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HomeMy WebLinkAbout2009/06/16 Additional Information R''<:,,\ \C Gi:>~,\-'-~~ 6-~~-o'1: ..{=k ~~O<S\~ CHULA VISTA CAN SOLVE ITS FINANCIAL CRISIS * Chula Vista's budget problem is caused by a structural imbalance - expenses cannot be supported by current revenues. . * The only way to attack the imbalance is to reduce expenses! * Declare bankruptcy now and renegotiate all city labor contracts and pension contributions. JudQe Rules Valleio Can Void Union Contracts In a ground breaking ruling as well as a rare victory for common sense and the overall good of taxpayers, Bankruptcy Judge Rules Calif. City Can Void Union Contracts. In the first ruling of its kind, a bankruptcy judge held the city of Vallejo; Calif. has the authority to void its existing union contracts in its effort to reorganize, holding public workers do not enjoy the same protections Congress gave union workers at private companies. Municipal bankruptcy is so rare that no judge had yet ruled on whether Congressional reforms in the 1990s that required companies to provide worker protections before attempting to dissolve union contracts also applied to public workers' union contracts. "This will have a huge effect nationwide if it is upheld," said Kelly Woodruff, of Farella, Braun & Martel in San Francisco, representing the firefighters and electrical workers unions. Woodruff said the unions would certainly appeal if the city ultimately voids the existing contracts with the two unions. "And I think we have a good chance of success," she said. "My understanding is that a lot of cities are watching this and particularly this motion," said Woodruff. "If the city of Vallejo succeeds in using bankruptcy to void union contracts I am sure others will follow," she said. Vallejo attorney Norman C. Hile of Orrick, Herrington & Sutcliffe's Sacramento, Calif. office said, "This is a decision that is somewhat groundbreaking." "There are a number of other cities and government entities watching it very closely," he said, but declined to speculate on whether others would take the Unions, local govemments split on bankruptcy bill By Loretta Kalb, SacramentoBee.com Published: Tuesday, Jun. 2, 2009 - 12:00 am I Page 1A What started as a municipal bankruptcy in the city of Vallejo has morphed into an all-out fight between California's local governments and unions over the sanctity of labor contracts vs. the autonomy of cities and counties. Next battle zone: the floor of the state Assembly, where legislation requiring local governments to get state approval to file for bankruptcy Protection is headed for a vote later this week. This won't be the last imbroglio spawned by the state's fiscal turmoil. But it is likely to be among the hottest. The bill by Assemblyman Tony Mendoza, D-Artesia, is sponsored by the California Professional Firefighters and supported by nearly three dozen labor organizations in the state and AARP _ groups worried about labor contracts or pensions potentially being affected by bankruptcy filings. The legislation, AB 155, would require local governments to get approval from the California Debt and Investment Advisory Commission before filing. If it passes in the Assembly, it goes to the Senate. The commission provides guidance on localities' debts and investments. The law is intended to help protect the state's credit rating on Wall Street, said Richard Garcia, Mendoza's spokesman. But Opponents say that the move is an attempt to thwart local governments, which may have to resort to seeking bankruptcy protection. They contend state oversight would inject state politics into what should be a local issue. "Every city is in trouble," said Marc A. levinson, the lead insolvency lawyer on the Orrick Herrington & Sutcliffe team handling Vallejo's bankruptcy filing. "Nobody wants to go through bankruptcy. I Counseled Vallejo to stay out of bankruptcy. Butif you can't pay your bills, what do you do?" Strongly opposing the bill are the league of California Cities and the California State Association of Counties. Cities and counties rarely enter into bankruptcy, they say. And with all the state's fiscal dissonance, the idea that the state should tell local governments when it's OK to file is absurd. ''This isn't an easy process. It's a rigorous examination of your financial conditions done by a competent bankruptcy judge who can make a determination as to whether you're solvent or insolvent," said Dwight Stenbakken, the League of California Cities' deputy executive director. "This isn't something that a city does on a whim." The legislation would not affect Vallejo's May 2008 filing. But since Vallejo went forward, the economy has worsened. And more cities and counties are flirting with financial insolvency. ThaI's just what worries the California Professional Firefighters. When Gov. Arnold SchwaJzenegger declared last month that the state planned to borrow $2 billion in property taxes from local jurisdictions, cities began declaring that were in a "state of fiscal crisis." It was a symbolic gesture aimed at discouraging the borrowing. '. Labor groups took it to heart. The fiscal crisis "raised alarm bells," said Carroll Wills, spokesman for the Califomia Professional Firefighters. "Municipalities up and down the state have either spoken publicly about bankruptcy or have contacted the bankruptcy attorney representative for Vallejo," Wills said. But the issue goes well beyond Vallejo, he said. ''There's a central issue of the sanctity of the negotiated (labor) contract at stake," he said. "Some of our local affiliates have been given this back-<:hannel nudge (from management): 'If you guys don't respond (and make contract concessions), we're going to pull a Vallejo,' "Wills said. Wills disputed the idea that the state shouldn't get involved in local filings or that it would inject intense state politics in the process. "Local politicians and bureaucrats have no special wisdom on fiscal matters," he said. "Irs disingenuous for anyone to suggest that the state process would be any more political than a local process," he said. "Look at Vallejo. It has been the hottest political issue imaginable in that jurisdiction." Califomia is one of a dozen states nationally that have no state constraints on federal bankruptcy filings. If the bill becomes law, California will join 16 other states that face some level of bankruptcy filing oversight. Another 22 states don't allow localities to file for bankruptcy protection, Wills said. Jean Hurst of the California State Association of Counties called AB 155 one of the "priority measures to defeat," particularly in light of the seriousness of the state's budget crisis. "When we look at this measure in the context of the fiscal environment, irs absolutely unworkable," she said. 'We don't agree that it's an appropriate limitation of local government's ability to manage its finances." -- -'- ,- - ,~~v 'i ~, FOR IMMEDIATE RELEASE - April 27, 2009 FOR MORE INFORMATION, CONTACT JOANN WEST, PUBLIC INFORMATION OFFICER (707) 651-7152" JUDGE ORDERS THE CITY OF VALLEJO AND THE UNlONS TO MEDIATION ON THE MOTION TO REJECT COLLECTIVE BARGAINlNG AGREEMENTS This afternoon, Judge Michael McManus issued a short order compelling the City of Vallejo, the International Association of Firefighters (lAFF) and the International Brotherhood of Electrical Workers (IBEW) to mediate their disputes over whether the collective bargaining agreements should be rejected, the damages that will flow from rejection and the terms of any new agreements in the event of rejection. The mediator will be Elizabeth L. Perris, a bankruptcy judge resident in Portland, Oregon. Judge Perris has been a bankruptcy judge for over 20 years, and has served two terms on the Bankruptcy Appellate Panel of the Ninth Circuit. The schedule for the mediation will be set by Judge Perris, in consultation with the unions and the City. The motion for approval of the rejection of the City's collective bargaining agreements was filed by the City in June, 2008 after the City filed its petition for relief under chapter 9 of the United States Bankruptcy Code. Approval of the motion would allow the City to move forward with the restructuring of its labor costs and developing a viable plan of adjustment. While the City has other debts it must adjust, the City cannot restore balance to the General Fund unless it restructures labor costs. A settlement through the mediation process also would perrnit the City to achieve its goals. [fthe mediation does not result in a settlement, Judge McManus will rule on the rejection motion. Despite extensive efforts prior to this ruling, the City, lAFF, and lBEW have been unable to agree on modifications that would lead to financial stability for the City. The City did reach agreements to modify the existing collective bargaining agreements in January 2009 with the Vallejo Police Officers' Association (VPOA) and the Confidential, Administrative, Managerial, and Professional Association of Vallejo (CAMP). While the City would have preferred a ruling on the merits, it is pleased that Judge McManus chose a bankruptcy judge to serve as the mediator, rather than a labor mediator, as suggested by the unions. The City is hopeful that the mediation will lead to an agreement. More information regarding the City of Vallejo bankruptcy case can be found on the city website at www.ci.valleio.ca.us OHS Wcst:260651290.! -,'- - - - - ~~-= ::::.1"."-.'_ : = ~",.,;."." E ~. FOR IMMEDlA TE RELEASE - March 13, 2009 FOR MORE INFORMATION, CONTACT JOANN WEST, PUBLIC INFORMATION OFFICER (707) 651-7152 JUDGE RULES THAT COLLECTIVE BARGAINING AGREEMENTS MAY BE REJECTED In a memorandum opinion filed this afternoon, United States Bankruptcy Judge Michael McManus ruled that the Bankruptcy Code and California law authorized the City to reject collective bargaining agreements. Judge McManus scheduled a status conference hearing for March 23rd, at which time the City, the International Association of Firefighters (IAFF) and the International Brotherhood of Electrical Workers (IBEW) will report on the status oflabor negotiations and will respond to questions raised by the Judge about the allocation oflabar costs among the various funds controlled by the City. At the hearing, the Judge likely will set a timetable for further hearings, if any. Jt is unknown when he will rule on whether the two agreements at issue should be rejected, but the City will press for an early decision. Today's ruling rejects the arguments by the unions that the bankruptcy court lacked the power to reject collective bargaining agreements and instead was compelled to defer to state law and state courts. In his ruling, Judge McManus opined that neither the California Supreme Court Sonoma County decision relied upon by the unions nor any state labor law, provides the applicable standard controlling the rejection of the City's collective bargaining agreements. Rather, the standard is the one enumerated by the United States Supreme Court in its Bildisco decision. The motion for approval of the rejection of the City's collective bargaining agreements was filed by the City in June 2008 after the City filed its petition for relief under chapter 9 of the United States Bankruptcy Code. Approval of the motion will allow the City to move forward with the restructuring of its labor agreements and developing a viable plan of adjustment. While the City has other debts it must adjust, the City cannot restore balance to the General Fund unless it restructures the labor agreements. The City did reach agreements in January 2009 to modifY the tormer collective bargaining agreements with the Vallejo Police Officers' Association (VPOA) and the Confidential, Administrative, Managerial, and Professional Association of Vallejo (CAMP). The City Council and memberships of both groups have ratitied these new agreements. Despite extensive efforts prior to this ruling, the IAFF and lBEW have not accepted modifications to their respective labor agreements that will allow the City to maintain solvency in its General Fund. The efforts oflabor to challenge the City's insolvency at a time of an unprecedented economic downturn and the labor groups ongoing intransigence regarding the modifications to their labor agreements has cost the City more than $3.5 million in bankruptcy costs. These funds could have provided critical municipal services to the Vallejo community. The City is pleased with the Judge's ruling, and believes that, fDllowing the next hearing or hearings, the Court will approve the City's rejection of both agreements. Such rulings will allow the City to focus its efforts and resources on the development of a plan of adjustment that will enable the City to successfully emerge from bankruptcy. More information regarding the City of Vallejo bankruptcy case, including today's memorandum opinion, can be found on the city website at the Bankruptcy Information web page. -====-- 16=- .~ f E .,~ ';,: FOR IMMEDIATE RELEASE-February 10, 2009 FOR MORE INFORMA TION, CONTACT JOANN WEST, PUBLIC INFORMATION OFFICER (707) 651-7152 CITY OF V Al.LEJO AND CAMP ASSOCIATION REACH AGREEMENT ON LABOR CONTRACT An agreement modifying tbe collective bargaining agreement between the City of Vallejo and the Confidential Administrative, Managerial, and Professional Association (CAMP) was approved by the Vallejo City Council this evening. This agreement was the result of negotiations between representatives of CAMP and city staff under the auspices of the chapter 9 bankruptcy case. TIle CAMP membership ratified the agreement last week. CAMP members constitute an important employee group that provides stability and leadership integral in the City's challenging fiscal environment. The supplemental agreement reached with CAMP achieves short term and long term reductions in costs as well as flexibility to reduce services in the future if necessary. The salary reductions included in the agreement achieve an estimated $508,000 in savings between July I, 2008 and June 30, 2010 in comparison to the existing agreement. Long term savings will be achieved through caps on medical benefits for current employees and retirees. Additional reductions ill sick leave cash out benefits for new and existing employees are provided in the agreement. The agreement, also, reduces longevity pay for current employees and eliminates it for employees hired after February I, 2009. The supplemental agreement extends the labor agreement with CAMP through June 30, 2013. Sandy Salerno, lead negotiator for the City, noted that this agreement with CAMP was a critical piece of the puzzle. "The CAMP folks are the lynch pin that enables the City organization to operate and implement City Council policies. Witb this agreement in place, Vallejo can continue to move forward." During the council's discussion of the proposed agreement at tonight's council meeting, Mayor Osby Davis stated "We have employees who do work for us and are entitled to a fair wage. No agreement we reach is going to give us everything we want. Supporting this agreement is the right thing to do." A complete copy of the Supplemental Agreement is available on the City of Vallejo web site at Citv Council Agenda with Staff Reports The City Council approved a supplemental labor agreement on January 27, 2009 with the Vallejo Police Officers' Association. The City of Vallejo continues to be hopeful that it can reach agreements with the two remaining labor groups (International Association of Firefighters and the International Brotherhood of Electrical Workers.) The hearing' on the City's motion to reject the collective bargaining agreements with the IAFF and IBEW concluded this afternoon in United States Bankruptcy Court. . Judge McManus is expected to rule on that motion within the next few weeks. May 28,2009 Meeting at 3:30 pm Room B-129 Chula Vista FInancial Crisis is problematic to business redevelopment. Solutions are to include obviously cutting line items that are unnecessary and unproductive. Since the creation of the Redevelopment Corporation approximately 5 years ago- we would like to know what are the statistic that this entity has helped the redevelopment and growth of Chula Vista (i.e.: new and old businesses)? The Chula Vista Save Our Business Coalition would like to express their grave concerns of the purpose and actions of the Redevelopment Corporation. The CVSOBC believes that the Redevelopment Corporation has hindered, repressed and complicated business development in Chula Vista. The CVSOBC would like to vigorously recommend to the stakeholders of Redevelopment Corporation the following: I. Disband, Dissolve and Close the Redevelopment Corporation or retire from services performed for City ofCV. 2. Close the Redevelopment Department at the City. Reasons for these actions are reflected by the end result that the Redevelopment Department has only: a. Added another level of bureaucracy which impedes redevelopment; b. Added complications and stifles the redevelopment process; c. Does not add any efficiency to the process; and d. Depletes City's resources with no result of a tangible product. The CVSOBC would like to additionally strongly recommend to the stakeholders of Redevelopment Corporation regarding streamlining permit issuing process as follows: a. Issue permits within 5 days from receiving application. b. Applicant (i.e. including but not limited to: Owner, Designer & Builder) will sign under penalty of perjury of Compliance with City Plan and City Building Codes. UTILIZING THESE RECOMMNEDATIONS THE END RESULT WILL BE: Tremendous acceleration of redevelopment activity and increased increment on redeveloped properties. Copies of a few businesses supporting these recommendations represent many more that have not been reached due to lack of time to get to other business before this meeting.