With $40M in Cash Reserves, the City of San Bernardino Exits Bankruptcy

By: Sharjeel Sohaib

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Sep 26, 2022

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the City of San Bernardino Exits Bankruptcy

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The City of San Bernardino was declared bankrupt in 2012. After a decade-long struggle, on Thursday, September 8, 2022, U.S. Bankruptcy Judge Scott C. Clarkson issued an order dismissing the City of San Bernardino’s bankruptcy case

Key Takeaway:

  • The City of San Bernardino is beginning to get back on its feet after exiting a decade-long bankruptcy. Mayor John Valdivia hopes this $2.5 Million surplus is the beginning. Over the next few years, much more will come for the city.

We Covered this in our Weekly Wire Roundup

2012: The Year of Difficulties for the City of San Bernardino

On August 1, 2012, San Bernardino filed for Chapter 9 bankruptcy protection due to a problematic liquidity situation, the lack of cash in its general fund (the unconstrained operating fund), other reserves, and the inability to access short-term credit markets. 

San Bernardino had a cash shortfall of $18.2 million and a budget shortfall of $45.8 million when the city declared bankruptcy in 2012. It was the third-largest municipal bankruptcy in American history at the time.

The Bankruptcy Court accepted the city’s plan of change in February 2017. The plan outlined a strategy for making payments or settlements with creditors, enabling San Bernardino to resume regular operations.

After the officials authorized the city’s plan, over a thousand claims and over 200 lawsuits were filed against the city. San Bernardino had to settle the claims and litigation through the claims procedure, contested matters, adversary processes, and mediations in the bankruptcy case to close it.

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Post-bankruptcy Update: New Improvements in the San Bernardino City

San Bernardino emerges from bankruptcy with solid financial standing. The city has a budget surplus of $2.5 million this fiscal year and more than $40 million in cash reserves. 

“What exciting news and a moment for San Bernardino residents collectively to celebrate,” said Mayor John Valdivia. “The closure of this chapter in our city’s history β€” the grueling and deep cuts we all experienced are in the rearview mirror of San Bernardino’s history. I wish to express my gratitude to our community and the businesses that have stood fast with our city.”

The cash reserves account for 25% of the general fund budget, a level that denotes a local government’s financial resilience. 

The city has been devoting funds recently to resurface roadways, trim trees, rehabilitate parks, and improve senior facilities. Along with a 27-block section of Sierra Way, improvements to 53 different city roadways are being made this year. 

Improvements along a two-mile stretch of Pepper Avenue and the long-awaited expansion of State Street will soon be the subject of new building projects.

Creating Forces to Help the Needy Residents.

Additionally, San Bernardino has hired the necessary personnel, such as police officers and code enforcement officials. The city has recently created a housing and homelessness team and a grants team to address concerns about the city’s unhoused population.

Highest Number of Building Permits Recorded.

Startempire wire also reported the significant growth seen last month in San Bernardino County building permits. The County is developing more buildings to give the residents a better life and work experience. 

Read Here: Booming Commercial Real Estate in San Bernardino Results in 736 Building Permits

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Wrap Up!

On August 1, 2012, the City of San Bernardino declared bankruptcy. At the time, it was the third-biggest municipal bankruptcy in American history. Now that the city has recovered from bankruptcy, much is being done for further enhancement. After exiting this bankruptcy in September 2022, the city anticipates a budget surplus of $2.5 million this fiscal year and more than $40 million in cash reserves. 

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