Business & Economy

San Bernardino reaches 'watershed' moment in bankruptcy. What's next? (FAQ)

Under the bankruptcy plan, many creditors will only be paid back about one cent for every dollar they are owed, saving taxpayers about $350 million.
Under the bankruptcy plan, many creditors will only be paid back about one cent for every dollar they are owed, saving taxpayers about $350 million.
Grant Hindsley/AP

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The city of San Bernardino reached another milestone on its way to recovery Wednesday when a federal judge said she would approve the city’s bankruptcy plan, which clears the way for the city to exit Chapter 9 protection in the next few months. Here are some questions and answers about the settlement and what happens next to the city of more than 200,000 people.

Q. What are the main parts of the plan that the judge approved?

Q. Will this all be enough to get San Bernardino back on its feet?

In a statement released Thursday, the city called this a 'watershed' moment, and says it is poised for a 'renaissance.' However, there is still a long road ahead. San Bernardino is one of the poorest communities in the state. The per capita income of city residents is less than $15,000 a year, about half the state average. The median housing price there is just about $152,000 compared to 366,000 for the state as a whole.

"Until the city can restore a decent level of municipal services to attract new residents, new population growth is expected to continue to be in the poorer population sectors of the City where the demand for city services is even greater," the city said in bankruptcy filings. 

"This is an important part of San Bernardino County, and the faster they get up and running the better," Thornberg said.

Q. What’s the biggest thing the city needs to do now?

Everyone agrees the answer is reducing crime. In bankruptcy filings, the city said cutting its crime rate and changing San Bernardino’s perception as a “dangerous” city are the most pressing issues; San Bernardino has more than double the violent crime rate as its neighbors. Of the 63 California cities with populations between 100,000 and 400,000, San Bernardino has the second worst crime rate (only Stockton ranks worse.)

The crime problem has been made much worse because of cuts to the police force; The number of sworn officers has been reduced by 30 percent since 2008. Under the bankruptcy plan, the city will be able to add officers, though the future number is still well below its 2008 peak.

Q. Has everyone agreed to the plan?

The city finally came to agreement with creditors and bondholders, which took a long time to do, evidenced by the fact that this all took four years – considerably longer than other municipal bankruptcies, like Detroit and Stockton.

One person who didn't approve of the agreement is Duane Folke, a lawyer representing Paul Triplett, who in 2006 received a $7.7 million judgement with the city in a police brutality case.

“It took 21 separate phone calls to get (the city’s bankruptcy attorney) Mr. Glassman on the phone, and then when I got him on the phone I got a penny on the dollar — a penny on the dollar for a man who’s going blind,” Folke told U.S. Bankruptcy Judge Meredith Jury, according to the San Bernardino Sun. 

However, Jury said since Triplett is a part of the group of unsecured creditors that agreed to the plan he is only entitled to $77,000.