Bankrupt Calif. Town Hires Twice-Bankrupt Manager

Allen J Parker San BernardinoBy Alan Farnham

On the theory, perhaps, that it takes one to run one, the bankrupt city of San Bernardino, Calif., has hired as its new manager a man who twice has declared personal bankruptcy. Allen J. Parker, 71, hired last week for the $221,000 post, first filed for bankruptcy in 1991, then filed again in 2011, Reuters reports, citing court documents. Court records also show that Parker and his wife, as a condition of discharging their debts, were required to take a course in personal financial management.

Parker declined to talk to ABC News but in an interview with the Press-Enterprise newspaper, says he made no secret of these facts and disclosed them at the time he was being interviewed for the city manager's job. The mayor's office confirms that. The mayor's chief of staff says neither the mayor nor the city council saw Parker's bankruptcies as any reason not to hire him to run the financially-troubled city.

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San Bernardino filed for Chapter 9 bankruptcy last August. Unlike other California cities that have gone bust, including Stockton, it has stopped making payments on its pension fund obligations, which amount to $1.7 million a month, according to the Los Angeles Times. The California Public Employees' Retirement System, or CalPERS, sued to try to force San Bernardino to keep making payments, arguing that to let the city off the hook would set a precedent that could encourage other bankrupt cities to do likewise, endangering its solvency. The Times reported that a federal bankruptcy judge in December rebuffed the efforts of CalPERS, which is the largest pension fund in the nation, and has 1.65 million members and $148.5 billion in investments.

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San Bernardino's pension obligations, combined with high unemployment, a high foreclosure rate and a collapsing tax base, helped push the city into bankruptcy. It has cut municipal services drastically. Reductions in the police force have brought a spike in violent crime.

City representatives say Parker was hired for his success at turning around other troubled cities. Reuters quotes Jim Morris, son of and chief of staff to Mayor Pat Morris, as saying the city looked carefully into what Parker had accomplished at other California cities that he helped manage, including East Palo Alto, Half Moon Bay, Seal Beach and Compton. That record, Mayor Morris told the Press-Enterprise, showed Parker to be a man who had repeatedly proved himself.

Mayor Morris, Parker and the city council declined a request by ABC News for further comment. The mayor previously had told Reuters he had "great confidence" in Parker's ability and praised the manager's "wealth of city management experience." Parker, interviewed last week by the Press-Enterprise, said that he considered the issue of his own bankruptcies and the city's to be "apples and oranges."

City attorney Jim Penman told the Press-Enterprise that his office had done a thorough background check on Parker, including interviewing some of Parker's creditors. "Bankruptcy is something we don't take lightly," Penmen told the paper, "because we're in it."

Opinion: What to Expect After San Bernardino's Bankruptcy

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