Decade after bankruptcy, Jefferson County refinances $2.24B debt

Jefferson County completed its refinance of $2.24 billion of sewer revenue warrants for a gross savings of $1.17 billion, officials said today. The move reduces the county’s payments on its overall sewer debt.

It’s been over a decade since the Jefferson County Commission, in 2011, voted to file the largest municipal bankruptcy in history.

Since then, Jefferson County officials have been working to bring the county out of its financial rut.

The refinancing did not require extending the maturity of the sewer debt. It included a provision for a customer assistance program and stabilized rate increases.

“This is great news for the citizens of Jefferson County,” said Commission President Jimmie Stephens. “It stabilizes the financial position of the county.

“We made promises when we emerged from bankruptcy to rebuild our credit and reputation, today we kept those promises. We appreciate the engagement by the finance team that worked seamlessly with the county to make this transaction a tremendous success.”

In 1996, a federal judge found that Jefferson County sewage was polluting rivers and streams within the region and ordered the county to repair and rebuild its sewer system.

The county then embarked on a massive capital campaign, borrowing millions of dollars for sewer repairs and also securing $1.05 billion for school construction.

Then, the 2008 financial crisis struck the United States, leaving Jefferson County in a dire situation with billions of dollars borrowed.

The financial collapse triggered penalties and higher interest rates for the county’s sewer debt, leaving it in a position to be sued by bond insurers.

“Since the bankruptcy, we have put Jefferson County back together piece by piece. The market confirmed our efforts today. It has been a collective endeavor with our team at the county, and their hard work has made this possible,” County Commissioner Joe Knight, chair of the Finance Committee, said.

County Manager Cal Markert said, “The result of the transaction is a reflection of the county staff and the Department of Environmental Services who have created a sustainable, well-run department that is capable of serving the citizens for many years to come.”

The financing team that worked with the county includes underwriters Raymond James and Associates; Stifel, Nicolaus & Company; B of A Securities; Morgan Stanley & Company; Siebert Williams & Shank, Co.; Loop Capital Markets; Jefferies and Piper Sandler & Company.

Following the financial crisis and the subsequent lawsuits from bond insurers, then-Commission President Larry Langford, lobbyist Al LaPierre, and Montgomery investment banker Bill Blount were found to have engaged in illegal bond swaps.

All three were indicted and convicted on federal corruption charges.

Grayson Everett is the state and political editor for Yellowhammer News. You can follow him on Twitter @Grayson270.