The city of San Bernardino announced Monday that after four years, it has officially exited bankruptcy and will have to start paying its creditors, but the economically-troubled city is not out of the woods yet.
"I’m not optimistic for the city in terms of its demographic issues," says John Husing, Chief Economist at the Inland Empire Economic Partnership, who has watched what he calls the city’s "tragic" downfall from an all-American middle class suburb at the end of the 1970’s to bankruptcy in 2012.
The typical resident in the city of 215,000 only earns about $38,000 a year, and is more likely to be renting than owning a home. The home ownership rate is just 50.4%, which Husing says makes it hard for the city to grow its tax base and attract wealthier residents.
"Once the housing stock moves from owner-occupied to renter-occupied, reversing that is trench warfare," says Husing.
On the plus side, he says the city’s unemployment rate, currently at 5.7 versus 4.4 percent for all of San Bernardino County, has been improving as Amazon and other companies build more warehouses that handle goods coming in through local ports. However those positions don’t pay nearly as well as the thousands of union jobs at Kaiser Steel and the Santa Fe Railroad that left in the 1980s.
"The underlying economy of the city got destroyed over things which it had very little control," says Husing.
"The [court-approved] plan calls for San Bernardino to leave bankruptcy with increased revenues and an improved balance sheet, but the city will retain significant unfunded and rapidly rising pension obligations," the report warned.
The city dismissed the report as "old news." Husing says despite its problems, San Bernardino is unlikely to have to resort again to bankruptcy.
In a statement, the city said its finances are continuing to improve.
The end of bankruptcy has already led to a noticeable increase in parties interested in business and development investment in San Bernardino," the city said. "The City's management team is also taking advantage of the City's improved post-bankruptcy financial status to recruit highly qualified management staff to fill important vacancies in Public Works, Housing, and Economic Development."