Stockton, California Is About To Declare Bankruptcy

[FarCenter]

The city of Stockton, Calif., is poised to become the largest U.S. city to declare municipal bankruptcy, after a deadline to make a deal with creditors passed Monday night.

The city council is expected to announce tonight whether or not an agreement was reached.

Stockton Mayor Ann Johnston told Stockton's KCRA television station that a bankruptcy filing is "very likely."

The decision will be the culmination of years of growing budget deficits, as Stockton struggled with the collapse of the housing market. The problems were compounded by expensive city investments — including a promenade, a sports stadium, and a hotel — as well as the growing costs of the city's labor contracts and generous pension plans for retired city workers.

Over the past three years, the city has eliminated one-fourth of it's police force, one-third of the fire department, and 40% of the rest of the municipal workforce to close a 90% budget deficit, according to the Associated Press,


Read more: http://www.businessinsider.com/stockton-california-is-about-to-declare-bankruptcy-2012-6

[coalition_unwilling]

1. I'm kicking this, b/c I think it is a very important story, although I'm not

an expert in what a municipal bankruptcy entails.

Presumably, holders of Stockton debt must now accept less than face value on their muni bonds and the amount they will recceive will be adjudicated by a bankruptcy court.

But this is what that financial analyst Meredith Whitney warned was coming, more and bigger municipal bankruptcies, as the states' fiscal crises are pushed down onto cities and localities. Can't remember where I saw her prophecy about it -- think it was a couple years back.

[NYC_SKP]

2. Kick. Ann Johnson is a friend to our community and I think we will persevere.

And fuck you Forbes.

[HiPointDem]

9. are you in stockton?

[jannyk]

3. kick

[FarCenter]

4. Stockton official: Mediation with creditors fails

STOCKTON, Calif. — Officials in Stockton said Tuesday that mediation with creditors has failed, meaning the Central California city is set to become the largest American city ever to declare bankruptcy.

City Manager Bob Deis said officials were unable to reach a deal to restructure hundreds of millions of dollars of debt under a new state law designed to help municipalities avoid bankruptcy.

...

To plug next year's anticipated $26 million shortfall, the proposed budget would suspend payments for debts and legal claims, reduce payments for retiree medical benefits, further cut some pay and benefits, and increase revenue through code enforcement and parking citations.

The proposed budget includes no major service reductions, Deis said earlier.

"The whole purpose of filing Chapter 9 is to avoid an uncontrolled chaotic situation," he said. "Bankruptcy provides the equivalent of a pause button. It retains services and provides structure so you don't have a bunch of lawsuits."

http://www.huffingtonpost.com/huff-wires/20120626/us-stockton-bankruptcy/

[NYC_SKP]

5. DU meetup in Stocton? Anyone up for it?

I'm not far away and follow the politics.

Stockton is a target for scammers, but also a great place of opportunity as a transportation hub and with proximity to the silicon valley and other vital interests and points of interest, like Yosemite and Tahoe.

Any takers for a DU meetup? PM me....

[Starry Messenger]

6. I think they have the highest foreclosure rate in the country.

Sorry, second highest.

http://www.sfgate.com/news/article/Mayor-Stockton-appears-headed-for-bankruptcy-3658878.php



"FILE - In this Feb. 29, 2012 file photo, a Stockton city worker walks away from city hall in Stockton, Calif. Stockton, the California city with the second-highest foreclosure rate in the nation, is facing a moment of decision on whether to become the biggest American city to file for bankruptcy, as the deadline for talks between the city and its creditors approaches late Monday. Photo: Ben Margot / AP "

The river port city of 290,000 in Central California has seen its property taxes and other revenues decline, while expensive investments and generous retiree benefits drained city coffers.

In the past three years, officials in the city that was slammed by the collapse of the housing market dealt with $90 million in deficits through a series of drastic cuts.

They eliminated one-fourth of the city's police officers, one-third of the fire staff, and 40 percent of all other employees. They also cut wages and medical benefits.

Too bad Stockton isn't a bank. They'd be lavished with bailout money.

[NYC_SKP]

7. As goes Stockton, so goes America...

And, hopefully, for recoveries, look to Stockton for solutions.

[FarCenter]

8. Of the top ten employers in Stockton, only two are private, for-profit corporations

The rest are public or private, non-profit organizations.

O G Packing and Diamond Foods are the two, but Diamond Foods has been recently embroiled with the SEC over accounting irregularities.

[Fire Walk With Me]

10. The smash-and-grab continues. Disaster capitalism. Expect the installation of a dictator just as

they've done in two counties in Michigan.

[onethatcares]

11. who gets the sports stadium and just how

"generous" are the pension plans?

Here in sunny st pete floriduh, we're being given the carrot and stick pier renovation at $50 million, the opportunity to give more money to the tampa bay rays by way of a new stadium. In the past, we've purchased two mini malls
that were supposed to be profitable for the city(even gave up a sidewalk or two to prevent protesting) now in remake at a much lower cost to the buyer/developer of the land, a cruise ship that took forever to be built and shipped from Poland that made one trip up the bay only to run aground and then disappear into the black hole of city budgets.

I always get a bit antsy when the city is opening hotels (here the building department dropped 235K worth of impact fees by accident and no one knows who authorized the drop), building stadiums so they will come, and shopping areas for the rich and famous.

[HiPointDem]

12. One of the possible outcomes is that the city will be allowed to reduce or end pension contributions

[FarCenter]

13. The open question is whether Stockton has to make good on its obligations to CALPERS

If the court rules that Stockton does not have to make good on the $900 million it owes CALPERS, does that affect the pensions that the Stockton employees and pensioners will receive?

Or will it only affect the funding status of CALPERS, and CALPERS will pay out full benefits from contributions of other municipalities and governmental units in CALPERS and from investment income?