Jefferson County officials looking at sewer debt compromise

Jefferson County commissioners say a draft exists of a proposal to compromise with creditors involved with the county’s $3.2 million sewer debt.

The proposal, drafted by Alabama finance director David Perry, is intended to help compromise with creditors such as JPMorgan Chase and Company and Bank of America Corporation.

Despite that, Commissioner Joe Knight, commissioner for District 4, which is mostly comprised of north Jefferson County said he wants to get as much information as possible and consider all the options, including bankruptcy, an option which Knight usually tries to avoid.

Knight said negotiations had reached a “breaking point,” and that he was glad state officials were stepping in to help. Alabama Attorney General Luther Strange filed a motion in June to intervene on behalf of consumers involved with the sewer system. The motion came after a proposed 24.21  percent increase in sewer use fees, and Strange said he seeks to join litigation because the case, Bank of New York Mellon v. Jefferson County, “has a substantial impact on pending rate increases and on the rights of rate payers and their ability to obtain service at just and reasonable rates from a public utility which is a monopoly provider.”

Long-time north Jefferson resident Allen Treadaway, R-Morris, co-sponsored a bill with the late Owen Drake, R-Leeds,  in an effort to block the county from charging any sewer-related fees to any property that isn’t directly connected to the sewer system. The bill also came in response to the proposed rate increase.

State Court Judge Albert Johnson issued a court order on Friday that names John S. Young, a court-appointed receiver for the county water and sewer board, complete control over the boards assets. The order gives Young permission to create a new corporation with the purpose of maintaining bank accounts for sewer system money. About $60 million would go into the new corporation.

Young also demanded about $75 million from the county reserves because he claims it came from a 2009 settlement with JPMorgan, who was required to assist sewer rate payers that were harmed by its bond deals.