Another City Sinks in California
July 13, 2012
According to Bank of America Merrill Lynch Munis & Derivative Data report by John Hallacy, San Bernardino, a city 65 miles east of Los Angeles with a population of over 200,000, became the third major city in California over a period of 5 years to commence the bankruptcy process.
“San Bernardino County’s population is estimated at 2.063mn. The county, which has grown at a slightly more rapid pace than the rest of the state over the past two years, is the largest county in geographic expanse in the continental United States.”
Despite its growth it has unable to tackle its fiscal and debt problems.
“The city has approximately $226.3mn “taxbacked” bonds and capital lease obligations outstanding, but $127.3mn of this amount is comprised of outstanding tax allocation bonds which would be payable from deposits by the San Bernardino County auditor/controller into the Redevelopment Property Tax Trust Fund set up for this purpose”
“In addition to the remaining $99.1mn tax-backed debt outstanding, the city had $14.7mn Certificates of Participation payable out of the discrete Sewer Fund managed by the Municipal Water Department, and notes payable from various enterprise funds to the California Infrastructure and Economic Development Bank; the California State Water Resources Board; and the San Bernardino Valley Municipal Water District. The city’s largest obligation consisted of its 2006 Taxable Pension Obligation Bonds, which we estimate to be outstanding in the amount of about $42.3mn.”
The above content is provided for educational and informational purposes only, does not constitute a recommendation to enter in any securities transactions or to engage in any of the investment strategies presented in such content, and does not represent the opinions of Bondsquawk or its employees.