STOCKTON, CA - The Stockton City Council announced Wednesday that they will look at bankruptcy contingency plans after Wells Fargo seized the new city hall building.
The city paid $35 million to buy the 8-story building, but was not able to move in because of its money problems, and recently stopped making debt payments all together. This is the fourth building that was repossessed by Wells Fargo; the bank seized three city parking garages for the same reason.
At the June 5 Stockton City Council meeting, members will look at a contingency plan if mediation between the city and creditors failed, city spokesperson Connie Cochran said. For the past two months, the city, under AB 506, has been in a mediation process with creditors to come up with a payment plan in order to avoid bankruptcy.
Cochran said the contingency plan would allow the City of Stockton to operate if the city cannot balance its budget by June 30 and give City Manager Bob Deis the authority to file for Chapter 9 protection. The plan would allow Stockton to provide daily services until a long-term plan is reached.
"This City has been in business for over 160 years and we will continue to be in business," Mayor Ann Johnston said. "We will come through the AB 506 process or Chapter 9 with a financially sustainable future. Even though we have inherited this mess, we are committed to doing everything in our power to leave this City better, stronger and healthier."