The City of San Bernardino moved one step closer toward ending the painful process of bankruptcy Tuesday, with a federal judge saying she would approve the city’s strategy for exit. The plan, which includes various agreements with employees, retirees, and bondholders, will become official within 30 days.
As part of the deal, employees will have to contribute more to their pensions and benefits with modifications for new hires. Some bondholders and unsecured creditors will also take a hit. The majority of the city’s creditors reluctantly agreed to the deal.
“We want our residents to know, and we want people who would invest in the city ... to know we’ve cleared this burden and we’re ready to do business,” City Manager Mark Scott said. U.S. Bankruptcy Judge Meredith Jury called it “a very important day for the city.”
San Bernardino declared bankruptcy in 2012. Years of fiscal hardship have resulted in massive cuts to city services, soaring crime rates, and general malaise. With the era of insolvency coming to a close, city leaders are hopeful they can finally turn that around.