Exclusive: Bankrupt San Bernardino picks twice bankrupt manager

LOS ANGELES Fri Feb 22, 2013 2:56pm EST

1 of 4. A concrete sign marking the city limits for San Bernardino, California is seen in this file photo from July 11, 2012.

Credit: Reuters/Alex Gallardo/Files

Related Topics

LOS ANGELES (Reuters) - The bankrupt city of San Bernardino has hired a new city manager who, according to court filings, has twice declared personal bankruptcy and was recently ousted from the board of a small community's water company after being sued by shareholders.

The city council voted unanimously on Tuesday night to hire Allen J. Parker, 71, as its city manager on an annual salary of almost $222,000. He replaces an interim city manager who resigned last month because, according to friends, she was exasperated by the city's internal divisions.

The interim city manager, Andrea Travis-Miller, could not be reached for comment.

Pat Morris, the mayor of the city in California, praised Parker's "wealth of city management experience" and expressed "great confidence" in his ability to oversee the city's affairs. Parker, who began working in the job on Wednesday, will be crucial in guiding the city of 210,000 people through municipal bankruptcy, in a case that could set a national precedent for Wall Street bondholders and pension funds in future municipal bankruptcies.

The mayor and council members knew about both of Parker's personal bankruptcies - the first in 1991 and the second in 2011 - and the litigation surrounding his water board tenure before they interviewed him, according to the mayor's chief of staff. They discussed both issues with him when they interviewed Parker last Friday. They say the issues were no impediment: the council interviewed two final candidates but voted unanimously to hire him.

The California newspaper The Press-Enterprise reported on Thursday that Parker filed in 2011 for personal bankruptcy. In comments to the paper, Parker said that his bankruptcy and his ability to handle the city's fiscal problems were "apples and oranges."

Calls and emails to Parker asking about his bankruptcy filings and his tenure on the water board went unanswered. An email to Parker asking if his wife Sara, with whom he jointly filed for bankruptcy in the 2011 petition, would comment also did not elicit a response.

The bankruptcy of San Bernardino, a city 65 miles east of Los Angeles, is a national test case as to whether the pensions of government workers take precedence over other payments in a municipal bankruptcy - a high stakes issue for pension plans and their beneficiaries, and for the Wall Street bondholders who lend money to governments.

City managers are central to any city's quest to seek bankruptcy protection, because they have a pivotal role in answering questions from creditors and the court. The judge overseeing San Bernardino's case must still rule on whether the city is eligible for bankruptcy before the case proceeds.


A 2009 lawsuit brought by a shareholder in the Banning Heights Mutual Water Company, where Parker was a director and then president of the board between 2004 and 2010, resulted in Parker being voted off the board in February 2010 after a court-ordered special election.

Banning Heights is a tiny unincorporated community 85 miles east of Los Angeles. The water company was formed in 1913 to provide water and today it serves about 250 residents.

Despite its small size, the water rights and land upon which the community sits are worth millions of dollars, according to John McClendon, the water board's general counsel. At one point under Parker's tenure on the water board, an entity called The Tahiti Group had placed $7 million in an escrow account to purchase the company, according to correspondence attached to court filings.

Court filings in the 2009 lawsuit, and a subsequent separate lawsuit brought by the water company allege that Parker, along with others, used their position on the board to try to sell the water company, against the wishes of shareholders.

Parker and others were also accused of withholding information from shareholders, according to those court filings. The shareholder sued in 2009 because he said Parker and others ignored the results of previous shareholder elections when they were voted off the board. Parker is not a defendant in the second lawsuit which is still active.

According to one court filing by the water company dated September 20, 2010, when shareholders gained access to the water company's office after Parker and others were voted off the board, computers were missing, hard drives had been wiped and bags of shredded documents sat on the floor.

In a deposition dated November 9, 2010 relating to the 2009 lawsuit, Parker said he never shredded documents and did not believe anyone "during our regime" on the water board shredded any documents.

After a judge ruled against Parker and others in the 2009 lawsuit and ordered a special shareholder election, they were voted off the board by shareholders in February 2010.


According to his resume, which does not mention Banning Heights Water Company, Parker has long experience as a local manager in several other California cities such as East Palo Alto, Half Moon Bay, Seal Beach, and Compton.

Jim Morris, the son and chief of staff to Pat Morris, San Bernardino's mayor, said the city had done its own thorough background check on Parker before he was interviewed by the council, last Friday. His bankruptcies, and the Banning Heights Mutual Water Company litigation, were known about by the time the interview took place, Morris said.

"We talked to the attorneys involved, and pulled the court filings. These were disputes over election results," Morris said. He said the Banning Heights litigation did not involve serious issues, and that such disputes occur on small entities such as the water board all the time.

Morris said there was no reason why Parker should have included his tenure on the water board on his resume. "He wasn't employed by the water board," Morris said. "His resume was an employment resume. If someone was a member of their local homeowners' association you wouldn't expect that to be on their resume."

Parker filed for personal bankruptcy in 1991, in San Mateo, California, according to court records. No further details were available. In February 2011, he filed for bankruptcy with his wife, in the U.S. Bankruptcy Court, Central District of California.

According to the 2011 bankruptcy filing, Parker and his wife listed among their debts two home mortgages with unsecured balances of $267,500, as well as bank and credit card debt of $137,252.

(Reporting by Tim Reid; Editing by Martin Howell, Tiziana Barghini and Claudia Parsons)

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (6)
Crash866 wrote:
Liberals at their best!!!

Feb 22, 2013 1:07pm EST  --  Report as abuse
morbas wrote:
@Crach866, Sorry not liberals, the republican representatives outnumber the democrats 4 to 1 in that county, and the voting record shows a vast majority of republican voters.
The debt has one cause, the aristocratic view of superiority and exemption to responsibility, aye even subjugation of Christianity itself. They would rather mint Ceasar’s denarii and subjugate humanity to a slaves wage. The top quintile income wealth is over 60% of the national income summation. And yet we tax poverty levels to hoard even that last 1% of coin. And tax least at the highest income levels.

The House of Representatives has the authority of taxation and can look no where else to shed it’s purpose.

Immediate solution is to flat rate all income above $20K with a federal tax at 35%, couples freely share, no exemptions; revenue is $3.8. Trillion. No Sequestration, what remains is serious look at reducing waste. This approach blends into a Nationalized Income Tax amendment as follows, eliminating every other tax at Federal, State and Municipality, as well as business and business inheritance.
-cut past to your Honorable Representative, Senator and POTUS Obama,
Honorable Senator/Representative,
This is a mandate to: Nationalized income tax system that funds Federal, State and Municipalities $8.1 Trillion expenditures. A margin tax at two levels will yield the necessary revenue. %0-$20k 0% tax rate, $20k to $200K 35% tax rate, above $200K 91% tax rate. Couples freely share, all income bundled and taxed in summation form, no exemptions. Remember the 1960 top rate was 91.5% at $400k, this effective rate is 66.6% at $500k, 31.5% at $200k; less than the 2011 single standard at under $200K. The Federal Reserve sets the rates, mandated to maintaining monetary value and supply. This change would require a constitutional amendment.

Thank you for your immediate attention,
Your constituent [Zip Code]

And as an interim solution,
Honorable Senator/Representative,
Stop Sequestration.
This is a mandate for a Federal income tax system that funds Federal, Health (Obama-Care and Medicare) and Social security. One Margin level will yield the necessary revenue: %0-$20k 0% tax rate, $20k upwards 35% flat rate, income bundled and taxed in summation form, couples freely share, no business tax and no exemptions. The Federal Reserve sets the rates, mandated to maintaining monetary value and supply.

Thank you for your immediate attention,
Your constituent [Zip Code]
So I believe the republicans offered a $10,000 reward for saving their arse…send cash. You can find me through Representative Virginia Foxx (r)NC refenced by Jan 29 2012 reply, “Thank you for your email of December 30 sharing your suggestion for changes to the tax code and your phone call of December 31. I appreciate your taking the time to contact my office.”

Feb 22, 2013 2:21pm EST  --  Report as abuse
What a joke! Maybe he was hired for his bankruptcy expertise. Seriously board needs to be replace for making this type of gaffe, and it just shows the problem is not the county is the leadership.

Feb 22, 2013 2:55pm EST  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.