Last month, San Bernardino announced that it had officially exited bankruptcy after four years. This means that San Bernardino will have to start paying its creditors, but things will not be that easy. The once all-American middle class suburb at the end of the 1970’s entered into bankruptcy in 2012 after years of struggling to stay financially stable. John Husing, Chief Economist at the Inland Empire Economic Partnership, stated:
I’m not optimistic for the city in terms of its demographic issues. Once the housing stock moves from owner-occupied to renter-occupied, reversing that is trench warfare. The underlying economy of the city got destroyed over things which it had very little control. The [court-approved] plan calls for San Bernardino to leave bankruptcy with increased revenues and an improved balance sheet, but the city will retain significant unfunded and rapidly rising pension obligations.
The average income in San Bernardino is about $38,000 a year, which means that people are more likely to be renting than owning a home. The fact that the home ownership rate is just 50.4 percent means that San Bernardino will have a hard time growing its tax base and attracting wealthier residents. The good news is that the unemployment rate in the city has dropped and is currently at 5.7 percent, compared the county average of 4.4 percent. Overall, San Bernardino has been has been improving thanks to Amazon and other companies building more warehouses that handle goods coming in through local ports. Hopefully, San Bernardino’s economy continues to improve so that it can officially be debt free in a couple years.