(Reuters) In the wake of the 2007-2009 economic recession, investors in the $3.7 trillion U.S. municipal bond market have been rattled by predictions of possible bankruptcies.
Still, municipal bankruptcies have been rare and experts say they will remain the option of last resort for struggling towns, cities and counties.
There have been only 624 municipal bankruptcies since 1937. The biggest U.S. municipal bankruptcy so far occurred in Orange County, California, in 1994.
The following is a list of U.S. municipalities that have either filed for municipal bankruptcy under Chapter 9 of the U.S. bankruptcy code since 2008 or stand on the brink of fiscal disaster.
The county — home to Alabama’s largest city, Birmingham — is in talks with its creditors to defuse a $3.14 billion bond debt crisis and avoid what would be the largest municipal bankruptcy in U.S. history.
Jefferson County ran into debt trouble in the mid-2000s when it refinanced an upgrade in its sewer system with auction rate bonds and bond swaps. Interest on the deals spiraled in 2008 when bond insurers downgraded the county’s debt.
Pennsylvania’s state capital, a city of 50,000 about 100 miles west of Philadelphia, has been flirting with bankruptcy as it struggles to pay off $300 million in debt incurred through a financing scheme used to fund a revamp of its trash-burning plant.
In July, the city council rejected a rescue plan put forward by a state-appointed advisor that called on the city to sell the incinerator, renegotiate labor deals, cut jobs, and sell or lease its parking garage.
The former navy town, near San Francisco, filed for bankruptcy on May 23, 2008, after failing to address steep city personnel costs and sliding revenues from a housing slump.
This July, the city won court approval for its financial plan to exit bankruptcy protection.
The smallest city in the smallest U.S. state filed for bankruptcy on August 1, 2011 after failing to win concessions from public-sector retirees and others to address an $80 million unfunded pension and retiree health benefit liability that is nearly quadruple its annual budget of $17 million.
Reporting by Edith Honan in New York; Matthew Bigg in Atlanta and Jim Christie in San Francisco; Editing by Kenneth Barry