Stockton, Calif., will consider halting general fund payments toward several bond issues, with the first payment shortfall coming March 1, the city said in a disclosure statement filed Friday morning on the Municipal Securities Rulemaking Board's EMMA site.
The defaults come as Stockton officials prepare to take the first step toward a Chapter 9 bankruptcy filing for the city of 290,000.
The Stockton City Council will vote Tuesday on a resolution determining if the city should suspend payment on certain of the city’s general fund obligations, according to the filing, and to enter a mediation process, which is the first toward bankruptcy under a recently enacted state law.
It’s not immediately clear if the City Council will adopt the resolution.
According to the 156-page disclosure statement, the city would stop making general fund payments toward seven distinct bond issues of the city of Stockton, the Stockton Redevelopment Agency, and the Stockton Public Financing Authority.
In some cases, payment default would not be immediate, because payments have already been forwarded to the trustee or the bonds have support from other pledged revenues.
In other cases, there will be an immediate payment shortfall on March 1 debt service payments, according to the disclosure statement.
The economy of Stockton, 80 miles east of San Francisco, was devastated by the housing bust.