Birmingham council approves water works buy for $1 as lawsuits mount for and against new law

The Birmingham City Council today unanimously approved an agreement to buy the assets of the Birmingham Water Works Board.

The move begins a process that could take months, including a legal fight that puts the city crossways with state lawmakers and suburban leaders.

The city faces significant legal and logistical hurdles before it can take over the state’s largest water utility.

Under the agreement, the city would buy the utility for $1 and assume its assets valued at more than $1.26 billion. The city would also assume the utility’s debt and bond repayment obligations.

Today’s special council meeting is an effort to short-circuit a new law that seizes power from the Birmingham Water Works Board to make the utility a regional authority and strip Birmingham of its dominance.

“We’re going to take every action possible to fight this takeover, the stealing of an asset from the citizens of Birmingham,” said Council President Darrell O’Quinn. “We’re going to do everything we can until every option is exhausted.”

The new law creates a seven-member board where Birmingham has just two seats with the rest reserved for members in Jefferson, Shelby and Blount Counties.

Also, Lt. Governor Will Ainsworth has appointed Bill Morris, the longtime general manager of the Leeds Water Works, to the new water board. Morris will represent St. Clair County, which is not mentioned in the new law but is allowed since the water works also services that area.

“It’s just an honor being appointed by the lieutenant governor,” Morris said Thursday.

O’Quinn said Mayor Randall Woodfin signed the sales agreement with the water works this morning and the council’s vote affirms the action.

Gov. Kay Ivey signed the law on Wednesday, but a defiant water works board met hours later where members voted to sell its assets to Birmingham for $1. The board’s actions are already being challenged, and dual lawsuits head to court.

“Our position with the lawsuit is that SB330 is unconstitutional, therefore we don’t believe it is in effect,” O’Quinn said.

Republican lawmakers have called changes to the board long overdue, saying customers throughout the five-county area served by the water works lack representation at the utility, face poor customer service and annual rate increases.

Selling the water works to the city is part of a two-front strategy to thwart the state legislation.

Woodfin and council members this week also announced a federal lawsuit to fight the bill, claiming that the legislation is motivated by racial discrimination.

Even with the flurry of recent actions to transfer assets to the city, the process remains slow compared to the quick action to dissolve and replace the current water works board.

O’Quinn said the agreement today calls for a 180-day due diligence period before the water works becomes part of the city.

“It’s an official statement that we’re involved in a transaction that’s being negotiated,” he explained.

The move could be moot since Ivey signed the new law Wednesday afternoon, with many interpreting that as immediately dissolving the current water works board.

Board members acted on the theory that the current board remains in place until their replacements are named.

Shortly after the governor signed the bill into law, Jefferson County Commission President Jimmie Stephens appointed Phillip R. Wiedmeyer to the board. Wiedmeyer is a resident of Vestavia Hills and is a retired engineer with Alabama Power.

Wiedmeyer then filed a federal lawsuit in response to the city’s lawsuit, asking the U.S. District Court to stop the former board from taking any action after Wednesday.

Chief U.S. District Judge Emily C. Marks had already set a hearing for May 15 on the city’s request for a temporary restraining order and preliminary injunction to block the law.