Looking to get out from under one of the primary factors for financial distress - pension obligations - city leaders across the United States are viewing bankruptcy as "a valuable tool in a city’s financial toolbox," reports Liz Farmer.
According to Farmer, "A handful of California cities are now using bankruptcy to take on that state’s goliath pension system; the outcomes of those cases could spread far beyond California, changing the way other municipalities view bankruptcy. Filing for Chapter 9 will almost certainly remain a decision of last resort, but the stigma may not be what it once was. There’s a growing sense among some leaders that municipal bankruptcy -- unthinkable just a few years ago -- may be a valuable tool in a city’s financial toolbox."
The bankruptcy of Central Falls, R.I., which allowed the town of 20,000 people to make cuts to its labor and retiree agreements it had long fought for, is seen as an important precedent for cities pushing for pension reform.
“Up until Central Falls, there was never what we call an ‘or else,’” says Ted Orson, the attorney for the city’s receiver. “There wasn’t any leverage to make concessions. However, after Central Falls, when [the labor unions] saw what happened, they understood it’s better to negotiate a better agreement than to be in a position where something can be forced on you and you might not like what it is.”
"Central Falls showed cities that pensions were touchable," says Farmer. "Now, two cases in California could cement that idea into law."
"If a judge rules that pension systems can indeed be treated like other creditors -- many expect the case to make its way to the U.S. Supreme Court -- it could forever change the notion of municipal bankruptcy and fiscal restructuring."
FULL STORY: The 'B' Word: Is Municipal Bankruptcy's Stigma Fading?

Planetizen Federal Action Tracker
A weekly monitor of how Trump’s orders and actions are impacting planners and planning in America.

Chicago’s Ghost Rails
Just beneath the surface of the modern city lie the remnants of its expansive early 20th-century streetcar system.

San Antonio and Austin are Fusing Into one Massive Megaregion
The region spanning the two central Texas cities is growing fast, posing challenges for local infrastructure and water supplies.

Since Zion's Shuttles Went Electric “The Smog is Gone”
Visitors to Zion National Park can enjoy the canyon via the nation’s first fully electric park shuttle system.

Trump Distributing DOT Safety Funds at 1/10 Rate of Biden
Funds for Safe Streets and other transportation safety and equity programs are being held up by administrative reviews and conflicts with the Trump administration’s priorities.

German Cities Subsidize Taxis for Women Amid Wave of Violence
Free or low-cost taxi rides can help women navigate cities more safely, but critics say the programs don't address the root causes of violence against women.
Urban Design for Planners 1: Software Tools
This six-course series explores essential urban design concepts using open source software and equips planners with the tools they need to participate fully in the urban design process.
Planning for Universal Design
Learn the tools for implementing Universal Design in planning regulations.
planning NEXT
Appalachian Highlands Housing Partners
Mpact (founded as Rail~Volution)
City of Camden Redevelopment Agency
City of Astoria
City of Portland
City of Laramie