Jefferson County, Alabama

146 Pages·2011·1.17 MB·English

by  Ray Morris

Jefferson County, Alabama: A Perfect Storm of Ethical, Financial, Political, and Market
Failures

by
Louis Ray Morris, Jr.

A dissertation submitted to the Graduate Faculty of
Auburn University
in partial fulfillment of the
requirements for the Degree of
Doctor of Philosophy
Auburn, Alabama
August 6, 2011

Copyright 2011 by Louis Ray Morris, Jr.

Approved by

Linda Dennard, Co-Chair, Professor of Public Policy and International Relations
Murray Jardine, Co-Chair, Jane Dickerson Lanier Professor, Department of Political Science
Mitchell Brown, Assistant Professor of Political Science
William Curtis Ellis, Assistant Professor of Political Science and Public Administration
Abstract

This study details the ethical, financial, political, and market failures that have nearly
caused the Jefferson County, Alabama to file what may become the largest municipal bankruptcy
in the history of the nation.

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Acknowledgments

Acknowledgements for a work of this nature are fraught with danger because so many
people have had to listen to my rants and raves about the body politic in Jefferson County.
However, a special thank you must go to Charles Ball, Executive Director of the Regional
Planning Commission and the entire Board of Directors of the RPCGB who have supported me
in this endeavor wholeheartedly. Also, my gratitude to the staff of the RPCGB, especially
Yvonne Murray who has had to hear more than her fair share of ideas and thoughts on this topic
than she would ever admit too, are more than I can repay. I especially wish to thank my
committee who has never failed to provide the guidance I need to make this work a reality. A
special debt of gratitude is owed to Jim Byram and Troy Post, both of these gentlemen gave me
my start in public administration and have and continue to be mentors and friends. Last, but
most importantly, I thank my wife Katharine and her family for all the moral support and
prodding provided along the way. I could not have done it without you.

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Table of Contents

Abstract ......................................................................................................................................... ii
Acknowledgments ....................................................................................................................... iii
List of Tables .............................................................................................................................. vii
List of Figures ............................................................................................................................ viii
List of Abbreviations ................................................................................................................... ix
Chapter 1--Introduction ................................................................................................................1
Statement of the Problem ................................................................................................2
Research Question ...........................................................................................................3
Theoretical Framework ...................................................................................................3
Methodology ....................................................................................................................5
Chapter Summary ............................................................................................................9
Chapter 2--Literature Review and Theory Development ............................................................13
Introduction .....................................................................................................................13
Overview of Municipal Debt ..........................................................................................14
Historical View of Debt Policies ....................................................................................17
Public Budgeting ............................................................................................................24
Growth Machine Theory ................................................................................................27
Regime Theory ...............................................................................................................30
Chapter 3--The Environmentalist‟s Lawsuit? .............................................................................40
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Sprawl ..............................................................................................................................40
Jefferson County—Polluter! ............................................................................................42
Jefferson County Sued by Slawson .................................................................................44
Judgment Levied .............................................................................................................48
Chapter 4—The Debt Explosion .................................................................................................50
The Consent Decree ........................................................................................................50
Corruption—Part I ...........................................................................................................59
Rate Increases ..................................................................................................................65
Chapter 5—Risky Refinancing ....................................................................................................67
Looting Main Street? .......................................................................................................67
Corruption—Part II .........................................................................................................78
Chapter 6—Subprime Crisis Spillover ........................................................................................85
The Derivatives Market ...................................................................................................85
Auction-Rate Securities ...................................................................................................91
The Occupational Tax .....................................................................................................92
Chapter 7—After Effects and Reconstruction .............................................................................99
Jefferson County: A Casualty of the New Civil War .....................................................99
Alternatives ……………………………………………………………………………112
Chapter 8—Conclusion .............................................................................................................115
Final Thoughts ...............................................................................................................119
References ...............................................................................................................................123
Appendix A—Historical Documents….……………………………………………………….132
v
Appendix B—Persons Interviewed…………………………………………………………….135
Appendix C—Semi-Structured Interview Questions…………………………….…………….136
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List of Tables

Table 1—Consent Decree Required Projects ............................................................................. 55
Table 2—Amount of Outstanding Debt Service ......................................................................... 56
Table 3—Contracted Firms and Award Amounts..……………………………………..……...60

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List of Figures

Figure 1—Home of Jack Swann Before Renovations .................................................................62
Figure 2—Home of Jack Swann After Renovations ...................................................................63

viii
List of Abbreviations

ADEM Alabama Department of Environmental Management
ARS Auction Rate Securities
BBA Birmingham Business Alliance
BoB Bureau of the Budget
CAO Chief Administrative Officer
CD Consent Decree
CDO Collateralized Debt Obligation
CEO Chief Executive Officer
CFO Chief Financial Officer
CIP Capital Improvement Plan
CM City/County Manager
CRS Cahaba River Society
CWA Clean Water Act
EPA Environmental Protection Agency
ESD Environmental Services Department
FBI Federal Bureau of Investigation
ICMA International City/County Management Association
IDB Industrial Development Board

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IRS Internal Revenue Service
Jeffco Jefferson County
LGC Local Government Commission
LIBOR London Interbank Offering Rate
NIH National Institutes of Health
NINJA No Income No Job or Assets
NPDES National Pollution Discharge Elimination System
OCIP Orange County Investment Pool
PARCA Public Affairs Research Council of Alabama
PIMCO Pacific Investment and Management Company
SEC Securities and Exchange Commission
SIV Special Investment Vehicle
UDC Urban Development Corporation
VaR Value at Risk
WTSCIP Waste Treatment System Capital Improvement Pl an
WWTP Waste Water Treatment Plant

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