Will Birmingham’s Black Eye Heal?

If you’re thinking of moving to Birmingham from out of town or out of state, you will no doubt hear news that—at best—will seem unsettling about our area.

On November 9th, the county commission for Jefferson county–Birmingham’s home county–voted 4-1 to file for what will be the largest municipal bankruptcy in U.S. history. At $4.2 billion, the scale of this filing is mind blowing, making it more than double the famous Orange Co. California $1.7 billion bankruptcy filing from 1994.Jeffrson Co. Alabama

It goes without saying that this is a very unfortunate event, but it’s not exactly a surprise, either; the possibility has been mentioned and warned about for years.

The Chapter 9 bankruptcy filing follows the collapse of an agreement for the county to pay $3.1 billion in sewer debt connected to a series of financial dealings going back three years that cost county taxpayers hundreds of millions of dollars and caused sewer rates to rise sharply.

Complicating the county’s financial picture was the Alabama Supreme Court’s ruling in March 2011 that a controversial occupational tax the county had passed (and depended on for $66 million of its budget) was unconstitutional.

Alabama’s Legislature could have stepped in to try and help the county avoid bankruptcy, but didn’t.

The bankruptcy filing isn’t helped by the tarnished reputation of some of Jefferson county’s elected leaders the past few years.  The county’s leadership became a cesspool of corruption that saw at least 21 people—including five county commissioners—convicted of, or agreeing to plead guilty to, corruption charges, some of which were connected to the sewer debts.  At least the commissioners and department heads connected with the sewer scandal are out of office.

If you’re thinking of moving to Jefferson county, this filing raises questions about the quality of life you can expect. What impact is bankruptcy likely to have on county services, on rates for sewer service, and even how easy or difficult it will be to renew car tags, given the closing of satellite courthouses? What does it mean for the myriad of county services residents need?

County staff has gone through severe reductions, as well, and these cuts have affected everything from roads and maintenance to the courts to health to inspections to law enforcement.

All of these are legitimate concerns for people thinking of moving to the Birmingham area, and there are no easy answers.

So, what does the filing mean for real estate sales in Jefferson county?  The county has a lot of desirable communities that individuals and families have called home for decades.  There are conveniences and benefits that only living relatively close to the metropolitan area can provide.

In deciding where to live, the quality of local government is certainly an important consideration, but so are other factors.  The general feeling a community has, the geography, types of housing, price ranges and proximity to important locations are all major considerations.  Vestavia and Mountain Brook, two incorporated and very desired cities in Jefferson county, have some of the most expensive homes in Alabama.

No doubt about it:  Jefferson county has a black eye that will take years to heal and that could have major economic ramifications.  People are still going to buy homes in the county, but the financial implosion is likely to make at least some Buyers take a close look at living across the line in Shelby county; indeed, we have already seen evidence of this.

A Birmingham real estate attorney says he has seen Buyers purchasing homes in Shelby county who say they want no part of Jefferson county’s problems.

Regardless of the bankruptcy filing, the simple fact is that—for decades—a large number of people who work in the general Birmingham area have chosen to live in Shelby county, because of its great quality of life, financial stability, affordability of housing and proximity to the metropolitan area.

The vast majority of Buyers Colleen and I work with wind up buying in Shelby county.Helena Market Days

Some residents view Shelby county as a breath of fresh air, compared to the financial mess, criminal wrongdoing and political bickering that has plagued their neighboring county to the north.

What’s ahead for Jefferson county?  Residents will no doubt experience new belt tightening, and much of it likely won’t be pleasant.  It is virtually inevitable that services will be strained further, and costs (whether they be taxes, sewer rates or other fees) will go up more.  Real estate sales in the county—both commercial and residential—may well be affected, though no one is sure by how much.

Real estate Agents may find themselves being asked questions from bewildered home Buyers, like, “What’s all this we hear about Jefferson county?”

Can Jefferson county rise from the ashes?

It has to, because it has no choice.

Despite the massive negative nationwide publicity, Jefferson county will have to find a way to continue to provide needed services and facilities.  The county is fortunate to have many talented and dedicated people working within its government.

Those people will be needed more than ever in the coming months and years as the county works to restructure its operations.

The Birmingham area business community may find itself being called on in new ways to be an active participant in helping the county get back on its feet.  Perhaps the state will finally step in and become involved at some point, too.

Another reason to feel optimistic for Jefferson county is the recent hiring Tony Petelos, Jefferson Co. Alabama County Managerof Tony Petelos, the former Mayor of Hoover, as county manager.

With his established track record in the business and legislative community for getting things done, Petelos has drawn praise for his diplomatic skills and ability to bring sides together.

Petelos is well known for his willingness to face daunting challenges, and take them head on.

In Jefferson county, he has found one.

David

About David Black

Colleen and David Black love what they do, and that's helping people who want to buy or sell homes in the Birmingham and Shelby Co. area achieve their dreams...

Posted on November 11, 2011, in Commentary, Quality of Life, Real Estate, Shelby Co. General and tagged , , , , , , , , , , , , , , . Bookmark the permalink. 1 Comment.

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