San Bernardino declares fiscal emergency, will file bankruptcy

The San Bernardino City Council voted 5-2 to file for bankruptcy on Wednesday.
The San Bernardino City Council voted 5-2 to file for bankruptcy on Wednesday.
Frederic J. Brown/AFP/Getty Images

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The San Bernardino City Council declared Wednesday that it faced a fiscal emergency and voted 5-2 to file for bankruptcy within 30 days.

The move enables the city to gain the bankruptcy court's protection from creditors earlier than permitted under a state law which mandates the city spend 60 days mediating with employee unions and others with a claim on city funds.

James Penman, the city attorney who is often at odds with Mayor Patrick Morris, said the two of them had agreed that morning that a vote in favor of declaring the fiscal emergency was essential.

"We're going to have tough times for the next two to three years," Penman said, "We'll come out of this a stronger city."

The impact on city residents is not immediately clear, but city management described a series of potential cuts and moneyraising moves. Residents are likely to see a cascade of proposals to close city fire stations, get rid of police administrator jobs, privatize other services, sell city assets, make development deals involving city properties like the Carousel Mall and charge more for building fees and other services.

The council members appeared to struggle with the calls by supporters of public safety unions to avoid bankruptcy. City Council memmbers Chas Kelley and John Valdivia voted against filing for bankruptcy.

In the public comment period that preceeded the vote, land developers urged the council to approve the fiscal emergency and go bankrupt, even though it would make it more difficult for them to persuade companies to locate in a city whose municipal services might be greatly reduced to save money.

John Magness, director of Hillwood, a company that is developing land on the former Norton Air Force Base in San Bernardino, said "No responsible developer including Hillwood will risk its nationwide and worldwide relationships by getting its users to locate in a city with such dire financial challenges unless you take the next important step."

Tom Brickley, a San Bernardino native whose two companies employ 65 people said those who opposed bankruptcy meant only to preserve pay and benefits for the city's public safety unions.

For some city residents, nothing less than a complete overhaul of city government will do.

Jim Smith, a retired stockbroker and San Bernardino native said the city should abandon its governing city charter that gives city officials a wide range of powers and instead adopt the more restrictive general law form of government spelled out in California law.