Wednesday, May 07, 2008


That toe is almost in the water, the city council in Vallejo, CA has at least voted to approve a Chapter 9 bankruptcy filing out there. If I had to guess, Federal court will not let them go that far, but we will see.

Down in Jefferson County, AL it is the bond insurers who are proposing that a fee be imposed on households who don't use their sewer system to help pay for the sewer debt down there. That ought to go over well, but what is more interesting is how the bond insurers are actively engaged in their public discourse down there. The insurers are the ones scrambling because at least in part it is their problems that have led to big increases in financing costs going up for Jefferson County.

I literally do have a news filter set up specifically for Chapter 9 bankruptcy filings. It's typically pretty sparse, but has been filling up of late. A smaller scale for sure, but here is one about a bankruptcy filing in Gould, Arkansas. Just given how rare Chapter 9 bankruptcy filings are, maybe a handful a year at most in recent decades and most of them pretty small places, it just makes you wonder.

Here are some dots to connect. While Chapter 9 bankruptcy is more concerned with cash flow than assets/debts this is still an interesting comparison: Vallejo has 117K residents and if I understand the the article linked above it currently has a general obligation bond debt of ~$60mil. The city of Pittsburgh these days has say 305K residents (a bigger % of whom are students or elderly than in Vallejo for sure) and a general obligation bond debt alone of ~$850mil. I leave the division to others. and that does not begin to address pension liability and is just the City's debt... so it does not include things like the Water Authority's debt nor any other revenue backed debt.


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