Jefferson County Commission President David Carrington said there are probably “30 sticking points” in talks with creditors over restructuring $3.1 billion of sewer-system debt that has brought the municipality to the verge of bankruptcy.
The county last week postponed a decision on whether to enter the largest-ever municipal bankruptcy and extended negotiations on reorganizing the debt it has struggled to repay. Commissioners called a special meeting for 2 p.m. New York time Aug. 4.
About $300 million divides the county and creditors, Carrington said today in an interview after a commission meeting. The county has asked bondholders to forgive $1.3 billion of the debt, while creditors have offered to write off $1 billion.
“It’s more than dollar requirements,” Carrington said, declining to elaborate. “People are working feverishly on both sides.”
The county is insisting on a “holistic solution,” Carrington said, which would restructure the sewer debt and solve a cash crunch in its general fund after the state Supreme Court in March struck down a wage and business-license tax that generated about $75 million annually.
State lawmakers in June refused to give the county more taxing power after the court ruling, forcing 500 employees to be put on leave.
The settlement being discussed would also resolve lawsuits brought by the county, bondholders and debt insures against one another, John Young, the court-appointed receiver who took over management of the sewer system, said yesterday in an interview.
The accord also envisions a significant state role, Young said. Lawmakers would need to create an independent sewer authority and pledge the state’s “moral obligation” to back the debt, he said. Governor Robert Bentley would have to call a special session of the Legislature and lobby lawmakers to pass a settlement package.
“It would be easier if it were simply numbers,” Young said.
Commissioner Sandra Little Brown said the county was preparing a counteroffer to the creditors before the Aug. 4 meeting.
“We are closer to bankruptcy than to a settlement,” she said in an interview.