Commission President Bettye Fine Collins discusses Jefferson County’s options as clock runs out.
Popularity: 5% [?]
Commission President Bettye Fine Collins discusses Jefferson County’s options as clock runs out.
Popularity: 5% [?]
Read the full story and more here.
Popularity: 11% [?]
As expected, the SEC has filed a lawsuit in federal court here against Mayor Larry Langford, Montgomery investment banker Bill Blount and lobbyist Al LaPierre. The SEC’s complaint is a civil lawsuit, so nobody is getting arrested or going to jail. That’s the Justice Department’s end of things and they’re still working at it.
In the meantime, the SEC wants Blount, LaPierre and Langford to repay money they received in various bond deals from Langford’s tenure at the Jefferson County Commission. According to the lawsuit, Blount paid off more than $150,000 of Langford’s personal debts, while Langford directed more than $6.7 million in fees to Blount’s investment firm, Blount Parrish.
Popularity: 16% [?]
If the commission approves, Jefferson County will pledge surplus sales taxes to help meet debt service on its sewer bonds, Commission President Bettye Fine Collins said in a press conference Wednesday. Currently the county has only pledged net sewer revenues — money from ratepayers minus operating costs — to pay down the $3.24 billion in sewer debt. In recent years, the net sewer revenues have average about $130 million per year. After recent market events and Jefferson County’s technical defaults, annual debt service on the sewer bonds could rise to $250 million or more, Collins said.
In 2004, the county enacted a one-cent sales tax hike for school construction. Then-Commission President Larry Langford championed the tax increase. Today, the sales tax produces more revenue than needed to pay the school bonds, Collins said.
However, it will take an act of the Alabama Legislature to redirect the surplus revenue.
Read the full text of Collins statement here.
Popularity: 64% [?]
The financial crisis over Jefferson County’s sewer debt will not cause layoffs or otherwise effect employee benefits, Commission President Bettye Fine Collins said Thursday morning.
During the commission’s weekly work session, Collins read from a memo to county employees assuring them that their jobs and benefits are not at risk.
By the contracts with bond holders, the sewer system debt is payable only from the net revenues of the sewer system, Collins said. That means other county services will not be effected. What’s more, the debt service comes after other sewer operating expenses, such as payroll.
While that’s good news for county employees, the commission and its advisors are still struggling over how to keep the county out of bankruptcy. On Wednesday, the county announced that it would not post collateral or insurance to stop terminations of 13 interest rate swaps. Thursday, Collins seemed more upbeat, indicating that the county might be able to work with its creditors to avoid bankruptcy.
Read the full story
Popularity: 75% [?]
Two weeks ago, Banks, Finley, White & Co. delivered the fiscal 2007 audit to the City of Birmingham. The city received a clean bill of health.
“We did enough tests and procedures that we feel that if fraud had occurred, we would have caught it,” Jeff White told the Administration Budget and Finance Committee.
Realize, though, that this audit was for the fiscal year ending June 31, 2007, the last full fiscal year of the Bernard Kincaid administration. Short of inspiring confidence, it is a good indicator of what Birmingham has yet to loose - its good name on the market and credit with the banks.
Next, you have to look to one hiring change made by the new mayor, Larry Langford.
Popularity: 41% [?]
Jefferson County has until Friday to post $184 million in collateral or insurance to prevent the costly terminations of its interest rate swaps, but in two more material event notices Wednesday night, the county says it will meet neither requirement.
PDFs of Jefferson County’s latest event notices can be found here and here.
“The County has notified the counterparties to the Swap Agreements that it does not
presently intend to post collateral or provide insurance to the counterparties for its obligations under the Swap Agreements,” the county said in the notice.
Popularity: 56% [?]
Thursday night Jefferson County released the second “material event notice” in as many weeks regarding its sewer debt crisis. The news isn’t good.
According to this release, recent downgrades by ratings agencies could soon cause the county’s interest rate swaps to terminate, an event that could cost the county hundreds of millions of dollars. The only way to avoid such terminations is for the county to produce $184 million in insurance or collateral by March 7. According to the notice, the county does not have the revenue or cash on hand to provide such collateral.
The county writes in the notice:
“As of the date of this notice, the County can offer no assurances that it can obtain the required insurance or post the necessary eligible collateral to avoid an Additional Termination Event under the Swap Agreements. If an Additional Termination Event occurs, the respective counterparties will have the right to terminate the respective swap transactions upon notice to the County, in which event the County would be obligated to pay the resulting termination payment in accordance with the provisions of the Swap Agreements. The aggregate amount of the termination payments that would be due is approximately $184 million as of February 27, 2008.”
What’s more, interest rates on variable rate warrants continue to rise and auction rate warrants continue to come due. As the auction rate warrants mature, and the county still cannot pay or find buyers for new bond debt to refinance the old.
“The County has experienced a total of eight failed auctions as of February 27, 2008 with respect to $869,450,000 aggregate principal amount of Auction Rate Warrants,” the county said in the event notice.
The county says that, while it continues to look for solutions to the problems, it can promise none.
More to come as we translate from the original Greek.
Or you can find the whole document here.
Popularity: 86% [?]
In an act of financial triage, the Jefferson County Commission Tuesday approved a resolution to give the Finance Committee special powers to negotiate new agreements with investment banks. Existing contracts with those banks entitle them to as much as $500 million immediately from the county. According to the county, those banks are willing to waive their rights in order to avoid virtual foreclosure on the county.
Were those banks to demand payment, the county does not have the cash on hand to make those payments. Bankruptcy would be all but certain.
Popularity: 45% [?]
It is common knowledge in Birmingham that the Securities and Exchange Commission has been investigating a series of conspicuous bond deals that took place during Langford’s tenure as president of the Jefferson County Commission.
Also, it has been widely reported that, in his second interview with the SEC, Langford refused to answer investigators’ questions, citing an ambiguous Constitutional right.
What has not been reported is what Langford said to those same investigators in his first SEC interview on June 21, 2007.
Birmingham Weekly has obtained a copy of a transcript from that interview. What it reveals about the mayor is disconcerting: personal financial habits that are reflective of — and perhaps connected to — his management of public funds, and an attitude towards debt that makes the federal government seem frugal.
And read our Cover Story about it here.
Popularity: 100% [?]
