City officials announced Tuesday they would be filing for Chapter 9 bankruptcy protection after they were presented with a dismal financial report.
It didn't come as a surprise to Cliff Cummings, owner of Toyota of San Bernardino, one of the city's biggest tax-revenue generators.
"I thought it was inevitable, and I think it's probably the appropriate step right now," Cummings said. "I think what we do now is look forward. I think it's absolutely necessary to reassess the structure of city finances and even city government because the public can't be thrilled with city management."
Cummings, who owns three auto dealerships in the city, is in both a unique and advantageous situation under the circumstances: Business is booming, and he's in a position where he feels he could provide valuable input to help the city recover.
"What I'd like to be able to do now is to be able to help with a solution," he said. "We have to have a list of what can be done, and that has not been presented yet."
Some ideas that immediately come to mind, Cummings said, is doing away with the city's charter and become a general law city.
That change would likely be a big help in allowing the city to get past the political infighting that has thwarted its progress for decades, Cummings said.
"A city charter doesn't have general law provisions that most cities operate under. We have a ward system," Cummings said. "Maybe you have to do away with it (the charter) and go with general law like every other city in the state."
He has no plans to relocate his businesses. On the contrary, he is preparing to expand his Toyota dealership and said he will continue courting other businesses to set up shop in San Bernardino.
"I will continue to actively search for automobile franchises to come into this city. It will not change my mind one iota," Cummings said. "But it's paramount we fix the systemic problems that led to this and get that clean slate so we can move forward."
Inland Empire economist John Husing said San Bernardino's ability to attract new businesses depends on the sector it is trying to lure.
"If you're talking retail operations, there's no question the condition of the city, which was already bad, looks worse," Husing said.
He said the city was already facing a 30percent decline in retail sales-tax revenue before it announced bankruptcy was imminent.
"All that adds up to, 'Do I really want to take my retail operation into that city?' It really compounds an already existing problem," Husing said.
The impact the city's bankruptcy will have on the manufacturing, logistics, health care and industrial sectors, however, will be minimal, Husing said.
"Those facilities are going to come anyway. They need large plots of land, and the city is one of the few places where land is available," Husing said.
Amazon is building a 950,000-square- foot warehouse at the Alliance California complex near San Bernardino International Airport and plans to hire more than 1,000 people.
The city is trying to negotiate a deal with the Internet retailer in which the city would receive tax revenues worth 1percent of sales processed at the warehouse.
The status of those negotiations was unclear Friday. Company spokesman Ty Rogers couldn't be reached for comment.
In order for San Bernardino to achieve a thriving and robust business climate, experts say, it must first conquer its poverty and housing problem.
Eighty percent of the city's taxable parcels are residential, and as of April, the city's unemployment rate was a staggering 15.7 percent, according to a financial report submitted to the City Council on Tuesday.
Of the 59,604 occupied housing units in the city in 2010, 29,227 -- nearly 50 percent -- were rentals, Husing said.
"There is no other community in the region with numbers like that," said Husing. "It's one of the highest in Southern California."
The high cluster of rental property resulted from an exodus of steel, defense and railroad workers and their families in the 1980s and early 1990s, Husing said.
Norton Air Force Base and Fontana's Kaiser Steel plant closed. The Santa Fe Railway transferred most of its San Bernardino workers to Topeka, Kan., and moved many switching operations to Barstow.
Real estate agents and landlords began snatching up the newly available properties at bargain basement prices and began renting them out to low-income families flocking to the city in search of affordable housing.
It is impossible for the city to thrive economically under such conditions, and it tends to create even bigger problems, mainly crime and blight, Husing said.
"You're sitting there with a population that doesn't spend a lot of money and are living on public assistance, and you have all the difficulties that that implies," Husing said.
Sharon Gaitan Blechinger, manager of The Mexico Cafe on Highland Avenue, has been weathering the economic storm.
News of the planned bankruptcy filing made her worry about how it would affect her family-owned restaurant.
"I'm afraid we'll be losing a lot of city employees -- they comprise a lot of our customers," Blechinger said.
Blechinger's family opened The Mexico Cafe in 1951 and bore witness to the drastic changes and challenges the city faced in the six decades that followed.
"All the things we older businesses have been through have been challenging -- the closing of Norton, Kaiser, the Santa Fe railroad," said Blechinger. "We've been doing OK, but it has slowed down since 2007. Now, after the bankruptcy filing, time will tell."
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