BIRMINGHAM, Ala. (WIAT) — Jefferson County leaders have chosen a plan to get out of bankruptcy.
The plan would eliminate more than a billion dollars in sewer debt, but there’s a downside.
Jefferson County Manager Tony Petelos said it is the county’s official plan, but it’s not set in stone.
Right up front- it promises to eliminate one point two billion dollars of debt, but the Devils in the details and behind the big numbers are year, after year, after year of rate increases… about 40 years worth- it turns out.
Supporters say it’s a fair and equitable way out of a very bad situation, but at least one commissioner says it’s a travesty.
Four county commissioners support the plan.
“To wipe off, one point two billion dollars of debt, to take it off the books and to move forward,” said Tony Petelos, Jefferson County Manager.
But one absolutely hates it.
“Hooray for the county the county’s coming out of bankruptcy! They’re not paying for it and that’s real fine unless the bill comes in your mailbox to pay and what’s happening is the existing rate payers are going to bail the county out of debt,” said Commissioner George Bowman.
County Manager Tony Petelos says the deal could fall apart between now and December 20th which is the projected date of completion. There are a number of variable that could impact the deal including interest rates.
“If they continue to climb to a very high rate, then the numbers don’t work anymore and we’ll have to go back to the drawing board,” said Petelos.
The first four sewer rate increases would be nearly seven and a half percent each (7.41%) followed by 3 and a half percent increases (3.49%) each year thereafter. That would continue as long as the county owes on the refinanced debt.
The first increase would hit in November. Petelos says there will be public hearings about the rate increases before that happens.
If you live in Birmingham and your sewer bill is 38 dollars per month, after the first five years of rate increases, your bill could be more than fifty dollars.
Jefferson County’s creditors would also take a financial hit on this plan, but Petelos says at least 80% of them are in favor of it.
“I know that folks don’t want to hear the fact that they’re having to pay larger sewer bills, but the fact of the matter is that in order for us to move out of bankruptcy this is the course that we have to take,” said Petelos.
“The county chose to take this plan of action when they decided to declare bankruptcy,” said Bowman.
Petelos says if the county couldn’t write off that one point two billion dollars the rate increases would have been even higher.
“When the receiver was here, John Young, his plan was to put three 25% increases in a row,” said Petelos.