Expensive Sewer Drives County to Bankruptcy

In 1993, Jefferson County, Alabama issued $3 billion in bonds to pay for a sewer system that would serve 150,000 people. Today, their financial situation is so bad they've stopped paying creditors and are close to declaring bankruptcy.

1 minute read

August 13, 2009, 2:00 PM PDT

By Tim Halbur

Governing reports on a series of poor decisions that lead to the county's woes.

"As sewer rates rose to meet those costs and Jefferson County struggled under its debt, county officials looked for a way to lessen its loan payments. In 2002 and 2003, they refinanced their bonds with variable-rate and auction-rate securities. Auction-rate securities are bonds where the interest rate is reset by auctions conducted by brokerage firms every few weeks. 'It's a little like someone buying a house and getting a pretty good 30-year fixed-rate mortgage,' says Christopher 'Kit' Taylor, former executive director of the Municipal Securities Rulemaking Board. 'Then somebody says, 'Why don't you get an adjustable-rate mortgage?''"

FULL STORY: Drained

Thursday, August 13, 2009 in Governing Magazine

Infrastructure Alabama Sewers Jefferson County

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching. Mary G., Urban Planner

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching.

Mary G., Urban Planner

Get top-rated, practical training

Start Learning

Advertise with us

Urban Design for Planners 1: Software Tools

This six-course series explores essential urban design concepts using open source software and equips planners with the tools they need to participate fully in the urban design process.