Federal bankruptcy judge to rule on JeffCo's exit plan today - abc27 WHTM

Federal bankruptcy judge approves Jefferson County's exit plan

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A federal judge has approved Jefferson County's plan to exit bankruptcy. The decision will allow the embattled county to formally exit its $4.23 billion bankruptcy upon the final closing of its new warrant sales, which has been scheduled for Dec. 3.

According to court affidavit, the county paid around $25 million to 18 various companies, including law firms, consultants and public relation experts. County Attorney Carol Sue Nelson said she expects more expenses in the coming years as they continue to navigate through the historic, complex bankruptcy.

See a complete breakdown of expenses here.


Court is recessed until 3 p.m. Thursday to allow the federal bankruptcy judge to decide whether to approve Jefferson County's exit plan. It calls for higher sewer rates over the next forty years to cover debt payments on the reduced 1.8 billion dollar sewer debt.

To confirm the plan, Judge Thomas Bennett must find the county's exit strategy is feasible and the rates are reasonable.

On Wednesday, sewer expert Eric Rothstein, Jefferson County Sewer Services director David Denard and Commissioner Jimmie Stephens took the stand for the county. It was Rothstein's sewer study and testimony that came under the most scrutiny in cross examination and closing arguments Thursday morning.

Rothstein discussed a study conducted to examine the sewer system over the next ten years to look at costs. He acknowledged a large portion of the sewer is in the Birmingham area.

Attorneys for ratepayers question the feasibility of the plan because the study didn't examine the forty years required to pay off the new debt. One attorney argued at the end of the ten years, sewer rates would climb even higher and the system would be faced with one billion dollars of capital improvements.

To that argument, attorneys for Jefferson County stated there was no way to predict the future and the plan actually keeps sewer rates lower.

As to the issue of reasonableness, Calvin Grigsby, another attorney for ratepayers, claimed the new sewer rates were anything but reasonable. He believes users should not be responsible for repayment of the debt brought on by the illegal bond swap deals totaling 1.3 billion dollars. He expressed a desire to get that debt declared invalid in another court fight. However, a provision of the plan would bring sewer related litigation to a permanent halt.

Grigsby also echoed statements made by Representative Mary Moore, (D) Birmingham, and Birmingham City Councilwoman Sheila Tyson earlier in the week. He said the rates placed an unfair burden on low income, minority users in the Birmingham area of which 30 percent are on fixed income.

Attorneys for ratepayers did not call any witnesses to testify.

If the judge rules in the county's favor, he will go over the ruling line by line.

Stay with ABC 33/40 for the latest. Follow @honorag for the latest on the ruling.

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