A bankruptcy deal means rising sewer rates for Jeffesrson County residents

Jefferson County manhole cover.

The news that Jefferson County, Ala., reached a deal to get out of bankruptcy this week seems like something to celebrate.  But residents also learned that their sewer rates will increase by 7 percent as part of the deal.

To shed some light on what happened, Kyle Whitmire, a reporter with the Birmingham News and a resident of Jefferson County, joins us.

"In the late '90s, Jefferson County was sued because its sewer system had grown into tremendous disrepair. It had to repair its sewer system and borrowed a lot of money to do that. So what they thought was going to be a half-billion-dollar project or a billion-dollar project turned out to be more than $3 billion of debt that the county accumulated. No one really knew how to pay this off until Wall Street came to town with some very sophisticated debt structures, which they sold to Jeffferson County and all those fell apart during the financial crisis," says Whitmire.

The county was left suddently with accelerated interest payments and accelerated principal payments. To make matters worse, as more debt was accumulated, bribery scandals involving county commissioners and bankers embarassed the county.

"If you go to the Jefferson County courthouse you look up on the wall just outside the commision chambers, they have all the pictures of the former county commissioners and half of those folks have gone to jail or are in jail or have gone and come back," says Whitmire. "There's a lot of anger that's involved. There's anger at the public officials who got us into this mess and we feel duped."

So what does the deal to get out of bankrtupcy mean to people living in the county?

"The most immediate thing is it means sewer rates are going to be going up again. One thing that has happened in the last few years, sewer rates were frozen in place. That sounds great, but they had gone up 400 percent in the last 10 years," says Whitmire.

About the author

Adriene Hill is the senior multimedia reporter for LearningCurve.

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