September 8, 2008

JEFFERSON COUNTY, Ala. - Word on a deal to save Jefferson County from sewer system bankruptcy could come as early as Monday, and it could be the most important day in the county's history according to UAB Professor of Finance Andreas Rauterkus.

 "As far as financial history, this is a big deal because the county would either be filing for or avoiding the biggest municipal bankruptcy in U.S history," Rauterkus said.

Alabama Governor Bob Riley, Jefferson County and its Wall Street creditors began a final round of debt negotiations more than a week ago.  Monday, the county commission voted to extend those negotiations in search of a solution. The county owes more than $3 billion to creditors as a result of ballooning interest rates on loans for its sewer system. 

"When bankruptcy is declared any economic solution to the problem becomes a legal solution, and that legal solution may not be the best economic answer for the parties involved," said the professor of finance.

Rauterkus believes the county's ability to secure future loans for capital improvements and other valued projects could be greatly diminished, and the loans would become more expensive with higher interest rates should Jefferson County file for bankruptcy.

"The consequence is that the county would not have lending capacity, and as a result the county would have to cut services or raise taxes to make-up loan shortfalls," Rauterkus said.

REPORTERS: Professor Rauterkus is free for interviews throughout the day Monday, Wednesday and in the afternoon Tuesday, Thursday.

PRODUCERS: Live in-studio interviews can be scheduled for Friday morning to discuss the week's sewer system developments.