Alabama’s legislature will go into special session in November to enact laws for Jefferson County – its largest and home of Birmingham – to refinance $3.14 billion in sewer debt that threatened the nation’s largest municipal bankruptcy.

The Jefferson County Commission voted Sept. 16 to approve a conceptual settlement that will allow it to refinance $2.05 billion, charge single-digit rate hikes for users, mandate sewer hookups for new construction and create a governmental utility service corporation (GUSC) to manage and finance the system until the debt is repaid.

GUSC members would be credentialed professionals, the majority appointed by Gov. Robert Bentley (R) based on county recommendations and other members by the county. It would be prohibited from selling, transferring or otherwise divesting assets without prior county approval.

“It’s time for resolution of this lingering debacle,” Commissioner Joe Knight said before the vote. “There is enough blame to go around but now we’re going to take a step forward.”

Most commission members had indicated before the meeting that they would approve the settlement.

The refinancing would close by June 30, 2012.

Commission President David Carrington and Commissioner Jimmie Stephens, its finance chairman, began meeting with creditors in August after members rejected an earlier settlement proposal and delayed filing Chapter 9 bankruptcy.

At issue were the size of rate hikes, a GUSC that could sell system assets and mandatory sewer hookups for both new construction and for any failed septic tank in a county where April tornadoes destroyed 5,000 homes.

The new plan calls for 8.2% rate hikes in each of the first three years, starting this year, and up to 3.25% each year for the remaining 37 years. Commissioner George Bowman, the sole dissenter, opposed any rate hikes.

The initial increase would add $3.10 to the $37.74 median monthly residential bill, Carrington said. The deal also calls for establishment of a low-income assistance program.