Saturday, December 31, 2016

San Bernardino Faces Its Post-Bankruptcy Future

The Bond Buyer reports:
With San Bernardino poised to exit bankruptcy in January after a grueling 54-month process, leaders of the Southern California city will shift from cost-cutting to achieve solvency toward growing the city's economy.

City Manager Mark Scott said he, Mayor Carey Davis, and the City Council are scheduling a meeting in early January to sit down with Scott's key managers and develop an action-focused work plan.

U.S. Bankruptcy Judge Meredith Jury issued a tentative oral ruling Dec. 7 confirming the city's exit plan.

"The judge puts out the written ruling on January 27 and then there will be several months of paperwork before we officially exit bankruptcy," Scott said. "From my standpoint, after January 27th, we will be in good shape."

The city of 216,000 was able to shed $350 million in one-time and ongoing expenditures through the bankruptcy, at the cost of about $25 million in legal expenses and enormous amounts of time spent by city employees, according to the city's Dec. 7 bankruptcy update.

The holders of $50 million in outstanding pension obligation bonds were among those who received a severe haircut, getting a 40% recovery.

San Bernardino has been brought into the mainstream with other California cities in its governance practices through the approval by voters on Nov. 8 of a new city charter, Scott said.

The charter, which still needs to be approved by California Secretary of State Alex Padilla, moves the city from a "strong mayor" system of governance to "council-manager." The mayor will remain a full-time position, but will work with the council as a single governing body. City attorney is no longer an elected position.

"The trouble with an elected city attorney and [similar city positions being elected] is that everyone could have their own agendas, and they did," Scott said. "There were warring factions; and the decisions that got made pushed the city into bankruptcy. No one was working together."
How many more American cities will face this?