You’re all familiar with the ever-increasing burden of passing along water and sewer rate increases to customers. Unfortunately, your hands are usually tied as you feel the pressure from local and national governments to fix failing infrastructure and maintain a top-notch water system. 

A Get Out of Jail Free card may seem like winning the municipal sewer lottery, but think again. Jefferson County, Alabama’s most populated county with 700,000 residents, has filed for bankruptcy and will be forgiven almost half of its current sewer bonds, but at what expense? 

According to an article on Bloomberg.com, creditors will forgive $1.4 billion of the county’s $3 billion sewer bonds. Approved by a federal judge last month, the result is huge spikes in sewer rates, including about 7.9 percent annually for the next four years and almost 3.5 percent annually thereafter through 2053.   

The article suggests that Jefferson County’s agreement to file for bankruptcy could benefit other municipalities facing similar issues. 

“The willingness of Alabama’s most populous county to enter bankruptcy, along with the losses imposed on creditors, may make bondholders of other distressed municipalities more willing to negotiate outside of court,” says the article. 

While the advantages to having millions of dollars of sewer bonds forgiven may seem to outweigh the disadvantages for municipalities, the article points out that the county will experience a deficit of more than $1 billion in available funds to maintain the sewer system as a result of the bankruptcy. 

This update comes only months after news broke of Detroit’s bankruptcy debacle. All of this seems to circle back to maintaining our valuable sewer systems, treatment facilities and pump stations. But the water and sewer industry can only do so much on its own. We need the help of government agencies to support those efforts and provide funding for necessary upgrades and maintenance. It might seem like a lost cause, but maybe reaching out and trying to influence local governments could do the trick. 

www.bloomberg.com/news/2013-11-22/jefferson-county-s-bankruptcy-left-few-winners-as-debt-forgiven.html

How do you suggest the industry tackle the growing problem of bankruptcy and rate increases? Post a comment below.