Feb 26, 2008 8:30 am US/Pacific
City Of Vallejo Moves Closer To Filing Bankruptcy
VALLEJO (BCN) ―
Officials were expected to meet Tuesday night to discuss Vallejo's financial crisis that has it edging closer to declaring bankruptcy.
Labor talks aimed at keeping Vallejo solvent broke down Monday, and top administrators recommended the City Council file for bankruptcy protection.
Vallejo, a former Navy town, faces a $6 million shortfall and officials say it will run out of money by the end of March. Chapter 9 bankruptcy would allow Vallejo temporary protection from creditors while a plan, subject to court approval, is devised to regain fiscal stability.
The city would join a small number of California municipalities to declare bankruptcy should officials decide it's their only option.
Orange County declared bankruptcy in the 1990s after then-Treasurer Robert L. Citron borrowed hundreds of millions of dollars while speculating in high-risk securities investments that depended on low interest rates.
The county lost $1.64 billion.
Desert Hot Springs also filed for bankruptcy in 2001.
Tuesday's gathering is another in a string of recent meetings aimed at finding a solution other than filing for bankruptcy. On Thursday, the council is expected to take a vote.
City Manager Joe Tanner recommends filing for bankruptcy protection, while Mayor Osby Davis said he remains optimistic the move can be avoided.
(© CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed. Bay City News contributed to this report.)
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