Jeffco, AL resident here. Was doing some research on the latest (because of a recent Max Keiser tweet) and came upon this article:

Bank Of America Sells Jefferson County Bonds, Ends Appeal
http://www.bloomberg.com/news/2012-08-13....

Quote:

The second-biggest U.S. bank said in a court filing last week that two of its units would no longer participate in the appeal of a bankruptcy court ruling that stripped bondholders of control over Jefferson County’s sewer system. One unit, Bank of America N.A., sold all of the $65.7 million in bonds it held. The other, Blue Ridge Investments LLC, sold most of the $160 million in bonds it held, according to court records filed with the U.S. Court of Appeals in Atlanta.

I haven't seen any talking about this!

Who in their right mind would by this crap?!? It ain't going to get paid back, folks are already moving out and/or cutting consumption.

Jefferson County sewer revenues declining
http://www.myfoxal.com/story/18818009/je....

This makes my blood boil. Water and sewer are tied together in the county. That is if you can't pay the sewer bill, then they CUT OFF YOUR WATER. Look at what the poorest of my county are having to deal with:

Quote:

COLLECTING RAINWATER

Beyond the headlines, the fiasco has hit local residents where it hurts -- their wallets. County residents are set to pay higher sewer bills for years to come.

Jones knows the pain of seeing such costs rise personally. She works part-time at the Greater Birmingham Ministries social-services group in Birmingham where she lives, helping people struggling with their bills.

But she's on a fixed income herself of $2,494 a month, including Social Security payments. So she and friends also curb their metered water use, which determines sewage fees, by reusing dishwater and collecting rainwater.

"My bill went from $60 a month to an average of $23 a month every month for the last year," Jones said.

County sewer rates shot up 329 percent in 15 years, even as surging capital and interest costs forced Jefferson County, Alabama's most populous, to default on debt and lay off workers.

The **** has literally hit the fan here.

How so?

They are charging people with septic systems for the sewer system? That sucks.

Betterments. If you have sewer access going past you on your street, you pay for it - because ostensibly you could sell and your buyers might want to tap into that sewer rather than redo an older septic system.

Had it happen to a place I was renting (as the renter).

Oh, somebody will buy those bonds - they are counting on the bankruptcy court allowing them to place a lien on every property in the county. If they get this right, they would exercise it. And the real value of every property in the county would go down accordingly.

The right of elected officials to enter into debt obligations without the assent of the governed is among my pet peeves. Most folks pay way too little attention to such things as the finances of the city, county and any special districts in which they purchase. Folks have tried to constrain spending by constraining taxes. Beware folks. Taxes are out front obligations - the banks consider them when making you a loan. The debts of these entities tend to escape scrutiny.

Also, as long as I am on my tall horse, let me unveil a bit of land development slime most are completely unaware of: some states allow developers to form special districts to finance infrastructure (roads, water, sewer, storm sewer) for their developments, greatly reducing the direct costs to the developer. The debt is secured by the property - the anticipated developed value of the property. Once the money is spent, the developer turns the special district over to the homeowners. During the housing downturn in CO in the 80s, some unfinished developments ended up with millions in debt obligations on a few million in purchased property - causing both the bond buyers and the home owners a lot of grief.

Those of you who own property and absolutely hate taxes, need to take the effort to know all the encumbrances of your property. Are you in any special districts? How are the districts finances? Also, be aware, new bond issues for say, your sewer district, are generally not about serving you better - they are about expanding the district boundaries, or serving underserved areas. That is, you would be paying for someone else's benefit, someone else's profit. Unless you can see a clear way in which a new city, county, or special district debt would benefit you - JUST SAY NO!

@Steelhead23 that is terrifying. I had no idea.

This is looking more realistic.
http://gonzalolira.blogspot.com/2010/10/....

I am going to call a county commissioner and see I can teach him about the Iceland-option.

Steel said:

Quote:

The right of elected officials to enter into debt obligations without the assent of the governed is among my pet peeves.

Why should they be able to enter into long-term obligations of any kind? They should be forced to save up and pay cash for all projects.

As has been talked about on this site numerous times, inflation is what made going into debt attractive instead of paying cash. What caused inflation? Fractional reserve lending. End that and governments paying cash makes sense once again on many levels.

Flap

Flap, I'm with you 100% on financial prudence. However, in the case of a rapid population expansion such as occurs in a boomtown, there are basic services that need to come at the front end. Water would be one. Sewer would be another. Wasn't the case with Jeffco, but there are limited times when funding is appropriate.