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  1. #1
    Senior Member JohnDoe2's Avatar
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    Jefferson County Alabama Files Biggest Municipal Bankruptcy

    November 09, 2011 10:46 PMtext size: TT

    Jefferson County Alabama Files Biggest Municipal Bankruptcy

    (Updates with quote from lawyer in fourth paragraph.)

    Nov. 9 (Bloomberg) -- Jefferson County, Alabama, filed the biggest U.S. municipal bankruptcy after an agreement among elected officials and investors to refinance $3.1 billion in sewer bonds fell apart.

    The county, home to Birmingham, the state's most-populous city, listed assets and debt of more than $1 billion in Chapter 9 papers filed today in U.S. Bankruptcy Court in Birmingham.

    The county's bankruptcy attorney, Kenneth Klee, said the filing was necessary because talks with creditors and the receiver in charge of the sewer plant broke down . . .
    http://www.reuters.com/article/2011/...7A87WW20111110
    Last edited by JohnDoe2; 06-30-2013 at 06:57 PM.
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  2. #2
    Senior Member JohnDoe2's Avatar
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    Jefferson County AL. bankruptcy would top $4.1 billion
    http://www.alipac.us/ftopict-245510.html

    46 U.S. cities have filed for bankruptcy
    http://www.alipac.us/ftopict-243090-jef ... tml+county

    Central Falls RI files for bankruptcy
    http://www.alipac.us/ftopict-245635.html

    Rhode Island City Files For Bankruptcy
    http://www.alipac.us/ftopict-243090.html

    Harrisburg, Pa., City Council Files for Bankruptcy, But Mayor Says Petition Is Illegal
    PA. Capitol Backruptcy Filling Not Legal
    http://www.alipac.us/ftopict-252481.html
    Last edited by JohnDoe2; 07-18-2013 at 08:49 PM.
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  3. #3
    Super Moderator Newmexican's Avatar
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    Timeline: How Jefferson County's financial crisis unfolded

    Published: Friday, August 05, 2011, 5:45 AM Updated: Wednesday, November 09, 2011, 6:36 PM

    Here's how Jefferson County borrowed billions to repair and build sewers, then changed that debt from simple interest to complex financial derivatives that blew up in the Great Recession and plunged the county into default.

    And how, during the same period, the county lost its occupational tax, the source of about one-fourth the county's general fund, through a series of actions by the Jefferson County delegation of the Alabama Legislature.

    1988: The first occupational tax -- Jefferson County imposes a one-half percent occupational tax using a 1967 license tax law; that law gives an exemption to professionals who buy state or county business licenses.

    1996: A federal judge orders Jefferson County to repair and rebuild its sewer system, after finding that county sewage has polluted rivers and streams.

    1997: The county begins six years of massive borrowing for sewer repairs. It also uses some of that money for new sewers not required under the consent decree.

    1999: The second, short-lived occupational tax -- In an attempt to grab pork money for themselves, Jefferson County legislators pass a bill that earmarks nearly $30 million from the local tax funds to legislators' projects. The county gets the court to enjoin this new tax and continues to collect the first occupational tax. In November, lawmakers repeal the old occupational tax law.

    2000: Jefferson County challenges the Legislature's acts in court and wins. A judge rules the repeal was invalid -- thus reinstating the first occupational tax -- because the repeal was passed under the practice of only local legislators voting on local bills.

    2004-05: Jefferson County borrows $1.05 billion for school construction. This is funded by an additional one cent sales tax.

    2005: In a case that does not involve Jefferson County, the state Supreme Court rules the practice of only local legislators voting on local bills is legal.

    2007: A lawsuit is filed challenging the Jefferson County occupational tax, based on the 2005 Supreme Court ruling.

    2007: Most of Jefferson County's sewer debt is tied up in several 2002-03 refinancing deals, championed by then-Commission President Larry Langford, that include complex, sophisticated derivatives meant to save money -- auction-rate securities, variable-rate bonds and embedded interest rate swaps. No other local government has as great reliance on such derivatives as Jefferson County, and these soon prove to be a crucial flaw.

    2008: The national subprime mortgage crisis and Great Recession -- The financial collapse plunges the county's debt to junk bond status because of failure of the derivative markets. This triggers penalties and higher interest rates for Jefferson County sewer debt. The county begins technical default. Bond insurers sue.

    2008-11: Unsuccessful negotiations -- Jefferson County and creditors attempt to reach a settlement of the $3.14 billion sewer debt, but any deal would need to erase $1 billion or more of that debt.

    2009

    January: Circuit Judge David Rains rules the 1999 repeal is valid and the occupational tax is no longer legal. He declines to order a refund of taxes collected in the past.

    May-June: The first failed attempt to replace the occupational tax -- The state House of Representatives and Senate pass different versions of an occupational tax. Lawmakers can't agree on whether an exemption for professionals should be removed, and the regular session ends without a new tax.

    June: County spending crisis No. 1 -- The Alabama Supreme Court denies the county's request for an emergency order allowing it to spend occupational tax money while the case is on appeal. The county orders budget cuts of 33 percent, requiring hundreds of layoffs as well as furloughs and 32-hour workweeks. This leads to closing of satellite courthouses and long waits at the main courthouse.

    August: A third, short-lived occupational tax -- The Alabama Supreme Court affirms Judge Rains' ruling striking down the 1999 occupational tax. In a special session, the Alabama Legislature passes a new occupational tax that will continue 0.05 percent occupational tax until end of year, reduce that to 0.45 percent beginning in 2010 but include professionals, and have a referendum in 2012 to decide whether to keep the tax.


    October: In the federal corruption case, Langford is convicted of bribery and fraud in connection with refinancing of the Jefferson County sewer debt in 2002-03, when he was Jefferson County Commission president. LaPierre and Blount, both having pleaded guilty in the case, testify that Langford received $236,000 in money, clothes and jewelry.

    Testimony showed that Blount's investment bank, Blount Parrish & Co., was included in Jefferson County sewer bond deals and interest rate swaps at Langford's insistence, earning the bank $7.1 million. Along with numerous others, former Commissioners Chris McNair, Gary White and Mary Buckelew also are convicted in cases related to corrupt sewer deals, and all but Buckelew are sentenced to prison.


    2010

    September: A state circuit judge names New Jersey water works executive John Young as receiver over the county's environmental services department. Young has the power to raise rates and increase revenues to pay the $3.14 billion sewer debt to creditors.

    December: Montgomery Circuit Judge Charles Price strikes down the county's new occupational tax and business license tax. He says the Legislature failed to properly advertise the bill, a basic procedural error that invalidates the tax.

    2011


    April: County spending crisis No. 2 -- After the Alabama Supreme Court upholds Price's ruling on the occupational tax, the county again puts hourly workers on a 32-hour workweek and shuts down four satellite courthouses to save $21 million annually.

    Alabama State Sen. Scott Beason, R-Gardendale (Birmingham News File)
    June: The second failed attempt to replace the occupational tax: Hope grows that the Alabama Legislature will pass a limited home-rule bill that could bring in $50 million a year for Jefferson County. But on the last day of the session, Sen. Scott Beason, R-Gardendale, kills the bill by contesting it, thus blocking any vote, even though five of eight Jefferson County delegation senators support the bill.

    Jefferson County puts 547 workers on administrative leave without pay, but restores the 40-hour workweek for those who remain. Officials announce that roadside mowing and most paving will stop. Sheriff Mike Hale says deputies no longer will respond to traffic accidents.

    June 21: The court-appointed receiver for the Jefferson County sewer system demands the county turn over $75 million in settlement money from JPMorgan Chase & Co. JPMorgan's 2009 settlement with the Securities and Exchange Commission was supposed to assist sewer ratepayers harmed by its bond deals. The County Commission argues the money is vital for capital emergencies.

    June 27: Negotiations intensify -- Jefferson County Commission President David Carrington announces a 30-day standstill period between the county and its creditors to seek a potential settlement. The standstill ends with no agreement.

    July 28: Jefferson County officials delay a decision on a possible bankruptcy filing for one week to consider a plan from the county's creditors.

    Aug. 4: Jefferson County officials convene in special meeting to review their options to resolve the county's financial crisis: approving a settlement, filing for Chapter 9 bankruptcy or extending the period for negotiations. They decide to delay a vote on their decision until Aug. 12.

    Aug. 12: Jefferson County officials convene another special meeting to review their options. They decide to delay a vote on their decision until Sept. 16.

    Sept. 16: The Jefferson County Commission votes to accept the terms of a deal to settle and refinance the county's $3.14 billion debt, by a vote of 4-1. Commission President David Carrington and Commissioners Joe Knight, Sandra Little Brown and Jimmie Stephens voted yes. Commissioner George Bowman was the only one who voted no.

    Both sides said the agreement was only a framework or a concept to settle the crisis, and work remains toward crafting a definitive, binding deal.

    As part of the deal, sewer rate increases will be 8.2 percent for each of the first three years beginning Nov. 1. Projected annual increases after that would be no more than 3.25 percent until the debt is paid off, according the the proposed settlement term sheet.

    Oct. 13: Area lawmakers and commissioners meet for the second time, failing to find solution to the county's debt problem.


    Nov. 8: Commission convenes a multihour meeting to discuss settlement with creditors or bankruptcy. Gov. Robert Bentley says he would call a special session of the Alabama Legislature to address Jefferson County's financial woes.

    Nov. 9: Commission votes 4-1 to file the largest municipal bankruptcy in U.S. history.

    http://blog.al.com/birmingham-news-stor ... untys.html
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  4. #4
    Senior Member JohnDoe2's Avatar
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    Senior Member JohnDoe2's Avatar
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    NEW RECORD: Detroit $18.5 billion.

    http://www.alipac.us/f9/detroit-bank...y-hist-283812/
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    Senior Member JohnDoe2's Avatar
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