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Repo of Stockton, Calif.’s Would-Be City Hall May Oust IT Dept.

City remains hopeful it can retain tenancy, despite bank takeover.

by / June 1, 2012

Stockton, Calif.’s roughly 40-member strong IT department may need a new home. Several news sources report that a San Joaquin County Superior Court judge has ruled that Wells Fargo Bank can move forward with the process of repossessing the former Washington Mutual building that city officials previously eyed for new city headquarters.

While the primary tenant of the building at 400 E. Main St. is currently JPMorgan Chase, it’s also home to the offices of the city’s technology brain trust as well as technology infrastructure. IT is the only city department housed in the facility.

City spokeswoman Connie Cochran explained to Government Technology via email that a backup plan for IT staff is not yet in place. In fact, the city remains optimistic that the group may stay at this location even if the city no longer owns it.

“Our hope is to remain a tenant in the building,” she said.

The headline-grabbing city in California’s Central Valley has garnered much attention lately as it hovers on the brink of bankruptcy. Experts credit a confluence of several factors for the financial instability in Stockton, including an extremely high rate of home foreclosures, unusually generous employee retirement benefits and excessive borrowing using risky financing methods that depended on future growth that failed to materialize.

In late February, City Council members voted to proceed with mediation to attempt to restructure the city’s debt. In the interim, they decided to stop making certain bond payments to stave off a bankruptcy filing in the current fiscal year.

These decisions led Wells Fargo to repossess three downtown parking garages, and now, the former Washington Mutual building, purchased by the city in 2007.

According to an announcement on the city website, the Stockton City Council will consider a backup plan to provide fundamental services if current mediation efforts are unsuccessful.

“We remain hopeful that we can reach an agreement with a sufficient number of our creditors to get our fiscal house in order. However, we must have a plan for any possible outcome to protect the health, safety and welfare of our community and maintain basic services,” said Mayor Ann Johnston in the news release.

The contingency plan allows the city manager to file for Chapter 9 bankruptcy protection as a last resort to meet California’s requirement to balance the municipal budget.

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Noelle Knell Editor

Government Technology editor Noelle Knell has more than 15 years of writing and editing experience, covering public projects, transportation, business and technology. A California native, she has worked in both state and local government, and is a graduate of the University of California, Davis, with majors in political science and American history. She can be reached via email and on Twitter.

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