By Tricia Kang |Staff Writer|
The San Bernardino City Council filed an emergency petition for Chapter 9 Bankruptcy in the court proceedings.
Chapter 9 is to provide a financially-distressed municipality protection from its creditors while it develops and negotiates a plan for adjusting its debts according to the United States Courts website.
Officials realized that they needed to address the management in order to give the city a chance after it went into bankruptcy in 2012, for $45 million.
City council members expect San Bernardino to emerge from Chapter 9 protection within Spring of 2018, as a debt free city.
A hearing confirmed of the City’s Plan of Adjustment of Debts is set forth on Dec.14.
San Bernardino’s City Council voted to adopt an emergency fiscal plan that would suspend debt payments, freeze vacant jobs, and quit paying into a retiree health fund while city staff produce a more detailed bankruptcy plan.
“The bankruptcy filing was just to get the protection in place, to kick the process off,” said a city spokesperson.
The city has been hit particularly hard by the foreclosure crisis which left numerous abandoned buildings and businesses.
The Carousel Mall which has around 20 business’ still operating, will most likely be demolished for new development.
“The once called Central City Mall now Carousel Mall… I feel bad because it’s like the end of an era of my life that’s going away, as my father has had a business for over 38 years where would the rest of these business owners work,” said a city spokesperson.
The City Council authorized to turn the area into a mixture of retail outlets, restaurants, and offices.
Details on development in the city included the bankruptcy Plan of Adjustment, which calls for financial recovery calls for huge cuts for retiree health benefits and emergency earthquake deserters.
In order to contract services to save money the city needs to undertake initiatives designed to reduce and generate revenues.
Over the years the council committee has been developing a new proposal based on the charters of similarly fixed California cities.
The counties to work through revenue enhancement plans of long term debt and adjustments to delivery of services within the city.
“The Recovery Plan’s terms make it clear that the city needs to streamline governance and operations and move into the mainstream of modern organization and service delivery for a city of its size,” stated Henry Nickel the Fifth Warden.
“The City needs to undertake dozens of initiatives designed to reduce expenditures and generate revenues … Other cities have saved money, while still delivering strong service levels, by adopting alternative service delivery approaches,” added Nickel.
City officials acknowledged that, even with savings, unsecured creditors, such as the pension bond holders, will give little in return.
The plan may set off a new round of challenges from the bondholders and other creditors.
The Recovery Plan’s terms make it clear that among all stakeholders, employees, retirees, citizens and capital market creditors.