BRADENTON, Fla. — An Alabama judge today said that bankruptcy is not a feasible alternative for Jefferson County and appointed a receiver with rate-setting powers to take over the county’s sewer system.
The receiver was sought by the Bank of New York Mellon, the trustee for nearly $3.2 billion of variable- and auction-rate sewer bonds.
In a 23-page ruling, Circuit Judge Albert Johnson said the county violated covenants, defaulted on the bonds, and failed to pay $515.9 million of principal payments accelerated between June 2008 and July of this year.
“The court finds that a receiver will be able to stabilize the system finances, and will also be able to implement significant operational improvements and efficiencies that will generate more system revenues and more net revenues available for debt service than [Jefferson County] previously produced,” the judge’s order said.
The judge appointed John Young as the receiver for the county’s sewer system. Young is chief water technology officer and president of American Water Works Service Co. and will be leaving his job to perform his duties as receiver, a company spokeswoman said.
Young was a special master appointed by a federal court judge who reviewed the county’s sewer system in a previous case.
