Actually, it looks like the people who were giving me information on bankruptcy were right about one big sticking point in the Bronner plan. Mr. Bronner confirmed it himself in today’s Birmingham News:
David Bronner, head of the Retirement Systems of Alabama, has offered to buy the sewer system for up to $1.4 billion, but only if county commissioners first put the system into Chapter 9 bankruptcy.
Bronner has said his offer depends on reaching a settlement in bankruptcy with the bondholders for the $1.4 billion because that would prevent them from suing the sewer system for the remainder. [emphasis mine]
If the RSA buys the sewer system out of bankruptcy, it gets the debts as well as the assets.
County Commission President Bettye Fine Collins says she’s open to selling the sewer system to RSA without declaring bankruptcy, but Bronner says no to that. I’m trying to figure out why. Is it because the sewer debt would still be tied to the system, and he’d rather pay off $1.4 billion than $3.2 billion? If so (and I need to do some research on that), I can’t blame him. Is he afraid that the county would try to unload other underperforming assets in the future? Could be.
Bronner is a decent guy with an amazing record when it comes to investments, and I believe he has the best interests of the county at heart. Of course, he also has the best interests of the RSA at heart, as he should. I don’t know why he thinks the sewer system is a good deal, but I bet it would be well-run under his leadership.
I still have a couple of concerns. The first is one the Birmingham News seems determined to avoid: if the county sells the sewer system out of bankruptcy, it goes to the highest bidder. We all hope that would be the RSA, but there is no guarantee. The second is this: the Alabama Public Service Commission does not regulate sewer rates. There has been some talk about rate regulation under EPA guidelines, but as far as I have been able to determine, they are just that — guidelines. A private business seeks to maximize return for its shareholders. Yes, a debt-free system should be much cheaper to operate, but what happens when developers ask for expansion and the RSA starts building new trunk lines?
There may be really good answers to these questions, but so far we’re not hearing them. It’s time we did.
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The County Commission is scheduled to meet at 10AM today to vote on a resolution asking that Jefferson County residents be allowed to express their preferences for the sewer system on the November ballot. The vote would be non-binding.
David Bronner will speak to the JeffCo legislative delegation and other elected officials on Friday morning at Sen. Jabo Waggoner’s monthly meeting. This month’s meeting will be held at Vulcan Park. I’m trying to find out if it will be open to the public and what time it’s scheduled. I’ll post as soon as I hear something.
UPDATE: No, it’s not a public meeting, but at least some of our elected officials will be there, and the press usually comes as well. I’ll do my best to get a report.