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Officials in Jefferson County, Alabama have once again postponed a decision over whether to file for the largest-ever municipal bankruptcy.The initial vote, scheduled for last week, was delayed after the county received an offer to settle its $3.2 billion sewer debt. Their offer would forgive about $1 billion of the county’s sewer debt, significantly less than the $1.3 billion of debt the county had asked bondholders to erase. The creditors’ proposal would also raise sewer rates by 47% over five years.
According to Bloomberg, several county commissioners have said they could not accept. County officials are now working on a counter proposal, and will make a final decision Aug 12.
County leaders had been ready for today’s meeting, but agreed to postpone the vote until Aug. 12 at the request of Alabama Gov. Robert Bentley, The Birmingham News reports. The state has become actively involved in the county’s negotiations with it’s creditors, has agreed to back the county’s repayment plan with a “credit enhancement” to make the deal more palatable to bondholders.
As we have previously noted, Jefferson County, home to Birmingham, is the largest county in Alabama and a key economic driver for the state. A bankruptcy filing could lead to financial problems for the county’s school districts and municipalities, as well as higher borrowing costs for the state and other local governments.
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