SAN FRANCISCO — The bankrupt city of Vallejo, Calif., will be losing its top two finance officials.
Robert Stout, the city’s finance director, will be retiring, and assistant finance director Susan Mayer will be leaving to become chief financial officer for the city of Stockton, Phil Batchelor, the interim city manager, announced to the City Council Tuesday.
“Both Rob and Susan were invaluable in helping us work through the bankruptcy situation,” Batchelor said.
Stout will stay on until the city finds a replacement. Mayer will be leaving by mid-January.
Vallejo, which has a population of around 120,000 residents, filed for bankruptcy in May 2008 in response to what it said were unsustainable labor contracts and dwindling tax collections. That move represents the largest municipal bankruptcy in the state since Orange County filed in 1994.
Stout, who was hired in 2004, and Mayer, hired in 2005, helped steer the city’s finances through the massive fiscal and legal challenges presented by the filing. Vallejo has had three different city managers, including Batchelor, since the city filed for Chapter 9 bankruptcy.
“They have been amazing soldiers in this case,” Vallejo’s bankruptcy lawyer, Marc Levinson, a partner at Orrick, Herrington & Sutcliffe LLP, said of Stout and Mayer. “The city will need to survive [their departures], and they will.”
Levinson said Stout stayed on beyond his retirement period because he wanted to do the right thing.
After approving a five-year budget road map earlier this month, the city hopes to emerge from bankruptcy after submitting a formal exit proposal outlining how to pay debt and creditor claims to the U.S. bankruptcy court in Sacramento by mid-January. That could lead to the city coming out of bankruptcy sometime in the summer after much wrangling for approval from Judge Michael McManus.
Union Bank of California, which provided the letter of credit on Vallejo’s defaulted debt, is owed in total around $50 million by the city. Insurer National Public Finance Guarantee Corp. is owed about $5 million.
The bankruptcy filing affected $53 million of debt backed by the city’s general fund, including certificates of participation sold in 1999. The COP deal carried insurance and a debt-service reserve surety bond from MBIA Insurance Corp., now operating as National Public Finance Guarantee.