Judge grants overseer authority in Alabama sewer dispute

Reuters News
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Posted: Jul 08, 2011 1:08 PM
Judge grants overseer authority in Alabama sewer dispute

BIRMINGHAM, Alabama (Reuters) - A court-appointed manager of Jefferson County, Alabama's debt-ridden sewer system should have full authority over the operation's finances, a state judge ruled on Friday.

The order by Judge Albert Johnson will also give John Young, the county's water manager, or "receiver", access to tens of millions of dollars of sewer revenue and said "the county has no authority over the existing accounts."

The order is likely to bolster Young's power as he seeks to use a portion of sewer revenue to maintain and improve the sewer system.

A $3.2 billion bond debt related to the sewer system threatens to push the county into what would be the largest municipal bankruptcy in U.S. history.

The revenue for capital expenditure on the system will not interfere with money slated for debt service payments, a senior county official said.

"There should be no further debate as to the receiver's sole and exclusive right and authority to control all accounts related to the system and system revenues," said Johnson in his ruling.

Jefferson County's main city, Birmingham, is also the largest in Alabama and the county is a significant driver of the state's economy.

(Reporting by Melinda Dickinson; Writing by Matthew Bigg, Editing by Kevin Gray and Padraic Cassidy)