BRADENTON, Fla. — An Alabama judge today said that bankruptcy is not a feasible alternative for Jefferson County and appointed a receiver with rate-setting powers to take over the county’s sewer system.
The receiver was sought by the Bank of New York Mellon, the trustee for nearly $3.2 billion of variable- and auction-rate sewer bonds.
In a 23-page ruling, Circuit Judge Albert Johnson said the county violated covenants, defaulted on the bonds, and failed to pay $515.9 million of principal payments accelerated between June 2008 and July of this year.
“The court finds that a receiver will be able to stabilize the system finances, and will also be able to implement significant operational improvements and efficiencies that will generate more system revenues and more net revenues available for debt service than [Jefferson County] previously produced,” the judge’s order said.
The judge appointed John Young as the receiver for the county’s sewer system. Young is chief water technology officer and president of American Water Works Service Co. and will be leaving his job to perform his duties as receiver, a company spokeswoman said.
Young was a special master appointed by a federal court judge who reviewed the county’s sewer system in a previous case.
Stabilize the system finances: That's just code for higher taxes.
The financial issue in Jefferson County have been exacerbated by recent tornadoes. But what the judge fails to see is the long term impact of raising taxes is regressive on the poor, the bulk of the population. Some of which may move out of the county, which could compound revenue collections in the future.
I'm disappointed with the ruling in this case because it's just pushing off the inevitable. Bankruptcy is the right tool for lower income and too much debt. If this were a case of individuals or a small business filing bankruptcy it would have passed with flying colors.
We still see the court system and politicians afraid, very afraid to stand behind the bankruptcy choice.
You can imagine the money bondholders are throwing at the political system to support the choice of raising taxes to protect bond holders. It's not that much different then unions throwing money at politicians to protect union pay and benefits.
Who's protecting the little guy or gal?
Hope all is well.
J.D. Rosendahl, Rosey