XPost: ba.politics, dc.media, soc.penpals   
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   From: crooks@democrats.com   
      
   SACRAMENTO, Calif. (AP) — A judge on Thursday approved a plan by   
   Stockton, California, one of the largest U.S. cities to declare   
   bankruptcy, allowing it to eliminate more than $2 billion in   
   long-term debt payments without touching its massive pension   
   obligations.   
      
   Marking a critical development in the city's financial recovery,   
   U.S. Bankruptcy Judge Christopher Klein said Stockton can use   
   the plan to exit the court's Chapter 9 protection, which it   
   sought in 2012. Klein's ruling can be appealed.   
      
   "This plan, I'm persuaded, is the best that can be done in terms   
   of restructuring an adjustment of the debts of the city of   
   Stockton," he said.   
      
   The city negotiated deals with all major creditors except   
   Franklin Templeton Investments, which argued it was being   
   treated unfairly. The investment firm said the city isn't   
   touching employee pensions but is asking the company to walk   
   away from collecting nearly $32.5 million still owed.   
      
   "Obviously we are disappointed," Franklin Templeton's attorney,   
   James Johnston, told the judge. "We will evaluate our next   
   steps."   
      
   Klein ruled earlier this month that bankruptcy law allows the   
   city to treat pension obligations like any other debt, meaning   
   the city could choose to trim benefits. Since filing bankruptcy,   
   city officials said the already reduced employee pay and   
   benefits. Cutting pensions would cause an exodus of workers,   
   they said.   
      
   Johnston was not available after the hearing for comment, and   
   the firm's spokeswoman Stacey Coleman declined to elaborate in   
   an email.   
      
   An inland port city 80 miles east of San Francisco, Stockton   
   filed for Chapter 9 protection in 2012, making it the nation's   
   largest bankrupt city before Detroit filed for bankruptcy last   
   year.   
      
   Elsewhere in California, Vallejo went through bankruptcy before   
   Stockton. San Bernardino filed shortly after Stockton and has   
   yet to present an exit plan.   
      
   Stockton City Manager Kurt Wilson said the lesson for other   
   cities is to watch for the early signs of deep financial   
   troubles and head them off before it's too late. He said the   
   city can now focus on providing services to residents, rather   
   than waging the bankruptcy fight.   
      
   "This has been a very draining and ugly process," Wilson said,   
   adding that the city has restructured its debts to bond market   
   investors through the year 2054.   
      
   The bankruptcy cost Stockton more than $13 million for attorneys   
   and consultants.   
      
   Stockton's leaders say the city was victimized by an unforgiving   
   boom-and-bust economic cycle.   
      
   Before the recession, leaders spent millions of dollars   
   revitalizing the downtown area with a new City Hall and building   
   a marina, sports arena and ballpark. The city issued about 3,000   
   permits annually to build new homes, and it paid police premium   
   wages and health benefits.   
      
   With the recession, building dried up, and Stockton became   
   ground zero for home foreclosures. Like many residents, City   
   Hall couldn't pay its bills. The city slashed millions of   
   dollars from its budget and laid off 25 percent of its police   
   officers. Crime soared.   
      
   Franklin Templeton argued that Stockton agreed to better terms   
   with its other creditors, and that the city's economic   
   projections showed it could afford to eventually pay back most   
   or all that it owed Franklin Templeton.   
      
   Stockton Mayor Anthony Silva said he was pleased with the ruling   
   but it was not an occasion for city officials to pat themselves   
   on the back. The bankruptcy came at a great cost to retired city   
   employees, who lost their health care benefits, current city   
   workers and residents who had to live with a low level of   
   services, the mayor said.   
      
   "I advise other cities to keep a close eye on your finances,"   
   Silva said. "I wouldn't wish bankruptcy on anybody else."   
      
   http://www.seattlepi.com/news/crime/article/Stockton-seeks-to-   
   exit-from-bankruptcy-5857383.php   
      
        
      
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