How low can they go? That's the question Jefferson County will be asking ratings agencies in Birmingham tomorrow about interest rates.
How these agencies decide to rate the county's creditworthiness will go a long way in deciding whether Jefferson County can get out of Chapter 9 this year.
The best analogy for the importance of the ratings agencies is comparing them to your banker.
If you're applying for a home or car loan, your banker looks at your credit score, and the higher the score, the lower your interest rate will be.
Same thing here. The higher the ratings agencies rate the new sewer bonds the county will sell, the lower the interest rate Jefferson County will have to pay to get investors to buy them.
Instead of a 10, 20 or even $100 dollars a month difference in your mortgage payment, there could be the potential for $60-80 million worth of savings if the ratings agencies like what they see.
That's why the county is putting on a full charm-fest Tuesday with a meeting hosted by the Birmingham Business Alliance and a private presentation by county officials as well.
Birmingham Mayor William Bell has been asked to participate, but as of Monday afternoon had not yet decided whether he would be a part of this.
Even if the ratings agencies upgrade the county's bond rating, the combination of higher interest rates in the market and lower sewer usage this summer has left the county with about a $350 million gap it has to cover between the plan it and creditors agreed to this spring and the realities of the market today.
Jefferson County Commissior Jimmie Stephens said Monday the county is "all in," meaning the rate increases they've already committed to are as high as they're going, so it's up to creditors to find a way to cover that $350 million.
If they don't, the county could decide to force this plan on them, but that would definitely mean the goal of getting out of bankruptcy by the end of the year goes up in smoke.
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