Reporting from Atlanta — In an effort to avoid filing the largest municipal bankruptcy in U.S. history, officials in an Alabama county Friday flirted with a potential settlement with creditors but eventually decided to take a few more weeks to try to hammer out a better deal.
Jefferson County, the state's most populous, is staggering under a $3.14-billion debt incurred after officials borrowed money to fix their troubled sewer system, and then entered into a number of complicated and corruption-laced refinancing deals that backfired in 2007 with the mortgage lending crisis.
In a meeting Friday, the five-member County Commission considered an offer drawn up by a court-appointed receiver that would have forgiven more than $1 billion in debt. But commissioners also found much to dislike in the offer, including sewer rate hikes that would have amounted to about 25% over 18 months. That was a particularly bitter bill to swallow in a county where more than 100,000 of its 665,000 residents live below the poverty level, according to Census Bureau figures.
Commissioner George Bowman noted that sewer rates had already increased 329% in the last 10 years in Jefferson County.
"I believe this is excessive," Bowman said of the proposed hikes. "Totally excessive."