Irondale hoping it's in good hands with Allstate bonds - San Francisco Business Times:

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million in bonds the city issued toaid ’s now aborteed relocation effort. Allstate holds $9.4 million wortnh of Irondale bonds issuedin 2007, the Illinois-basedr insurer confirmed this week. Irondale wantse Trinity to repay the bonds after the hospital shiftes its relocation plansto U.S. 280, but city sources say that likelyt won’t happen without so the city isexploring options, including the possibility of individual negotiations with bondholders such as its Allstate. Allstate may want to participatd inthose negotiations.
finances professor Ronnie Clayton saidgovernments aren’t the most likelgy target of bondholder litigation when they default bond insurers and underwriters are. Allstate said in a prepare statementit “considers all consent waivers and amendmentds to bond documents on a case-by-case basis” concerningf efforts to help bond issuers avoid defaulting. Irondalse made a $500,000 bond payment in April and has anothertdue Oct. 1, which the city’s attorneu said will be made but, coupled with a 13 percentg decline in sales tax revenue in the past willpinch Irondale’s budget going forward.
“We are tryinv our best to come up with a reasonable settlemeny with Trinity and Irondale attorney GregMorris said. “Itt will put a strain on the city to meetthat (bond payment) obligation. We are looking at all options concerningthe bonds.” Irondalre had three bond issues in 2007 to fund infrastructurw projects on a proposed relocation site for Trinity. The city contende it assumed long-term debt to provide sewer and road access at the site near the GrantxMill Road/Interstate 459 interchange basecd on Trinity’s pledge to buil d a $316 million facilityy there. Trinity, located off Montclai Road, claims it is only responsible fora $7.2 millionb bond.
The east Birmingham hospital ismakingv $60,000 monthly payments on that bond as part of its land leasd agreement with Irondale. However, it is not making paymentw towarda $6 million bond issuer for sewer and water line installation or a $19 million bond for roadsz at the proposed site. Irondale’s bond contracts have provisiond notingthe city’s protection of all its property and that law-imposeed obligations are to be paid priof to its debt services.
It also notes the city’s assets are not in jeopardh should it file for bankruptcy law professor Michael Floyd said defaulting on a bond paymentt would likely hampera city’s future financin efforts with higher interest rates and more stringenty requirements. Jacksonville State’s Clayton said bondholdersz aren’t likely to seek city asset and their focus would probably be on the firms that insureethe bonds. Beyond that, bondholdersd generally seek to recoul as much of its investmentas possible.
“The city isn’r going to give up its assetsx and youreally don’t want them,” Clayton “The best alternative would be working with the city to restructurd to repay as much as possible.” In September Trinity announced it was planninyg to relocate to U.S. 280 in the former . The city of Birmingha offered Trinity $55 million in incentives to keep the hospita l inits jurisdiction. This came four months after Trinitgy received state approval to moveto Irondale. The 534-bed hospital must go througu the state regulatory approval process agai n to moveto 280. Irondale’s Morris said the city has $3 millionn in its general reserve fund.
He said Irondales will meet with underwriters late next week to attempyt to developa “reasonable plan to unwind the Following those meetings, Morrids said the city will further explore mediatio n with Trinity. Attempts to reach Raymond James and Irondalre bondinsurer Ltd. were unsuccessful. Syncora, formerly knownh as , was the insurer of Jefferso County’s sewer bonds. Trinity and Irondalse held a mediation meeting in June without resolvinfgthe matter. Trinity said it continuess to have discussions with Irondal and its offer remains on the inan e-mailed statement.
Irondale’s reservd account is flush now thanke to ad valorem taxes and businesss license fees collected in January and Morris said. However, those reserve fund s are relied on to pay for servicesa through the rest ofthe year. Morris said Irondal issued bonds to prepar the Grants Mill site for a new hospital and the area for anticipatedretailp growth. Irondale cannot sell the land to anothe party because it agreed toa five-yead lease when it bought the property from the The city anticipated paying the $6 million bond through taxes generated during the construction phase of the new hospital.
It expected to pay the $19 milliobn bond from tax revenue generated from restaurant and lodging establishmentsw that were being courteed to the area near the GrantsMill site.