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Chapter 9 Bankruptcy Imminent as San Bernardino Declares Fiscal Emergency

SAN BERNARDINO, Calif. - (Mealey's) The San Bernardino City Council on July 18 voted 5-2 to declare a fiscal emergency, which allows it to file Chapter 9 bankruptcy without first negotiating with its creditors.  City officials said they expect to file a petition in the next 30 days.

Bankruptcy Looms

The two councilmen who opposed the motion to declare a fiscal emergency are John Valdivia, representative for the city's Third Ward, and Chas A. Kelley, who represents the Fifth Ward.

The city has a population of 211,000.

On July 10, the City Council took a preliminary vote to move toward Chapter 9 bankruptcy.

Fiscal Emergency

The vote taken last night comes after city officials, including the finance director, issued a report indicating that the city was facing insolvency and that its expenditures were projected to exceed revenues by $45 million.

Moreover, the report said that between $10 million and $16 million in annual revenue had stopped in recent years as property values plummeted.

Despite a 20 percent reduction in the city's workforce over the last four years, San Bernardino did not have enough money on hand to meet its obligations, according to the report.

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