Minutes from April 30, 2013-San Bernardino bankruptcy

Tuesday, April 30, 2013 

Open Board of Directors Meeting  

San Bernardino Community College District

114 S. Del Rosa Drive

San Bernardino, CA 92408


Present:  Dimitrios Alexiou, Don Averill, Deborah Barmack, Carole Beswick, Tom Brickley, Ann Bryan, Rachelle Bussell, Dan Carlone, Ken Coate, Bill Easley, Carrie Gilbreth, Ray Gonzalez, Richard Hart, Scott Hofferber, Fran Inman, Mark Kaenel, Ed Kilgore, Ed Lasak, Bill Lemann, Temetry Lindsey, John Mirau, Tomas Morales, Steve PonTell, John Prentice, Susan Rice, Frank Schnetz, Larry Sharp, Paul Shimoff and Phil Waller.

Guests: Numerous guests were in attendance.

Announcements: 1) The reservation form for the trip to Sacramento was circulated for those not yet registered to attend.   The trip to Sacramento will be on Tuesday, May 21, 2013, with the option of arriving on Monday, May 20th for some possible afternoon meetings and a group dinner.  Reservation forms should be submitted no later than today.  2) Committee chairs and co-chairs should plan to review State issues and active bills in preparation for the trip. 3) An “Exporter Forum” will be held at the Norton Event Center on May 2, 2013.  For more information go to http://www.exim.gov.gasb  4) Steve PonTell represented Inland Action at the Inland Empire Regional Economic Forum held on Friday, April 26.  The findings from these regional meetings will be brought to the state level later this year.  5) The League of California Cities, Inland Empire Division will hold a dinner meeting on Thursday, May 16 at the San Bernardino Hilton.  For more information call the City of Highland (909) 864-6861.   6) The topic for the next Randall Lewis Seminar is RTP/SCS What’s Next for the Inland Region.  The seminar will be held on April 30 beginning at 5:30p.m. at the UCR CE-CERT Building in Riverside.  Register at http://or.ucr.edu/Event/index.aspx 

M/S/P: Minutes from April 23, 2013

Bill Lemann introduced John Husing and Larry Sharp. 

John Husing began by discussing the historic decline of San Bernardino, which began in 1980 when the I-15 opened.  The highway moved and changed the thriving retail market out of San Bernardino, west to Ontario and Rancho Cucamonga.  The area then lost many high paying jobs with Kaiser Steel closure in 1983 (loss of almost 9,000 jobs), Santa Fe closure in 1986 (loss of 4,500 jobs) and the closure of Norton AFB in 1989 (12,000 jobs).  Homes and properties were depreciated and sold to landlords who then populated them with low-income renters.  The economy of the area changed as people retired, lost their jobs, sold homes and relocated.  What remains is an almost unsustainable city with a disproportionate amount of people on public assistance, a majority of low-income residents and a high percentage of renters vs home owners. 

The San Bernardino City government has the following dynamics that block progress and sets them up for a stalemate:

  •        Mayor runs the staff, but has no Council vote
  •        Council split into 7 small pieces
  •        City Attorney independent & contending for power
  •        Mayor + 3 votes & a veto vs. City Attorney + 4 Votes
  •        Police & Fire Overwhelm Voting System
  •       3rd Ward:  Donated $100,000 To Winner

 Mr. Husing’s suggestions included:

  •       Let unions & Penman allies dominate next election
  •        Spend time rebuilding a Hispanic electorate and leadership
  •        Raise political action funds and create database, E-mail, Facebook & other campaign systems
  •        In 2 years run an election to switch the City to General Law-City Manager form/All incumbents gone/No elected Mayor, City Attorney or City Clerk/No automatic pay raises


Larry Sharp reviewed the causes of the financial collapse, which include union control of the city council, collective bargaining, San Bernardino City charter section 186 and voter apathy.  The council is intimidated by the very real threat of “vote our way or we will put someone in who will” giving the unions the ability to buy elections.  Additionally the City Attorney is a strong supporter of the unions.  

  • City was spending more on personnel and pension costs than it collected in revenues.
  • City personnel costs totaled 103% of its General Fund Revenues.
  • In the 2012-2013 budget Personnel costs are projected to be $109.6 million while general fund revenues are $114.4 million (most cities spend 44% – 55% of total spending on personnel). 

Chapter 9 exists in the U.S. Bankruptcy Code solely to provide a pathway to recovery for struggling cities and counties.  Under Chapter 9, the City can reject collective bargaining agreements to reduce out of control labor costs.   Chapter 9 will allow San Bernardino to finance its debts over time so it can pay its bills without dissolving.  The City has not, however, met their stated goals in either the court required Pre-Pendency or Pendency Plans submitted to the bankruptcy judge. They also must submit a Plan of Adjustment, a budget and plan that returns the city to long-term financial health.  There are real and justified concerns that the bankruptcy judge may throw out San Bernardino’s case if the city shows they are not serious and committed to complying with the plans they submitted.

The city council must stay focused on taking the actions needed to complete the Plan of Adjustment.  This includes budget cuts, increasing revenues, fiscal discipline, and modeling of cash.  The city’s residents and homeowners need to understand that they will pay the price for the city’s mismanagement- not the city council and not the unions.  It is apparent that this council and charter have failed to provide good government. 

Mr. Sharp’s solution to return “Good Government” to San Bernardino focuses on recall, reform, rebuild in the following ways:

  • ·         Launch a recall of all of the cities elected officials
  • }  Amend the City’s charter or become a “General Law City”
  • }  Develop a long-term plan and vision for economic development, financial and political stability in the city.  

Both agreed that comprehensive information is critical so the people of San Bernardino can be better informed of the bankruptcy situation and the options available.   Additionally, more definitive information is needed from County and/or State Counsel for the legal options and ramifications of the potential dissolution of the city.   Further discuss and information will be sought regarding legislative initiatives that might deal with the potential inability of the City of San Bernardino to develop an acceptable plan of adjustment.

A Q & A period followed.
The meeting adjourned at 9:00 a.m.