Jefferson County, Alabama: Iron, Civil Rights and a $4.2B Sewer Bankruptcy

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Jefferson County, Alabama, was created in December 1819 at the southern edge of the Appalachians, on rare side by side deposits of iron ore, coal and limestone. Birmingham was founded there in 1871 and named for England's industrial city, and after 1890 Black and white rural migrants and European immigrants poured into its mills and mines. A rural-dominated legislature refused to reapportion seats, and the 1901 state constitution used poll taxes and literacy tests to disenfranchise most Black citizens and many poor whites. The county recorded 29 lynchings between 1877 and 1950, the most in Alabama, and Klan bombings earned the city the name Bombingham.

The 1963 Birmingham campaign, coordinated from the 16th Street Baptist Church, won integration of public facilities, and that September Klan members bombed the church and killed four Black girls. The Voting Rights Act and the one man, one vote principle of Baker v. Carr eventually gave the county home rule, including control of its sewers. In the 1990s, facing a federally mandated sewer overhaul, officials including commission president Larry Langford entered interest rate swaps with Wall Street banks such as JPMorgan. On November 9, 2011, the county filed a $4.2 billion Chapter 9 bankruptcy, then the largest municipal bankruptcy in U.S. history.

• Water and sewer rates rose more than 300 percent in 15 years to cover the debt.
• After a 2008 downgrade to junk by Standard & Poor's, the county could not post $184 million in required cash collateral.
• Six former county commissioners and 15 other local officials were found guilty of corruption, and Langford went to federal prison.
• After SEC action, JPMorgan paid $75 million to the county and forfeited $647 million in future swap fees.
• The county still runs two courthouses, in Birmingham and Bessemer, a remnant of an early 1900s plan to split off a new county.