Vallejo's bankruptcy ends after 3 tough years
Carolyn Jones, Chronicle Staff Writer
San Francisco Chronicle November 1, 2011 05:02 PM
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Vallejo -- Vallejo is bankrupt no more.
A federal judge released the Solano County city from bankruptcy Tuesday, ending its dubious distinction of being one of the largest and first U.S. cities to go that route since the financial meltdown.
"I think we're all exhausted but exulted," said City Councilwoman Stephanie Gomes. "It's been a rough road."
Vallejo's City Council declared bankruptcy in May 2008, faced with large deficits, few reserves, costly police and fire contracts and plunging tax revenue. Declaring bankruptcy gave the city protection from creditors and allowed it to renegotiate its employee contracts.
Among other changes, city staffers now contribute more to their health insurance, new firefighters have lower pension plans, and the fire department no longer has minimum staffing requirements.
The city has also taken steps to find more revenue. It's created a one-stop permit center for developers and is asking for a 1-cent sales-tax increase and medical marijuana tax on the Nov. 8 ballot.
The moves have paid off. Toys R Us is opening a new store, and Blu Homes, a pre-fabricated home manufacturer, is opening a plant on Mare Island, according to Assistant City Manager Craig Whittom.
The fire and police unions unsuccessfully sued to stop the bankruptcy, saying the city had ample funds and was merely trying to dodge its contract obligations.
Fire union officials did not return phone calls Tuesday.
The bankruptcy proceedings cost Vallejo $8 million in legal fees and cast a stigma on the city of 117,000. Real estate agents were required to disclose the city's status to buyers, and national media pointed to Vallejo as a nightmare scenario for cash-strapped cities everywhere.
"I'd only advise cities to go this route if they have no other options," Whittom said. "The money spent on bankruptcy should be spent on providing services to residents."
A federal judge released the Solano County city from bankruptcy Tuesday, ending its dubious distinction of being one of the largest and first U.S. cities to go that route since the financial meltdown.
"I think we're all exhausted but exulted," said City Councilwoman Stephanie Gomes. "It's been a rough road."
Vallejo's City Council declared bankruptcy in May 2008, faced with large deficits, few reserves, costly police and fire contracts and plunging tax revenue. Declaring bankruptcy gave the city protection from creditors and allowed it to renegotiate its employee contracts.
Among other changes, city staffers now contribute more to their health insurance, new firefighters have lower pension plans, and the fire department no longer has minimum staffing requirements.
The city has also taken steps to find more revenue. It's created a one-stop permit center for developers and is asking for a 1-cent sales-tax increase and medical marijuana tax on the Nov. 8 ballot.
The moves have paid off. Toys R Us is opening a new store, and Blu Homes, a pre-fabricated home manufacturer, is opening a plant on Mare Island, according to Assistant City Manager Craig Whittom.
The fire and police unions unsuccessfully sued to stop the bankruptcy, saying the city had ample funds and was merely trying to dodge its contract obligations.
Fire union officials did not return phone calls Tuesday.
The bankruptcy proceedings cost Vallejo $8 million in legal fees and cast a stigma on the city of 117,000. Real estate agents were required to disclose the city's status to buyers, and national media pointed to Vallejo as a nightmare scenario for cash-strapped cities everywhere.
"I'd only advise cities to go this route if they have no other options," Whittom said. "The money spent on bankruptcy should be spent on providing services to residents."
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