The scandal of the Alabama poor cut off from water
By Brian Wheeler BBC News, Alabama
Sheila Tyson, a community activist in the deprived West End area of Birmingham,
tells the BBC how her community has been affected
Continue reading the main story
Banks stand to lose millions of dollars in debt repayments if the biggest
municipal bankruptcy in American history is allowed to proceed.
But the real victims of the financial collapse in the US state of Alabama's
most populous county are its poorest residents - forced to bathe in bottled
water and use portable toilets after being cut off from the mains supply.
And there is widespread anger in Jefferson County that swingeing sewerage rate
hikes could have been avoided but for the greed, corruption and incompetence of
local politicians, government officials and Wall Street financiers.
Tammy Lucas is the human face of a financial and political scandal that has
brought one of the most deprived communities in America's south to the point of
what some local people believe is collapse.
She says: "If the sewer bill gets higher, my light might get cut off and if I
try to catch up the light, my water might get cut off. So we're in between. We
can't make it like this."
Mrs Lucas's monthly sewerage rate bills - the amount levied by the county to
flush away waste and provide water for baths and showers - has quadrupled in
the past 15 years. She says it is currently running at $150 (£97) a month,
which leaves little left out of her $600 social security cheque for food and
electricity.
"We need to keep the water running because we're women," she says. "We need to
take baths. I try to pay the sewer bill and the water bill together and then
what little I got left I try to put on my lights. I got to have lights."
'Just outrageous'
Her neighbour in one of the poorest districts of Jefferson County's largest
city, Birmingham, a father of four who asked not to be named, has already made
that choice.
The poorest citizens in Birmingham, Alabama, say they can no longer afford
running water
His modest rented home, next to a busy freight train line, is one of a growing
number in the area that now has a blue portable toilet next to it.
He says he finds it cheaper to buy drums of water from a petrol station and pay
a sanitation company about $14 a month to remove waste from his "porta-potty"
than pay the combined sewer and water rate bill, which some months can reach
$300.
"Most people who live here are on social security," he said.
"They can't spend this kind of money on sewerage. It's just outrageous. It's
too high.
"I pay my sewerage bill, then I'm going to slack on my groceries. Then what am
I going to eat?"
Sewerage rates and water rates, which are levied on drinkable water, vary
widely across the United States.
But they are generally rising faster than inflation as cities are forced by
federal government to replace worn-out sewerage facilities.
The two rates have been combined into a single bill in Jefferson County, which
has increased by 329% over the past 15 years, making it among the highest in
America, as the county has struggled to service the mountain of debt it took on
to pay for a new sewer system.
Corruption scandal
The facility, which has been under construction since 1996, was meant to cost
about $300m.
But the bill soared to $3.1bn after construction problems and a series of bond
and derivatives deals that went sour in the financial meltdown of 2008.
Continue reading the main story
“Start Quote
If they let this stuff happen they are going to get the biggest riot the South
has seen”
End Quote Sheila Tyson Community activist
Investment bank JP Morgan Securities and two of its former directors have been
fined for offering bribes to JeffersonCounty workers and politicians to win
business financing the sewer upgrade.
Six of Jefferson County's former commissioners have been found guilty of
corruption for accepting the bribes, along with 15 other officials.
New county commissioners, struggling to service the debt they inherited from
their crooked predecessors, took the decision to file for Chapter 9 bankruptcy
last month.
But the county's bondholders, who stand to lose about $4.5m a month in
repayments if the bankruptcy is allowed to proceed, are contesting it in court.
A Birmingham bankruptcy judge, Thomas B Bennett, has yet to make a final ruling.
Breaking point
Prior to the bankruptcy filing, the county's sewer rates had been due to go up
by a further 8.2% a year for the next three years in a deal with the county's
creditors, to the dismay of local residents.
Now that is more likely to be 10% a year or even, according to the court
appointed receiver John S Young, as much as 25%.
Sheila Tyson, a community activist in the deprived West End district of
Birmingham, says people in the city are reaching breaking point.
"These people are going to end up rioting about this," she says. "If they let
this stuff happen they are going to get the biggest riot the South has ever
seen. Over this sewer business. I can see it coming."
She says soaring sewer-rate bills have traditionally hit the poorest parts of
the county hardest, as better-off people in the suburbs installed septic tanks
at their properties.
But the people affected are embarrassed to speak out about living in such
unsanitary conditions, she tells BBC News.
"This is not even a race issue, if I'm telling the truth," says Ms Tyson. "It's
just so happens that it's affecting black people. It's a class issue. They
don't give a doo-doo about poor people period."
Budget shortfall
And she adds: "Somebody from Washington DC needs to come down here and take
these sewer bills to where they are affordable for the people in these
districts. Injustice - that's all this is. They need to come down here and fix
it."
Continue reading the main story
“Start Quote
When you look at the amount of debt, and you look at the revenue that is
produced from the rate payers, there is no way it is going to come down”
End Quote Tony Petelos Jefferson County manager
To add further to Jefferson County's woes, it faces a budget shortfall next
year of $40m after a local tax was declared illegal.
The county is appealing to the Alabama state legislature for financial aid, but
there are still likely to be cuts to public services.
More than 500 county workers were laid off over the summer and are having to
get by on unemployment benefit, while their jobs hang in the balance.
Tony Petelos, the county manager appointed by the new commissioners to sort the
mess out, admits it could take years to get the area back on its feet.
"The public has lost confidence in Jefferson County over the last decade and a
half, because of the mismanagement, because of the corruption. We have got to
rebuild that confidence," he says.
He insists there is "light at the end of the tunnel" and that some of
residents' worst fears about looming public service cuts are groundless, with
most savings likely to be made through efficiencies and property sales.
Troubled project
But he can offer few assurances to citizens struggling with soaring sewer and
water rate bills.
The decision is in the hands of the bankruptcy court, he stresses, but even if
the judge decides to hand control of sewer rates back to the county - and Mr
Petelos has offered to manage the troubled project himself - there is no
prospect of the bills being reduced.
"When you look at the amount of debt, and you look at the revenue that is
produced from the rate payers, there is no way it is going to come down," says
Mr Petelos.
When he was Republican mayor of Birmingham's neighbouring city of Hoover, Mr
Petelos recalls attending a presentation by a Wall Street bank about the same
kind of bonds that would later prove to be the downfall of JeffersonCounty.
He says: "I turned to my finance director and said, 'did you understand that?'
He said, 'no I didn't'. So I said, 'we had better not buy it then'."
Perhaps if Jefferson County's previous commissioners had made the same
decision, some of their poorest residents would not be facing daily life
without basic sanitation and running water.
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