San Bernardino Bondholders Vs Calpers

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DAVID L. DUBROW (NY Bar # 2115806
)
MARK A. ANGELOV (NY Bar #4545182
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)
ARENT FOX LLP
1675 Broadway
New York, NY 10019-5874
Telephone: 212.484.3900
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david.dubrow@arentfox.com
mark.angelov@arentfox.com

RALPH A. TAYLOR, JR. (DC Bar #225219
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ARENT FOX LLP
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Washington, DC 20036-5342
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METTE H. KURTH (CA Bar #187100)
ARENT FOX LLP
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Los Angeles, CA 90013-1065
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mette.kurth@arentfox.com

Attorneys for Ambac Assurance Company, Erste
Europische Pfandbrief-und Kommunalkreditbank
AG, and Wells Fargo Bank, N.A., as Trustee

LAWRENCE A. LAROSE (NY Bar #1916766
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)
SAMUEL S. KOHN (NY Bar #3049749
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)
WINSTON & STRAWN LLP
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New York, NY 10166-4193
Telephone: 212.294.6700
Facsimile: 212.294.4700
llarose@winston.com
skohn@winston.com

SARAH L. TRUM (TX Bar #24079990
*
)
1111 Louisiana, 25th Floor
Houston, TX 77702-5254
Telephone: 713.651.2600
Facsimile: 713.651.2700
strum@winston.com

Admitted pro hac vice

Case 6:12-bk-28006-MJ Doc 257 Filed 12/10/12 Entered 12/10/12 15:05:41 Desc
Main Document Page 1 of 114
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MATTHEW M. WALSH (CA Bar #175004)
333 S. Grand Avenue, 38th Floor
Los Angeles, CA 90071-1543
Telephone: 213.615.1700
Facsimile: 213.615.1750
mwalsh@winston.com

Attorneys for National Public Finance
Guarantee Corporation

UNITED STATES BANKRUPTCY COURT
CENTRAL DISTRICT OF CALIFORNIA
RIVERSIDE DIVISION
In re

CITY OF SAN BERNARDINO,
CALIFORNIA,

Debtor.

Case No.: 6:12-bk-28006-MJ
Chapter 9
JOINT OBJECTION OF THE BOND
CREDITORS TO THE MOTION TO LIFT
AUTOMATIC STAY OF CALIFORNIA
PUBLIC EMPLOYEES RETIREMENT
SYSTEM
HEARING DATE
Date: December 21, 2012
Time: 10:00 a.m.
Judge: Honorable Meredith A. Jury
Place: United States Bankruptcy Court
3420 Twelfth Street
Courtroom 301
Riverside, CA 92501
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TABLE OF CONTENTS

Page

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SUMMARY OF ARGUMENT ...................................................................................................... 1
FACTUAL BACKGROUND ......................................................................................................... 3
A. The Citys Financial Condition ............................................................................... 3
B. CalPERS .................................................................................................................. 3
C. The Bond Creditors ................................................................................................. 4
ARGUMENT .................................................................................................................................. 5
I. NEITHER THE POLICE POWERS EXCEPTION NOR SECTION 903 EXEMPT
CALPERS FROM APPLICATION OF THE AUTOMATIC STAY ................................ 5
A. Section 362(b)(4) Is Inapplicable Because CalPERS Attempt to Collect
Deferred Payments Is Not an Exercise of Police Powers ....................................... 6
1. CalPERS Is Not Vested With Police and Regulatory Powers .................... 7
2. CalPERS Attempt to Obtain Payment from the City Does Not
Constitute an Exercise of Police Powers as a Matter of Law ..................... 8
B. Neither the Tenth Amendment Nor Section 903 of the Bankruptcy Code
Exempt CalPERS from Application of the Automatic Stay ................................. 11
II. CALPERS HAS NOT AND CANNOT MEET ITS BURDEN OF PROOF THAT
IT IS ENTITLED TO RELIEF FROM THE AUTOMATIC STAY FOR CAUSE ......... 15
A. Alleged Violations of California Law Are Insufficient to Justify Relief
From the Stay ........................................................................................................ 16
1. The Mere Noncompliance with State Law Does Not Constitute
Cause to Lift the Automatic Stay .......................................................... 16
2. 28 USC 959(b) Does Not Warrant Lifting the Stay ............................... 19
3. The Balance of Factors Overwhelmingly Favors Denial of
CalPERS Motion ..................................................................................... 21
B. The City Has Not Deferred or Failed to Pay Any Postpetition
Administrative Expenses that Justify Relief from the Stay ................................. 25
CONCLUSION ............................................................................................................................. 26

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TABLE OF AUTHORITIES
Page(s)
CASES
Ashton v. Cameron County Water Improvement District No. 1,
298 U.S. 513 (1936) .......................................................................................................... 17, 23
Bd. of Admin. v. Wilson,
52 Cal. App. 4th 1109 (Cal. Ct. App. 1997) ........................................................................... 23
Bellus v. City of Eureka,
69 Cal. 2d 336 (1968) ............................................................................................................... 7
Cent. Virginia Cmty. Coll. v. Katz,
546 U.S. 356 (2006) ................................................................................................................ 16
Chao v. Hosp. Staffing Servs., Inc.,
270 F.3d 374 (6th Cir. 2001) ................................................................................................... 10
Hillis Motors, Inc. v. Hawaii Auto. Dealers Ass'n,
997 F.2d 581 (9th Cir. 1993) ............................................................................................ passim
In re A Partners, LLC,
344 B.R. 114 (Bankr. E.D. Cal. 2006) .............................................................................. 22, 24
In re Bastian Co., Inc.,
45 B.R. 717 (Bankr. W.D.N.Y. 1985) .................................................................................... 26
In re Berg,
230 F.3d 1165 (9th Cir. 2000) ................................................................................................... 9
In re Chateaugay Corp.,
87 B.R. 779 (S.D.N.Y. 1988) .............................................................................................. 8, 10
In re City of Stockton,
478 B.R. 8 (Bankr. E.D. Cal. 2012) ................................................................................. passim
In re City of Vallejo
403 B.R. 72 (Bankr. E.D. Cal. 2009) ............................................................................... passim
In re Cnty. of Orange
179 B.R. 185 (Bankr. C.D. Cal. 1995) .................................................................................... 13
In re CSC Indus., Inc.,
232 F.3d 505 (6th Cir. 2000) ..................................................................................................... 9
In re Curtis,
40 B.R. 795 (Bankr. D. Utah 1984) ...................................................................... 20, 21, 22, 24
In re Lehman Bros. Holdings Inc.,
435 B.R. 122 (S.D.N.Y. 2010) ................................................................................................ 22
In re New York City Off-Track Betting Corp.,
434 B.R. 131 (Bankr. S.D.N.Y. 2010) .................................................................................... 25
In re Nortel Networks, Inc.,
669 F.3d 128 (3d Cir. 2011), cert. denied, 133 S. Ct. 34 (2012) .................................... 8, 9, 10
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In re Orange Cnty.
191 B.R. (Bankr. C.D. Cal. 1996) ......................................................................... 11, 13, 14, 17
In re Plumberex Specialty Prods., Inc.,
311 B.R. 511 (Bankr. C.D. Cal. 2004) .............................................................................. 15, 22
In re Ranasinghe,
341 B.R. 556 (Bankr. E.D. Va. 2006) ..................................................................................... 20
In re Si Yeon Park, Ltd. v. State Street Bank and Trust Corp.,
198 B.R. 956 (Bankr. C.D. Cal 1996) ..................................................................................... 21
In re Sonnax Indus., Inc.,
907 F.2d 1280 (2d Cir. 1990) ............................................................................................ 15, 22
In re Toledano,
299 B.R. 284 (Bankr. S.D.N.Y. 2003) .................................................................................... 20
In re Tucson Estates, Inc.,
912 F.2d 1162 (9th Cir.1990) .................................................................................................. 22
In re Tucson Yellow Cab Co., Inc.,
789 F.2d 701 (9th Cir. 1986) ................................................................................................... 26
In re Universal Life Church, Inc.,
127 B.R. 453 (E.D.Cal.1991) .................................................................................................. 22
In re Valley Health Sys.,
429 B.R. 692 (Bankr. C.D. Cal. 2010) .................................................................................... 25
In re Velo Holdings Inc.,
475 B.R. 367 (Bankr. S.D.N.Y. 2012) .................................................................................... 21
Intl Bhood of Elec. Workers v. City of Vallejo
432 B.R. 262 (E.D. Cal. 2010) ......................................................................................... passim
Klench v. Bd. of Pension Fund Comrs of City of Stockton,
249 P. 46 (Cal. Ct. App. 1926) ................................................................................ 7, 12, 18, 19
Massingill v. Dept of Food & Agric.,
102 Cal. App. 4th 498 (2002) ................................................................................................... 7
Mission Independent School District v. Texas,
116 F.2d 175 (5th Cir. 1940) ................................................................................................... 12
In re World Sales,
183 B.R. 872 (Bankr. 9th Cir. 1995) ...................................................................................... 26
Natl Football League Players Assoc.,
Nos. SACV 03-0389 NM & SA 03-1103, 2003 WL 26112510
(Bankr. C. D. Cal. Sept. 29, 2003) .......................................................................................... 22

New York v. Irving Trust Co.,
288 U.S. 329 (1933) ......................................................................................................... 12, 16
N.L.R.B. v. Bildisco & Bildisco
465 U.S. 513 (1984) ................................................................................................................ 26
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Penn Terra, Ltd. v. Dept of Envtl. Res.,
733 F.2d 267 (3d Cir. 1984) .................................................................................................... 11
Perez v. Campbell,
402 U.S. 637 (1971) ................................................................................................................ 16
Tennessee Student Assistance Corp. v. Hood,
541 U.S. 440 (2004) ................................................................................................................ 12
Tuscon Yellow Cab Co., Inc.,
789 F.2d 701 (9th Cir. 1986) ................................................................................................... 26
United States v. Bekins,
304 U.S. 27 (1938) ............................................................................................................ 17, 23
Valdes v. Cory,
189 Cal. Rptr. 212 (Cal. App. 1983) ....................................................................................... 17
Van Huffel v. Harkelrode,
284 U.S. 225 (1931) ................................................................................................................ 12
Westly v. California Pub. Employees Ret. Sys. Bd. of Admin.,
105 Cal. App. 4th 1095 (2003) ........................................................................................... 7, 17
STATUTES
11 U.S.C 9 ........................................................................................................................... passim
11 U.S.C 11 ................................................................................................................................ 20
11 U.S.C 12 ................................................................................................................................ 20
11 U.S.C. 101. .............................................................................................................................. 1
11 U.S.C. 105(b) ........................................................................................................................ 20
11 U.S.C. 109. ............................................................................................................................ 14
11 U.S.C. 362(a)(3) ...................................................................................................................... 6
11 U.S.C. 362(b)(4) ............................................................................................................. passim
11 U.S.C. 362(d) ........................................................................................................................ 15
11 U.S.C. 362(d)(1) ...................................................................................................................... 1
11 U.S.C. 365 ....................................................................................................................... 17, 18
11 U.S.C. 503 ............................................................................................................................. 25
11 U.S.C. 901 ...................................................................................................................... passim
11 U.S.C. 902 ............................................................................................................................... 6
11 U.S.C. 903 ...................................................................................................................... passim
11 U.S.C. 904 ................................................................................................................. 13, 18, 25
11 U.S.C. 904(2) ........................................................................................................................ 18
11 U.S.C. 922 ........................................................................................................................... 1, 6
11 U.S.C. 922(a) .......................................................................................................................... 6
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11 U.S.C. 1129(a)(9) .................................................................................................................. 26
28 U.S.C. 151 ........................................................................................................................... 19
28 U.S.C. 1334(e)(1) ..................................................................................................................... 19
28 USC 959(b) ............................................................................................................... 19, 20, 21
29 U.S.C. 1302(a) ......................................................................................................................... 8
Cal. Educ. Code 22501 ................................................................................................................ 7
Cal. Gov. Code 31500 .................................................................................................................. 7
OTHER AUTHORITIES
California Constitution ...................................................................................................... 12, 17, 18
Article XVI of the California Constitution ................................................................................... 17
Collier on Bankruptcy 362.05[5][b] ............................................................................................. 9
Collier on Bankruptcy 362.05[5][b] ........................................................................................... 10
Collier on Bankruptcy 105.01 [2] ................................................................................................ 6
Collier on Bankruptcy 900.01 .................................................................................... 6, 19, 20, 23
Collier on Bankruptcy 922.02[4] ............................................................................................... 11
Collier on Bankruptcy 926.02 .................................................................................................... 19
Collier on Bankruptcy 901.03 .................................................................................................... 20
Ryan Preston Dahl, Collective Bargaining Agreements and Chapter 9 Bankruptcy, 81 Am.
Bankr. L.J. 295, 333 (2007) .................................................................................................... 14
S. Rep. No. 989, 95
th
Cong., 2d Sess. 50-51 (1978) ..................................................................... 10
San Bernardino City Charter ........................................................................................................... 8
U.S. Const. amend. X ........................................................................................................ 11, 13, 20
U.S. Const. art. I, 8, cl. 4 ............................................................................................................ 16
U.S. Const. art. VI, 2 .................................................................................................................. 16
U.S. Const. art. I, 10 ................................................................................................................... 17
U.S. Const. Bankruptcy Clause ..................................................................................................... 16
U.S. Const. Contracts Clause ....................................................................................................... 12
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Ambac Assurance Company (Ambac), Erste Europische Pfandbrief-und
Kommunalkreditbank AG (EEPK), Wells Fargo, NA, Trustee (Wells Fargo) (collectively the
POB Creditors), and National Public Finance Guarantee Corporation (National) (together
with the POB Creditors, the Bond Creditors) hereby submit this Objection (the Objection) to
the motion (the Motion) and accompanying Memorandum of Points and Authorities in Support
(the Mem.) for relief from automatic stay pursuant to sections 362(d)(1) and 922 of title 11 of
the United States Code, 11 U.S.C. 101 et seq. (the Bankruptcy Code or Code), D.E. 227
and D.E. 228, submitted by the California Public Employees Retirement System (CalPERS).
As described more fully below, the Bond Creditors are interested parties because of their roles
with respect to the City of San Bernardinos (the City) issuance of certain municipal bonds.
SUMMARY OF ARGUMENT
Purportedly to avoid a phantom harm from the Citys proposed deferral of certain
obligations to CalPERS, CalPERS contends that because it is an arm of the state, the Court
should ignore the Supremacy Clause of the United States Constitution and over 70 years of legal
precedent to elevate CalPERS pecuniary interest above the interest of the City and its other
unsecured creditors. CalPERS solipsistic view ignores every other entities interests and boldly
argues that the Citys post-petition deferral of certain payments to CalPERS violates State law
and thereby constitutes cause for relief from the automatic stay.
CalPERS distorts the fundamental principles of bankruptcy law and omits or ignores
governing constitutional, statutory and judicial authority establishing that the Bankruptcy Code
preempts and supersedes inconsistent state law. State law inconsistent with the Citys deferral of
payments is preempted rather than violated.
In addition, CalPERS misconstrues the Constitutional underpinnings of Bankruptcy Code
section 903. Longtime precedent, including precedent in this Court and in sister districts, makes
clear that once a state has authorized a municipality to seek bankruptcy protection, the state is
subject to all provisions of chapter 9. Neither the state nor CalPERS, as an alleged arm of the
state, can pick and choose which provisions of the Bankruptcy Code that it wishes to have
applied in the Citys chapter 9 case. Here, the State of California authorized the City to file its
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chapter 9 case, and the State and CalPERS are thus subject to all provisions of the Bankruptcy
Code, including the automatic stay.
CalPERS also mistakenly argues that it is exempt from the automatic stay pursuant to
Bankruptcy Code section 362(b)(4). Section 362(b)(4), however, only provides an exemption
from the automatic stay to permit the governmental exercise of police and regulatory powers to
remedy or prevent public harm. CalPERS again ignores precedent and the very purpose of the
police and regulatory exception from the automatic stay. CalPERS lacks police or regulatory
powers, and in any event, its attempt to jump to the front of the line of creditors to advance
private, pecuniary interests is beyond the scope of section 362(b)(4).
Perhaps in recognition of the weakness of its position, CalPERS argues that the Court
need not, at this time, decide the exemption issue because CalPERS is entitled to relief for
cause. Once again, CalPERS is wrong. None of the arguments advanced by CalPERS grants it
an automatic right to relief. Rather, the Court must engage in a balancing of harms, which weighs
overwhelmingly in favor of denial of CalPERS Motion. The harm to CalPERS of maintaining
the stay is nonexistent. CalPERS manages a total pension portfolio of approximately $242
billion; the Citys pension assets comprise a mere 0.3 percent of that total. The City only
proposes in its pendency plan to defer, through June 30, 2013, up to $20 million of payments to
CalPERS. The declaration of Joseph Esuchanko, dated December 6, 2012 and filed with this
Joint Objection (the Esuchanko Decl.), demonstrates that the Citys proposed deferral would
not negatively affect either of the Citys two pension plans, much less the entire CalPERS system
as CalPERS contends. In contrast, lifting of the stay would cause enormous harm. Relief sought
in the Motion would unfairly and unlawfully favor CalPERS over all other unsecured creditors
and would cripple the City and nullify the entire chapter 9 proceeding.
Accordingly, and as more fully set forth below, the Court should summarily deny
CalPERS Motion and enter an order declaring that CalPERS is not exempt from the automatic
stay and has not met its burden to show cause to obtain relief from that stay.

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FACTUAL BACKGROUND
A. The Citys Financial Condition
The City is in dire financial condition. See Declaration of Scott Davido, dated November
30, 2012, D.E. 237 (the Davido Decl.), submitted in support of the Response of the POB
Creditors to the Eligibility Objections of the San Bernardino Public Employees Association and
CalPERS, D.E.236. The City has exhausted its unrestricted cash and reserves, reflecting a
negative unrestricted cash position in the General Fund of ($21,070,389). Davido Decl. 5.
Without any post-petition balancing measures, the Citys cash flow deficit is projected to exceed
$45 million by the end of the 2012-13 fiscal year. Id. 25, Table 3. In addition, the City has no
ready access to additional funding through revenue restoration, borrowing capacity, or asset sales.
Id. 15-22.
To ameliorate the cash shortage and continue to operate in bankruptcy, the City passed its
pendency plan on November 26, 2012. In addition to proposing significant reductions to the
Citys operating expenses, the pendency plan provides for the deferral of certain post-petition
obligations, including those to CalPERS and other creditors. See Exhibit 1, Pendency Plan
1
at
10. Those deferrals reflect the Citys need to preserve cash in order to sustain operations,
including the essential services to be provided to the residents, while it proceeds toward a plan of
adjustment.
B. CalPERS
CalPERS administers the pension programs for State employees as well as employees of
certain municipalities, including the City, that contract with CalPERS. As detailed below,
CalPERS statutory authority is limited to actuarial and other administrative services with respect
to the pension programs it administers. Those programs constitute $242 billion of assets under
management. See Esuchanko Decl. 12, Table 2. The Citys plan assets represent 0.3% of total
CalPERS assets. Id. 16, Table 2.
CalPERS is the largest single general unsecured creditor of the City. See List of Creditors

1
The City filed the Pendency Plan with this Court as Exhibit 1 to the Declaration of Michael Busch re City of
San Bernardino Pendency Plan, D.E. 234. A copy of the pendency plan is attached hereto as Exhibit 1 for the
Courts convenience.
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Holding 20 Largest Unsecured Claims, D.E. 41. The Citys ongoing annual obligations to
CalPERS total $21.2 million. See Davido Decl., Table 4. By way of comparison, these
obligations are approximately equal to the Citys negative cash shortfall as of the petition date
and represent approximately one half of the Citys budget deficit. See id., Tables 1, 3, Figure 1.
On an annual basis, the Citys obligations to CalPERS subsume nearly 18% of its total General
Fund revenues. Id., Table 3, Figure 1.
C. The Bond Creditors
The Bond Creditors are creditors of the City and/or interested parties in this proceeding in
connection with certain municipal bonds.
National is the bond insurer of a number of the Citys bond obligations.
2
The POB
Creditors are comprised of Wells Fargo, EEPK, and Ambac respectively, the indenture trustee,
bondholder, and bond insurer of certain of 2005 Pension Obligation Bonds.
3
The bond insurers,
National and Ambac, are responsible to bondholders for the full principal and interest payments
when due as required by their respective policies to the extent the City does not satisfy its
obligations under the insured bonds.
4

2
Specifically, National insures (1) the Lease Revenue Refunding Bonds, Series 1996 (City Hall
Project) issued by the San Bernardino Joint Powers Financing Authority in the aggregate principal amount
of $16,320,000 pursuant to that certain Trust Indenture dated as of December 1, 1996, by and between the
Joint Authority and First Trust of California, National Association, as trustee and (2) the 1999 Refunding
Certificates of Participation (Police Station, South Valle, and 201 North E Street Projects) in the aggregate
amount of $15,480,000, issued by the Joint Authority pursuant to that certain Trust Agreement, dated as of
September 1, 1999, by and between the Joint Authority and U.S. Bank Trust National Association as
trustee. National also insures the 1998 Refunding Sewer Revenue Certificates of Participation, in the
aggregate principal amount of $36,230,000 pursuant to that certain Trust Agreement by and among U.S.
Bank Trust National Association, as trustee and the San Bernardino Public Safety Authority and the City,
dated as of July 1, 1998.
3
The City issued its City of San Bernardino Taxable Pension Obligation Bonds in the aggregate
principal amount of $50,401,582.90, consisting of (i) the 2005 Series A-1 (Standard Bonds), in the
aggregate principal amount of $36,050,000 (the Series A-1 Bonds), and (ii) the 2005 Series A-2 (Capital
Appreciation Bonds), in the initial aggregate principal amount of $14,351,582.90 (the Series A-2 Bonds
and, collectively the Series A Bonds), pursuant to that certain Trust Agreement dated October 1, 2005
(the Trust Agreement), by and between the trustee and the City. All of these bonds were issued to re-
fund the Citys obligations to CalPERS with respect to employee pension benefits.
4
Under relevant provisions of the applicable bond documents, insurance policies, and applicable
law, to the extent either bond insurer makes payments under the policies, it is subrogated to the rights of
bondholders and effectively steps into the shoes of such bondholders. Ambac has already made one
payment to EEPK as a result of the Citys failure to make its payment due October 1, 2012.
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ARGUMENT
CalPERS filed the Motion in response to the Citys passage of the pendency plan that
contemplates a deferral of certain payments to CalPERS. The Motion is an undisguised and
unfounded attempt by CalPERS to undermine the purposes of chapter 9, circumvent the
automatic stay, and obtain grossly preferential treatment over all other general unsecured
creditors. The relief CalPERS seeks could potentially make it impossible for this case to proceed
and for the City to fairly adjust its debts. CalPERS attempts to justify its Motion by arguing that
Code sections 362(b)(4) and 903 exempt it from application of the section 362 automatic stay. As
is shown in Part I below, neither provision affords CalPERS such an exemption. Alternatively,
CalPERS contends that the automatic stay should be lifted as to it, arguing that cause for such
relief is provided by the alleged failures of the City to comply with state law and pay post-petition
administrative costs. Part II below demonstrates that CalPERS cannot meet its burden to show
cause for relief from the stay on either of its asserted grounds.
I. NEITHER THE POLICE POWERS EXCEPTION NOR SECTION 903 EXEMPT
CALPERS FROM APPLICATION OF THE AUTOMATIC STAY
CalPERS argues that the automatic stay does not apply to it by virtue of Code section
362(b)(4), which exempts from the stay litigation to enforce a governmental units or
organizations police and regulatory power. CalPERS further contends that section 903 permits
CalPERS, as an arm of the state, to compel the City to comply with state law despite the stay.
Nevertheless, CalPERS asserts that the Court need not address the exemption issue, even though
CalPERS suggests it may commence a state court action regardless of whether the stay is lifted.
Mem. at 7. In light of the importance of the issue and the lingering threat created by CalPERS as
to applicability of the stay, particularly its demand for mandamus and appointment of a receiver
to control the finances of the City, the Bond Creditors request that this Court issue an order
specifically declaring that CalPERS is bound by the automatic stay for the reasons set forth
below.

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A. Section 362(b)(4) Is Inapplicable Because CalPERS Attempt to Collect
Deferred Payments Is Not an Exercise of Police Powers
Chapter 9 of the Bankruptcy Code serves two primary purposes. First, it permits an
overburdened municipality to seek protection from its creditors while it formulates and negotiates
a plan of adjustment of its debts. Alan N. Resnick & Henry J. Sommer eds., Collier on
Bankruptcy at 900.01 [1] (16th ed. 2010). Second, it serves the interests of creditors by
providing them with an equitable distribution of the debtors assets. See Collier on Bankruptcy at
105.01 [2]. The automatic stay of section 362, included as part of the broader stay imposed by
section 922,
5
is one of the most important mechanisms for accomplishing those purposes. That
stay is extremely broad in scope and, aside from the limited exceptions of subsection (b), applies
to almost any type of formal or informal action taken against the debtor or the property of the
debtor. Specifically, section 362 provides, in relevant part, that a bankruptcy petition operates as
a stay, applicable to all entities, of . . . any act to obtain possession of property of the estate or of
property from the estate or to exercise control over property of the estate . . . . 11 U.S.C.
362(a)(3).
6

Code section 362(b)(4) provides a narrow exception to the automatic stay to permit the
governmental exercise of police and regulatory powers to remedy or prevent harm to the public.
CalPERS does not have such police and regulatory powers, and even if it did, its efforts to obtain
a money judgment against the debtor do not constitute an exercise of such powers as a matter of
law.

5
Section 922(a) of the Bankruptcy Code provides:
(a) A petition filed under this chapter operates as a stay, in addition to the stay provided by section
362 of this title, applicable to all entities, of
(1) the commencement or continuation, including the issuance or employment of process, of a
judicial, administrative, or other action or proceeding against an officer or inhabitant of the debtor
that seeks to enforce a claim against the debtor; and
(2) the enforcement of a lien on or arising out of taxes or assessments owed to the debtor.
11 U.S.C. 922 (emphasis added). It appears that CalPERS is not seeking to lift the stay under section
922(a). However, under California law, a writ of mandamus is addressed to an officer of the City, which
would implicate section 922(a) of the Bankruptcy Code, and CalPERS has not addressed any cause for the
relief of stay under section 922(a).
6
Pursuant to section 902 of the Bankruptcy Code, property of the estate, when used in a section
that is made applicable in a case under chapter 9 by section 103(e) or 901, means property of the debtor.
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1. CalPERS Is Not Vested With Police and Regulatory Powers
CalPERS lacks the police or regulatory powers contemplated by section 362(b)(4). Police
power referred to in section 362(b)(4) is the power of sovereignty or power to governthe
inherent reserved power of the state to subject individual rights to reasonable regulation for the
general welfare. Massingill v. Dept of Food & Agric., 102 Cal. App. 4th 498, 504
(2002)(citation omitted). In contrast, CalPERS authority is limited to actuarial services and to
the protection and delivery of the assets, benefits, and services for which the Board has a
fiduciary responsibility. Westly v. California Pub. Employees Ret. Sys. Bd. of Admin., 105 Cal.
App. 4th 1095, 1110 (2003) (holding that CalPERS lacks plenary authority over the pension
system).
CalPERS attempts to obfuscate the narrow scope of its authority by claiming to be an
arm of the state. See Mem. at. 1, 2, 6. Regardless of whether that claim is correct, CalPERS
task of pension administration is neither a sovereign activity nor an exercise of police or
regulatory powers. State law does not even establish CalPERS as a single statewide retirement
system serving all public employees. Rather, state law authorizes a variety of retirement system
options for employees of local jurisdictions.
7
Municipalities are not, and have never been,
required to participate in CalPERS. Some cities have chosen to do so, and many (such as the
cities of Fresno, Los Angeles, San Diego and San Jose)
8
have not.
9
CalPERS cites no authority

7
For example, counties can establish their own retirement system under the 1937 Act. See Cal.
Gov. Code 31500. Teachers throughout the State are members of a separate state retirement system,
CalSTRS, which local school districts are compelled to join. See Cal. Educ. Code 22501.
8
Twenty out of fifty-eight California counties and numerous charter cities established their own
retirement systems.
9
Under California law, the provision of pension benefits by a charter city such as San Bernardino is
strictly a municipal affair reserved to the municipality not to the state (or, for that matter, to CalPERS).
Whether an issue is considered a municipal affair is important because the settled rule is that a city
operating under a freeholders charter is exempt from the operation of general laws with respect to all
municipal affairs as to which such charter speaks. Klench v. Bd. of Pension Fund Comrs of City of
Stockton, 249 P. 46, 48 (Cal. Ct. App. 1926). The California Supreme Court has also observed that
establishment of an employee pension plan is a municipal affair. Bellus v. City of Eureka, 69 Cal. 2d
336, 345-46 (1968). Accordingly, treatment of the pension liability or the claim or contract with CalPERS
in no way implicates Code section 903. Thus charter (or home rule) cities, like the City, have total
control over the manner by which they provide for retirement benefits. The State Constitution makes it
abundantly clear that wages and retirement benefits paid to the Citys employees are a municipal affair
under the exclusive control of the San Bernardino Common Council. Article 11, Section 5(b) of the State
Constitution provides that charter cities have plenary authority over the manner in which, the method
by which, the times at which, and the terms for which [its] municipal officers and employees whose
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vesting it with broad police or regulatory powers or enabling it to avail itself of section 362(b)(4).
CalPERS lack of police powers is further highlighted by comparison to other
governmental agencies expressly vested with police and regulatory powers, such as the Pension
Benefit Guaranty Corporation (PBGC). PBGC was created by Congress under Title IV of
ERISA specifically to carry out provisions of that law. See 29 U.S.C. 1302(a) (The purposes of
this subchapter, which are to be carried out by the corporation . . . .). Courts have since
recognized that PBGC was granted certain regulatory [and] investigatory . . . powers that may
be exercised despite the automatic stay. In re Chateaugay Corp., 87 B.R. 779, 787, 803
(S.D.N.Y. 1988) (emphasis added). CalPERS has no comparable police or regulatory powers.
2. CalPERS Attempt to Obtain Payment from the City Does Not
Constitute an Exercise of Police Powers as a Matter of Law
In addition, CalPERS effort to enforce the Citys unsecured obligations owed to it does
not constitute an exercise of police and regulatory powers for the purposes of section 362(b)(4).
The purpose of that section is to discourage[] debtors from submitting bankruptcy petitions
either primarily or solely for the purpose of evading impending governmental efforts to invoke
the governmental police powers to enjoin or deter ongoing debtor conduct which would seriously
threaten the public safety and welfare (e.g., environmental and/or consumer protection
regulations). In re Nortel Networks, Inc., 669 F.3d 128, 137 (3d Cir. 2011)(citation omitted),
cert. denied, 133 S. Ct. 34 (2012). [T]he terms police or regulatory power as used in [section
362(b)(4)] refer to the enforcement of state laws affecting health, morals, and safety, but not
regulatory laws that directly conflict with the control of the res or property by the bankruptcy
court. Hillis Motors, Inc. v. Hawaii Auto. Dealers Ass'n, 997 F.2d 581, 591 (9th Cir. 1993),
citing In re Missouri v. U.S. Bankruptcy Court for the E.D. of Ark., 647 F.2d 768, 776 (8th
Cir.1981).
10
In fact, any state action that conflicts with the bankruptcy courts control of the

compensation is paid by the city shall be elected or appointed, and for their removal, and for their
compensation . . . Further, the San Bernardino City Charter makes clear that the Common Council has
complete control over how it compensates its employees, authorizing the Council to fix the qualifications,
duties and compensations of City employees. See Exhibit 2, San Bernardino, CA, Annotated Charter
Section 40(s) (March 6, 2006).

10
Section 362(b)(4) was amended in 1998, but the amendment did not change the scope of what
constitutes police or regulatory power. The amendment only affected the scope of the resulting exception
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property of the debtor is necessarily outside the scope of the governmental power exception. Id.
Bankruptcy courts in the Ninth Circuit apply two overlapping tests to determine whether a
particular action by a government unit falls within the exception to the automatic stay. In re
Berg, 230 F.3d 1165, 1167 (9th Cir. 2000).
Under the pecuniary purpose test, the court determines whether the government
action relates primarily to the protection of the government's pecuniary interest in
the debtor's property or to matters of public safety and welfare. If the government
action is pursued solely to advance a pecuniary interest of the governmental
unit, the stay will be imposed. The public policy test distinguishes between
government actions that effectuate public policy and those that adjudicate private
rights.
Id. (emphasis added). CalPERS argument fails under both tests.
The pecuniary purpose test distinguishes between actions designed to advance pecuniary
interests and those serving the public welfare. The essential inquiry is whether the contested
action is predicated on some act of the debtor that is injurious to the public good. In re Nortel
Networks, Inc., 669 F.3d 128, 141-42. In the absence of a threat to public welfare, the
governmental action is deemed to be driven by pecuniary interests and subject to the automatic
stay. Id. Proceedings brought by CalPERS to determine let alone collect a debtors liability
for an alleged pension fund shortfall are outside the police powers exception as a matter of law.
Id. Cf. In re CSC Indus., Inc., 232 F.3d 505 (6th Cir. 2000) (holding that PBGCs claim for
missed minimum funding contributions was not entitled to a tax priority when operation of the
section 362(a)(4) automatic stay prevented the imposition of a statutory lien.). CalPERS seeks to
lift the stay solely to obtain payment from the City and is driven by purely pecuniary concerns.
The deferral of pension contributions is not the kind of far reaching public wrong the correction
of which warrants exemption from automatic stay. In fact, such deferral does not harm CalPERS
or the Citys pension program. See Esuchanko Decl. 7, 18, 22-26. Accordingly, CalPERS
efforts to gain a pecuniary advantage by interfering with this Courts exclusive jurisdiction over
the debtors property should be denied. See Hillis, 997 F.2d at 591.

from the automatic stay. Specifically, it (i) combined former subparagraph 362 (b)(4) (permitting
commencement and continuation of an action) and with former subparagraph 362 (b)(5) (permitting
enforcement of a nonmonetary judgment); (ii) expanded the scope of the exception to include the stay
under section 362(a)(3) and (a)(6); and (iii) extended the exception to organizations operating under the
Chemical Weapons Convention. Collier on Bankruptcy 362.05[5][b].
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The application of the automatic stay to CalPERS is independently supported by the
public interest test because CalPERS seeks to protect private rather than public rights. See Nortel
Networks, Inc., 669 F.3d at 142. The key inquiry under the public interest test is whether the
particular lawsuit is undertaken by a governmental entity in order to effectuate public policy or,
instead, to adjudicate private rights. Chao v. Hosp. Staffing Servs., Inc., 270 F.3d 374, 389 (6th
Cir. 2001) (hot goods action by the Secretary of Labor brought pursuant to the Fair Labor
Standards Act was not exempt from the automatic stay because it sought to recover moneys for
the benefit of the harmed workers and not advance the welfare of the public at large). Where the
suit seeks to adjudicate private rights with only an incidental benefit to the public, it is subject to
the automatic stay. Id. at 390.
Here, far from concerning the public at large, CalPERS effort seeks to benefit an
extremely narrow category of private parties: San Bernardino municipal employees. Under the
holding of In re Nortel Networks, Inc., members of a single pension fund are too narrow a group
of beneficiaries to justify the application of the police powers exception.
CalPERS reliance (Mem. at 6) on Chateaugay, 87 B.R. 779, is misplaced. The PBGC
action in that case passed muster under section 362(b)(4) because it was primarily to prevent
public harm from wrongful pension plan terminations and only incidentally involved a pecuniary
interest of the plan beneficiaries. Id. at 805. In contrast, CalPERS seeks primarily pecuniary
relief for the benefit of a narrow group of private parties.
11

Finally, but importantly, even if CalPERS otherwise satisfied section 362(b)(4) and
obtained a money judgment against the City, it would still be prohibited from levying on the
Citys assets or taking any other collection activity. See Collier at 362.05[5][b] (a governmental
unit acting under the police powers exception may enforce only those judgments and orders that
do not require payment.) (emphasis added). Monetary recovery is impermissible because it
would give the governmental unit an unfair advantage over other creditors exactly the result
sought here by CalPERS. Id., citing H.R. Rep. No. 595, 95
th
Cong., 1
st
Sess. 343 (1977),
reprinted in App. Pt. 4(d)(i) infra; S. Rep. No. 989, 95
th
Cong., 2d Sess. 50-51 (1978), reprinted

11
Moreover, as noted in Part I.A.1 above, unlike CalPERS, PGBC is expressly vested with
regulatory powers.
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in App. Pt(e)(i) infra, Penn Terra, Ltd. v. Dept of Envtl. Res., 733 F.2d 267 (3d Cir. 1984). See
also City of Stockton, 478 B.R. 8, 26 (Bankr. E.D. Cal. 2012) (even in the absence of a stay,
enforcement of a money judgment against the debtor would interfere with the bankruptcy courts
exclusive jurisdiction over the debtors property).
Accordingly, CalPERS is not exempt from the automatic stay under section 362(b)(4).
B. Neither the Tenth Amendment Nor Section 903 of the Bankruptcy Code
Exempt CalPERS from Application of the Automatic Stay
Citing section 903 of the Bankruptcy Code, CalPERS also argues that as an arm of the
state it is exempt from the automatic stay and may take any actions necessary to force the
Citys compliance with its obligations to CalPERS. Mem. at 7-8. In so arguing, CalPERS
fundamentally misconstrues the Tenth Amendment and the nature of the federal bankruptcy laws
and seeks to usurp or nullify the Bankruptcy Codes protections for municipal debtors.
Whether or not CalPERS is an arm of the state, in this matter it is simply an unsecured
creditor of the City. As such, it must comply with the provisions of the Bankruptcy Code as all
other creditors, even including the State itself, must. Contrary to CalPERS assertions, Mem. at
6-7, section 903 does not specially exempt state creditors from the protections and powers
made available to a municipal debtor through the Bankruptcy Code sections incorporated into
chapter 9. Collier on Bankruptcy at 922.02[4] (Section 903 is directed toward the relationship
of sovereignty between the state and its municipality and should not be construed to extend to any
debtor-creditor relationship between them, thereby enabling the state to obtain preference over all
other creditors in the conduct of a municipal bankruptcy case.). Rather, section 903 merely
affirms that chapter 9, by its terms and operation, appropriately reserves to the state the power to
control the municipal debtor in the exercise of its political and governmental powers in
accordance with the Tenth Amendment. See In re Orange Cnty. (hereinafter Orange County
II), 191 B.R. at 1005, 1017, 1021 (Bankr. C.D. Cal. 1996)(noting that Federal preemption on
bankruptcy and debt adjustment matters does not interfere with the political or governmental
powers of the state).
Nevertheless, CalPERS argues that as an alleged sovereign, it may force the City to make
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payments to CalPERS. Mem. at 7. CalPERS would place itself beyond the reach of the
automatic stay that restrains the actions of all other creditors. This turns the Supremacy Clause
on its head. As demonstrated by longstanding precedent, even if CalPERS is an arm of the state
and even is indeed a sovereign, it is nonetheless subject to all of the provisions of the
Bankruptcy Code in this case, including the automatic stay.
Mission Independent School District v. Texas, 116 F.2d 175 (5th Cir. 1940) involved a
state law that purported to exempt state-owned municipal bonds from the purview of any
municipal bankruptcy proceeding, effectively preventing impairment of state-owned bonds in a
municipal bankruptcy case. Id. at 176. The Fifth Circuit held that once the state had authorized
its municipalities to file a bankruptcy case, the state law providing for preferential treatment of
state-owned debt was invalid due to its conflict with the Bankruptcy Act:
The Bankruptcy Act as a law of Congress made in pursuance of the Constitution of
the United States, is part of the supreme law. It makes no provision for separate or
preferential treatment of a bondholding state as a creditor. The State of Texas
bought the bonds it holds for the school fund, and paid for them just as others did.
It obtained no better right to repayment. The bonds it holds against its own
subdivisions as an investment stand just as though they were municipal bonds
issued in another state. The State of Texas is simply a bond creditor as others are.
Id. at 178. As shown in In re City of Stockton, 478 B.R. 8 (Bankr. E.D. Cal. 2012), this 70
year-old precedent remains the law today. In Stockton, decided in August of this year, certain city
retiree creditors requested relief from the automatic stay on the grounds that their claims were
protected from impairment by the Contracts Clause of the United States Constitution, a similar
provision in the California Constitution, and by other provisions of California law. Id. at 13. The
Court denied that request, citing Mission approvingly for the proposition that a state cannot
immunize . . . [itself] . . . from impairment. Id. at 16-17. Yet this is precisely what CalPERS
asserts it, as sovereign, can do.
12

12
Chapter 9 is not unique in this respect. A states claims as a creditor are not entitled to special
treatment even if provided by state law. See Van Huffel v. Harkelrode, 284 U.S. 225 (1931) (Bankruptcy
Act decision in which the Supreme Court upheld a bankruptcy court's authority to sell a debtor's property
free and clear of a county tax lien); New York v. Irving Trust Co., 288 U.S. 329 (1933) (Supreme Court
sustained a bankruptcy courts order barring the State of New York's tax claim that was filed after the
claims bar date reasoning that [if] a state desires to participate in the assets of a bankrupt, she must
submit to the appropriate requirements); Tennessee Student Assistance Corp. v. Hood, 541 U.S. 440
(2004) (holding that a state, regardless of its sovereignty, is bound by a bankruptcy courts discharge
order); Mission Indep. Sch. Dist., 116 F.2d at 178 (rejecting state law that prevented impairment of
municipal bonds owned by the state). It has been beyond legal dispute for decades that a bankruptcy
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CalPERS also misconstrues the Constitutional underpinnings of section 903. State
consent is the key to the constitutional analysis. Once a state has authorized a municipality to
seek bankruptcy protection as it has done in this case the interests of state sovereignty are at
an end with respect to fundamental bankruptcy issues regarding the adjustment of debts and the
automatic stay. Simply put, the authorization provisions empower states to act as gatekeepers to
their municipalities access to chapter 9. In turn, a states authorization that its municipalities
may seek Chapter 9 relief is a declaration of state policy that the benefits of Chapter 9 take
precedence over control of its municipalities. Intl Bhood of Elec. Workers v. City of Vallejo
(hereinafter Vallejo II), 432 B.R. 262, 267-68 (E.D. Cal. 2010) (emphasis added). To hold
otherwise would run afoul of the Bankruptcy Clauses provision for uniform bankruptcy laws:
If chapter 9 permitted states to define all properties of the debtor in bankruptcy
regardless of the situation and to rewrite bankruptcy priorities, then chapter 9
would become a balkanized landscape of questionable value. Moreover, chapter 9
would violate the constitutional mandate for uniform bankruptcy laws.
Orange County II, 191 B.R. at 1020(emphasis in original). As a consequence, states are not free
to pick and choose among the provisions of the Bankruptcy Code that they wish to have applied
in any particular municipal bankruptcy case to which they have consented.
This Court has previously determined that application of the automatic stay in a municipal
bankruptcy case does not run afoul of the Tenth Amendment. See In re Cnty. of Orange
(hereinafter Orange County I), 179 B.R. 185, 189-90 (Bankr. C.D. Cal. 1995). In Orange
County I, a creditor sought relief from the automatic stay on the basis that section 904 of the
Bankruptcy Code prevented the bankruptcy court from requiring that the City make set-asides to
adequately protect the creditors debt. Id. at 187, 189. The Court rejected the creditors
argument, noting that the county consented to the bankruptcy courts jurisdiction by filing for
chapter 9 protection and that section 901 specifically incorporates section 362 and the automatic
stay. Id. at 190.
More recently in the City of Stocktons bankruptcy case, the court ruled that [a] state

court may impair, expunge, and discharge the claims of a state, notwithstanding its status as the
Sovereign.

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cannot rely on the section 903 reservation of state power to condition or to qualify, i.e. to cherry
pick, the application of the Bankruptcy Code provisions that apply in chapter 9 cases after such a
case has been filed. In re City of Stockton, 478 B.R. at 16. The court succinctly summarized the
law as follows:
[T]he municipalitys voluntary act of filing a chapter 9 case triggers two relevant
consequences. First, the municipality consents, within the meaning of 904, to
interference by a federal court as to the Bankruptcy Code provisions that apply in
chapter 9 cases. Second, sovereign immunity is voluntarily abrogated to the extent
provided in 106.
Id. at 22 (citations omitted). Thus, since the state must consent to a bankruptcy filing under
section 109(c)(2), the state consents to the displacement of its own law in order to obtain the
benefits uniquely available under the Bankruptcy Code. Ryan Preston Dahl, Collective
Bargaining Agreements and Chapter 9 Bankruptcy, 81 Am. Bankr. L.J. 295, 333 (2007).
Although sections 109(c)(2) and 903 of the Bankruptcy Code allow a state to establish rules for
access to chapter 9 and protect a municipality from undue bankruptcy court interference in the
exercise of the municipalitys political or governmental powers, those sections do not allow a
state to modify its application or to exempt itself from provisions of the Bankruptcy Code the
state deems undesirable once authorization to file has been given. See City of Stockton, 478 B.R.
at 17. Other courts in California have uniformly reached the same conclusion. See Vallejo II,
432 B.R. at 267-68 (same); In re City of Vallejo (hereinafter Vallejo I), 403 B.R. 72, 76 (Bankr.
E.D. Cal. 2009); Orange County II, 191 B.R. at 1021(By authorizing the use of chapter 9 by its
municipalities, California must accept chapter 9 in its totality; it cannot cherry pick what it likes
while disregarding the rest.).
These cases are fatal to CalPERS assertion that it is exempt from the automatic stay, a
fundamental Bankruptcy Code provision that protects bankrupt municipalities. The State of
California, of which CalPERS claims to be an arm, may not authorize the City to file for
bankruptcy protection and then cherry pick, through CalPERS or otherwise, the Code provisions
that it would prefer to apply to State-related claims. Such cherry picking has been uniformly
rejected.

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In summary, neither section 362(b)(4) nor section 903 exempt CalPERS from the
operation of the automatic stay.
II. CALPERS HAS NOT AND CANNOT MEET ITS BURDEN OF PROOF THAT IT
IS ENTITLED TO RELIEF FROM THE AUTOMATIC STAY FOR CAUSE
The automatic stay give[s] debtors a breathing spell from their creditors to stop all
collection efforts, all harassment, and all foreclosure actions. In re Plumberex Specialty Prods.,
Inc., 311 B.R. 511, 556 (Bankr. C.D. Cal. 2004) (quoting Depit v. Commr Int Revenue Serv., 18
F.3d 768, 771 (9th Cir. 1994). This breathing spell allows a municipal debtor to focus on the
adjustment of its debts. In addition, the automatic stay promotes the goal of equality of
distribution by preventing a piecemeal dismemberment of the bankruptcy estate, while assuring
that a debtor . . . has an opportunity to use property necessary for an effective reorganization.
Plumberex, 311 B.R. at 556. Accord, Hillis Motors, Inc., 997 F.2d at 585.
Section 362(d) of the Bankruptcy Code sets forth the limited circumstances under which
parties in interest may be entitled to relief from the automatic stay. As an alternative to its
exemption claim, discussed in Part I above, CalPERS asserts that the stay should be lifted.
CalPERS alleges only two bases for such relief, each of which invokes the for cause provision
of section 362(d)(1) of the Bankruptcy Code: (1) the City has failed to comply with applicable
California law, Mem. at 7, and (2) the City has failed to pay postpetition administrative
expenses. Mem. at 8.
CalPERS, as the party seeking to lift or modify the automatic stay, bears the initial burden
to show cause as to why the stay should be modified or lifted: If the movant fails to make an
initial showing of cause . . . the court should deny relief without requiring any showing from the
debtor that it is entitled to continued protection. In re Sonnax Indus., Inc., 907 F.2d 1280, 1285
(2d Cir. 1990); see also In re Plumberex, 311 B.R. at 557. CalPERS has not satisfied its burden
of demonstrating that either of its proffered bases for relief from the stay is legally and factually
sufficient.
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A. Alleged Violations of California Law Are Insufficient to Justify Relief from
the Stay
1. The Mere Noncompliance with State Law Does Not Constitute
Cause to Lift the Automatic Stay
CalPERS mistakenly asserts that it is entitled to relief from the automatic stay for cause
merely because the City has failed to comply with applicable state law. This argument, which is
similar to its erroneous argument for exemption, see Part I.B. above, completely ignores
governing authority including the Supremacy Clause and the Bankruptcy Clause of the United
States Constitution, decisions of the United States Supreme Court and applicable chapter 9
precedent establishing that federal law, in this case the Bankruptcy Code, preempts and
supersedes inconsistent state law.
The Supremacy Clause provides that the Constitution, and the Laws of the United States
. . . shall be the supreme Law of the Land. U.S. Const. art. VI, 2. Where the Constitution
grants the federal government the power to act, the Supremacy Clause establishes that federal law
prevails over competing state provisions. See Perez v. Campbell, 402 U.S. 637, 652 (1971) (any
state legislation which frustrates the full effectiveness of federal law is rendered invalid by the
Supremacy Clause). Such federal law includes the Bankruptcy Code:
The Federal government possesses supreme power in respect of
bankruptcies . . . If a state desires to participate in the as sets of a
bankrupt, she m ust submit to ap propriate requirements by the
controlling power; otherwise, orde rly and expeditious proceedings
would be impossible and a funda mental purpose of the Bankruptcy
Act would be frustrated.
New York v. Irving Trust Co., 288 U.S. 329, 333 (1933) (citations omitted). See also Cent.
Virginia Cmty. Coll. v. Katz, 546 U.S. 356, 373 (2006) ([T]he history of the Bankruptcy Clause .
. . shows that the Framers' primary goal was to prevent competing sovereigns' interference with
the debtor's discharge).
The Bankruptcy Clause of the United States Constitution provides that Congress shall
have Power [t]o . . . establish . . . uniform Laws on the subject of Bankruptcies throughout the
United States, U.S. Const., art. I, 8, cl. 4. Thus, the federal bankruptcy law preempts contrary
state law, leaving the state law inapplicable and unenforceable. See Vallejo I (finding that a
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chapter 9 debtor may reject collective bargaining agreements under section 365 of the Bankruptcy
Code notwithstanding conflicting state law), affd, Vallejo II. The California Constitution also
must yield to the extent it conflicts with the Bankruptcy Code.
13
See Vallejo I, 403 B.R. at 77.
CalPERS asserts that the City is violating California law and the California Constitution
by failing to pay CalPERS in full and on time during the pendency of this chapter 9 case.
Claiming it is an arm of the state, Mem. at 2, and that its contractual claim against the City is a
statutory obligation, id. at 4, CalPERS argues that for those reasons alone the stay must be
lifted. CalPERS conveniently ignores controlling Supreme Court authority upholding the
primacy of the Bankruptcy Code in relation to state law. In Ashton v. Cameron County Water
Improvement District No. 1, 298 U.S. 513, 530 (1936), the Supreme Court held that the especial
purpose of all bankruptcy legislation is to interfere with the relations between the parties
concerned to change, modify, or impair the obligation of their contracts. Ashton, 298 U.S. at
530. Further, in United States v. Bekins, 304 U.S. 27, 53-54 (1938), the Supreme Court explained
that bankruptcy law provides a remedy -- the right to impair contracts -- that the states cannot
provide on their own due to the prohibitions of the Contracts Clause, Article I, Sec. 10, of the
United States Constitution.
CalPERS also ignores chapter 9 precedent, including precedent in this Court, upholding
the preemption of state law in bankruptcy. Despite CalPERS assertions to the contrary, the
California legislature cannot rewrite bankruptcy priorities. See Orange County II, 191 B.R. at
1017. More recently, in the pending chapter 9 case of the City of Stockton, the bankruptcy court
for the Eastern District of California examined the Supremacy Clause and the Bankruptcy Clause

13
Not only is the California Constitution trumped by federal law, it is not violated by deferral of
payments to CalPERS. Contrary to CalPERS assertion, Mem. at 5-6, Section 17 of Article XVI of the
California Constitution is not directed toward enforcement of employer contributions and does not vest
CalPERS with the authority to do so. The express voter intent behind Proposition 162, which added that
constitutional provision, was to prevent governmental looting of pension funds already appropriated and
paid into the system. See Exhibit 3, California Ballot Pamphlet, dated November 3, 2991, pp. 3-4, 36;
Westly, 105 Cal. App. 4th at 1110-12 (carefully examining the voter intent behind Proposition 162 and
holding that CalPERS authority was limited to administer[ing] investments, payments, and other services
of CalPERS). Valdes v. Cory, 189 Cal. Rptr. 212 (Cal. App. 1983), cited by CalPERS, confirms this. Far
from explain[ing] that a failure to make pension contributions is no different than taking funds from
CalPERS and diverting them to another purpose, Valdes stands for the proposition that the State
legislature cannot withhold from CalPERS funds already appropriated pursuant to PERL and then direct
CalPERS to use its reserve funds to fill the deficiency left by the States non-payment. Id.
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as well as the preemption issues raised in the chapter 9 cases and found that state laws like the
PERL and the California Labor Code are ineffective and preempted in a chapter 9 case. See City
of Stockton, 478 B.R. at 16-17 (retiree benefits could be impaired under the Bankruptcy Code,
and conflicting California statutes and the California Constitution are ineffective and preempted
in a chapter 9 case); Vallejo I, 403 B.R. at 75 (California labor law and the California
Constitution are preempted by the Bankruptcy Code).
14

Here, as in Stockton, section 904 of the Bankruptcy Code prohibits this Court from
ordering the City to comply with its state law obligations to CalPERS because such an order
would interfere with . . . the property or revenues of the debtor. . . . 11 U.S.C. 904(2).
Section 904 trumps any conflicting state law since the 904 limitation on the courts authority is
absolute . . . . City of Stockton, 478 B.R. at 20.
In a transparent attempt to skirt the strictures of the Bankruptcy Code that it does not like,
CalPERS asks this Court to lift the automatic stay to allow CalPERS to do in state court what it
cannot do in this Court enforce state law favorable to it and detrimental to the City and other
unsecured creditors. This request should be denied for the same reasons that Judge Klein
declined to lift the automatic stay in Stockton:
The logic of plaintiffs requests is that, if the bankruptcy court does not
have authority to interfere with the Citys property or revenues by virtue of
904, then they should be allowed to go to a forum that does have such
authority i.e., the California state courts . . . . The core of a chapter 9
case is adjustment of the debtor-creditor relationship. The plaintiffs here
are creditors. They want two things: a judgment that their health benefit
claims are valid and an order compelling the City to maintain payments for
these benefits. Those issues are central to the debtor-creditor relationship
to be dealt with, along with every other unhappy creditor, in the collective
chapter 9 proceeding.

14
In Vallejo I, the court held that California labor law restricting the debtors ability to reject or
impair obligations arising under collective bargaining agreements was preempted by the Bankruptcy Code
in the context of an authorized chapter 9 case: Assuming for sake of argument that California law
superimposes its labor laws onto section 365, such law would be unconstitutional Incorporating state
substantive law into chapter 9 to amend, modify or negate substantive provisions of chapter 9 would
violate Congress ability to enact uniform bankruptcy laws. Vallejo I, 403 B.R. at 76-77 (emphasis
added) (citations omitted); accord Vallejo II, 432 B.R. at 270 (incorporating state labor law is, as the
Bankruptcy Court so found, prohibited by the Supremacy Clause, the Uniformity [Bankruptcy] Clause and
the Contracts Clause).
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Id. at 25 (emphasis added).
15
Here, CalPERS is no more than an unhappy creditor
whose plea for special treatment is unsupported by any law or facts and, if granted, would
permit the single largest unsecured creditor in this case to seek advantageous treatment to
the detriment of the City and all of its other creditors.
16
As the Court stated, the
bankruptcy policy of favoring a collective proceeding to work out a comprehensive
solution to municipal insolvency counsels against permitting nonbankruptcy litigation that
would materially interfere with the reorganization process. Id. at 26.
2. 28 USC 959(b) Does Not Warrant Lifting the Stay
CalPERS further argues that failure to comply with state law violates 28 U.S.C. 959(b)
and thereby constitutes cause to grant CalPERS relief from the automatic stay. Mem. at 7.
CalPERS wholly misconstrues that statutory section.
28 U.S.C. 959(b), a provision of the judicial code, states as follows:
Except as provided in title 1166 of title 11, a trustee, receiver or manager
appointed in any cause pending in any court of the United States, including a
debtor in possession, shall manage and operate the property in his possession as
such trustee, receiver or manager according to the requirements of the valid laws
of the State in which such property is situated, in the same manner that the owner
or possessor thereof would be bound to do if in possession thereof.
By its terms, section 959(b) of title 28 is inapplicable to the City because it only applies to
an appointed trustee, receiver or manager, including a debtor in possession. The City, as a
municipal debtor, is none of these.
17
Furthermore, section 959(b) only applies to property being

15
The Stockton court also noted that enforcement of a state court judgment compelling such
payments during the chapter 9 case would run afoul of 28 U.S.C. 151 & 1334(e)(1), which upon
commencement of a chapter 9 case vest the bankruptcy court with exclusive jurisdiction over all of the
debtors property.
16
In fact, the relief that CalPERS threatens to seek in state court a writ of mandamus to compel
the payment of pension contributions or seeking the appointment of a receiver is so sweeping that, if
granted, it could make it impossible for the City to confirm a Plan of Adjustment in this case. Not only
would a receiver be antithetical to a chapter 9 proceeding, but CalPERS cites no authority for appointment
of a receiver even under state law.
17
Code section 901 expands the contents of chapter 9 by incorporating other chapters of the
Bankruptcy Code into chapter 9. Collier on Bankruptcy at 901.01. Not all sections, however, are made
applicable. For example, because of the unique nature and purpose of chapter 9 proceedings, those
provisions providing for the appointment of a trustee would certainly involve interference with the
political affairs of the municipality and are excluded. Collier on Bankruptcy at 901.01. Indeed, only in
unique circumstances and for the limited role of pursuing avoidance actions, may a trustee be appointed in
the chapter 9 context. Collier on Bankruptcy at 926.02 [1] (Because of a debtors desire not to
antagonize creditors with whom it is negotiating a plan, and because of the strict limitations on the courts
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managed or operated by third-party fiduciaries. Because chapter 9 does not incorporate the
concept of a bankruptcy estate, a municipal debtor maintains full control over its own property
during the chapter 9 proceeding. Vallejo I, at 78, aff'd sub nom., Vallejo II. Because no fiduciary
relationship was established upon the commencement of the chapter 9 case, section 959(b) is
inapplicable to the City.
18

Finally, section 959(b) reflects general bankruptcy policy that fostering the
rehabilitation of debtors will not serve to preempt otherwise applicable state laws dealing with
public safety and welfare. In re Toledano, 299 B.R. 284, 293 (Bankr. S.D.N.Y. 2003) (quoting
Robinson v. Mich. Consol. Gas Co., 918 F.2d 579, 589 (6th Cir. 1990)). As with section
362(b)(4), the deferral of the Citys post-petition payments to CalPERS does not raise the public
safety and welfare concerns that section 959(b) was enacted to protect. See Part I.A above.
CalPERS completely ignores the foregoing and instead boldly asserts that the alleged
legal requirement that the City pay CalPERS is the type of circumstance that typically requires
relief from the automatic stay. Mem. at 7-8. CalPERS relies exclusively on Hillis Motors, 997

ability and power to interfere with the governmental or political functions of the debtor in a chapter 9 case,
courts should be very hesitant to appoint a trustee on request of a creditor to pursue an avoiding power
granted to the debtor under section 901(a).). Collier on Bankruptcy at 901.01. Further, section 902(5)
provides that the term trustee, when used in a section that section 103(e) or 901 makes applicable in a
chapter 9 case, means debtor. That is, the term trustee in an applicable section should be interpreted as
debtor. Neither section 103(e) nor section 901 makes 28 U.S.C. 959(b) applicable in a chapter 9 case.
Therefore, the term trustee in section 959(b) may not be interpreted to refer to the debtor.
A chapter 9 municipal debtor is also not a receiver. Indeed, Code section 105(b) prohibits a
court from appointing a receiver. 11 U.S.C. 105(b). In addition, the principles of the Tenth
Amendment and state sovereignty would prevent such an appointment in any event for a municipal
debtor. Collier on Bankruptcy at 901.03. A chapter 9 municipal debtor is also not a manager.
Finally, a chapter 9 municipal debtor is not a debtor in possession that would be subject to
section 959(b). The term debtor in possession appears only in chapter 11 and 12 of the Bankruptcy
Code and signifies the separate capacity that a prepetition debtor undertakes in a restructuring case. In the
chapter 9 context, however, there is no such term or capacity, and the term debtor in possession does not
exist or have meaning in chapter 9. As stated in a recent chapter 13 decision:
Importantly, the term debtor in possession nowhere appears in chapter 13. By simple logic,
therefore, since the term debtor in possession is only used in the context of chapter 11 and 12, it
follows that a debtor in possession only exists in the context of those chapters and not chapter 13.
In re Ranasinghe, 341 B.R. 556, 565 (Bankr. E.D. Va. 2006).
18
The Bond Creditors are not suggesting that a municipal debtor is not obligated to comply with
applicable state law. Section 959(b) is simply not applicable to a municipal debtor. Additionally, a
municipal debtor must comply with state law to the extent state law does not conflict with, and is not
preempted by, the Bankruptcy Code. See generally Part II.A.1 above. Like section 903 of the Bankruptcy
Code, section 959(b) of title 28 cannot be used to subordinate the Bankruptcy Code to state law.
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F.2d 581. Hillis, however, is a chapter 11 case in which a trustee was appointed; it says nothing
about the applicability of section 959(b) to a chapter 9 proceeding. Moreover, even if section
959(b) were applicable, Hillis explicitly holds that section 959(b) does not in and of itself create
an exception to the automatic stay. Id at 592. See also In re Si Yeon Park, Ltd. v. State Street
Bank and Trust Corp., 198 B.R. 956, 965-66 (Bankr. C.D. Cal 1996). Rather, in deciding
whether to grant relief from the stay, the Court must still balance CalPERS interest against those
of other interested parties, which includes other unsecured creditors and the City. Hillis, 997 F.2d
at 594.
The request by CalPERS nevertheless urges the Court to ignore all other interests and
grant CalPERS relief from the stay to file a state court action to compel the City to pay CalPERS
(through a writ of mandamus and/or an appointment of a receiver over the accounts of the City)
before, and to the substantial detriment of, other creditors. Such action would be directly contrary
to the well-established purposes of the automatic stay, to afford the City the breathing room and
bargaining time it needs and to ensure fair treatment of all interested parties.
3. The Balance of Factors Overwhelmingly Favors Denial of CalPERS
Motion
The grant of relief from the stay is a matter within the discretion of the Court, which must
weigh the relative harms and equities of the relief requested. In re Velo Holdings Inc., 475 B.R.
367, 389 (Bankr. S.D.N.Y. 2012) (even if the Court did find that cause exists, based on a
balance of harms and equities, the Court would not modify the automatic stay.) (citation
omitted).
Although the Ninth Circuit has not adopted a uniform test, numerous courts in this district
and in other Circuits apply the twelve factor test (hereinafter referred to as the Curtis Factors)
19

19
The Curtis Factors are:
(1) whether the relief will result in a partial or complete resolution of the issues;
(2) lack of any connection with or interference with the bankruptcy case;
(3) whether the other proceeding involves the debtor as a fiduciary;
(4) whether a specialized tribunal with the necessary expertise has been established to hear the
cause of action;
(5) whether the debtors insurer has assumed full responsibility for defending it;
(6) whether the action primarily involves third parties;
(7) whether litigation in another forum would prejudice the interests of other creditors;
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when considering whether to modify the automatic stay. In re Plumberex, 311 B.R. at 559; Natl
Football League Players Assoc., Nos. SACV 03-0389 NM, SA 03-1103, 2003 WL 26112510, *1
(Bankr. C. D. Cal. Sept. 29, 2003); In re Sonnax Indus., Inc., 908 F.2d 1280, 1286 (2d Cir. 1990);
see also In re A Partners, LLC, 344 B.R. 114, 127 (Bankr. E.D. Cal. 2006) (applying a five factor
test).
20
The Curtis Factors were developed largely to address the situation of a movant using a lift
stay motion to continue prepetition litigation, which is inapplicable here. Thus, the Bond
Creditors consider only those factors applicable to the relief requested. In re Lehman Bros.
Holdings Inc., 435 B.R. 122, 138 (S.D.N.Y. 2010) (Only those factors bearing on the particular
case need be considered.); see also In re Sonnax Indus., Inc., 908 F.2d at 1286 (considering only
four of the twelve factors). Additionally, courts need not assign equal weight to each factor and
have discretion in weighing the factors against one another. In re Tucson Estates, Inc., 912 F.2d
1162, 1166 (9th Cir.1990); In re Universal Life Church, Inc., 127 B.R. 453, 455 (E.D.Cal.1991).
Consideration of the balance of harms is particularly important when determining whether
to modify the automatic stay regardless of which test is applied. See e.g., In re Plumberex, 311
B.R. at 559 (applying the twelfth Curtis Factor, impact of the stay on the parties and the balance
of the hurt); see In re A Partners, LLC, 344 B.R. at 127 (applying the fifth A Partner Factor,
the relative portionality of the harms from modifying or continuing the stay.).
A balancing of harms here overwhelmingly favors denying CalPERS Motion. The Citys

(8) whether the judgment claim arising from the other action is subject to equitable subordination;
(9) whether movants success in the other proceeding would result in a judicial lien avoidable by
the debtor;
(10) the interests of judicial economy and the expeditious and economical resolution of litigation;
(11) whether the parties are ready for trial in the other proceeding; and
(12) impact of the stay on the parties and the balance of harms.

In re Curtis, 40 B.R. 795, 799-800 (Bankr. D. Utah 1984); In re Plumberex, 311 B.R. at 559.
20
Similar to the Curtis Factors, the factors (hereinafter referred to as the A Partners Factors)
considered by the court in In re A Partners, LLC include:
(1) whether the relief with interfere with the bankruptcy;
(2) whether the debtor acted in good faith;
(3) whether there will be injury to the debtor and other creditors if the stay is modified;
(4) impact on the movant if the stay is not modified; and
(5) the relative portionality of the harms from modifying or continuing the stay.

344 B.R. at 127.
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deferral of payment will not result in harm to CalPERS, the pension system as a whole, or even
the Citys employees. See Esuchanko Decl. 7, 18, 22-26. CalPERS own authority establishes
that the adverse impact from the deferral is limited to the amount CalPERS would have earned by
investing the deferred payment. Bd. of Admin. v. Wilson, 52 Cal. App. 4th 1109, 1143-1144 (Cal.
Ct. App. 1997).
21
This impact is de minimis, and further would be ameliorated by any interest to
be paid.
22

In contrast, modifying the automatic stay at this time and allowing CalPERS to litigate
and potentially enforce a judgment requiring the immediate payment of the post-petition
obligations would harm all creditors and put the entire chapter 9 proceeding at risk. For example,
a state court collection action would interfere with the Citys chapter 9 proceeding. At best,
allowing CalPERS to litigate its entitlement to payment of the pension contributions is a waste of
the Citys scarce resources. At worst, granting relief from the automatic stay can result in a state
court judgment compelling payment to CalPERS. Such a result would not only be inconsistent
with purpose of chapter 9 legislation to permit a financially distressed public entity to seek
protection from its creditors while it formulates and negotiates a plan of its debts . . . but would
be financially crippling to the City. Collier on Bankruptcy at 901.01 [1]. The relief CalPERS
seeks to obtain from a state court a writ of mandamus and a receiver over the Citys accounts
would be devastating to the Citys chapter 9 case. Forcing the City to make payment to CalPERS
now would require the City to make further cut costs, which would directly harm the Citys

21
Wilson, relied on heavily by CalPERS, Mem. at 3-4, is only instructive to the extent it supplies the
formula for calculating the impact of a deferral on the fund. Its ultimate analysis of whether a deferral is
permissible is wholly irrelevant because it addresses the propriety of state legislatures continuous deferral
of the totality of the states employer contributions under the Contracts Clause. Here, neither a state
legislative action nor the Contracts Clause is implicated. Furthermore, the Contracts Clause does not
preclude the impairment of contracts in bankruptcy. Ashton v. Cameron Cnty. Water Improvement Dist.
No. 1, 298 U.S. 513, 530 (1936) (The Supreme Court stated in 1936 that the . . .special purpose of all
bankruptcy legislation is to interfere with the relations between the parties concerned to change,
modify, or impair the obligation of their contracts.). United States v. Bekins et al. Lindsay-Strathmore
Irr. Dist. v. Same, 304 U.S. 27 (1938) ([B]ecause the Constitution forbids the passing of State laws
impairing the obligations of existing contracts. Therefore, relief must come from Congress . . .); City of
Stockton, 478 B.R. at 16 (Significantly, the Contracts Clause bans a state from making a law impairing
the obligation of contract; it does not ban Congress from making a law impairing the obligation of
contract).
22
Ironically, the deferral may actually benefit CalPERS if any interest were paid at a rate that
exceeds CalPERS rate of investment returns.
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citizens and its employees, who would necessarily be subject to further cuts in addition to those
already made by the City. Accordingly, granting relief from the stay has the potential to derail
the entire chapter 9 proceeding, a substantial harm (and one that also satisfies the second Curtis
factor (and first A Partner factor) (lack of any connection with or interference with the
bankruptcy case).
Relief from the stay would also severely prejudice the City and other creditors. Contrary
to CalPERS assertions, a judgment compelling payment of the $5,106,107 in alleged accrued and
unpaid post-petition obligations to CalPERS
23
would be financially devastating to the already
insolvent City. See Davido Decl. 5, 25, Table 3. In addition, if CalPERS is allowed to enforce
and collect on this post-petition claim against the City, CalPERS would be receiving special
treatment, elevating its claim above those of other unpaid post-petition unsecured creditors. This
special treatment is contrary to the Bankruptcy Codes important goal of equal treatment among
creditors and weighs against granting the requested relief from stay.
24

Application of the remaining applicable Curtis factors further weighs in favor of the City.
Specifically, the first Curtis Factor concerns whether granting a modification of the stay would
result in a partial or complete resolution of the issues. The answer is no. Any state court decision
would be limited to the current matter of whether the City is permitted to defer payment of its
post-petition obligations to CalPERS. Issues on the treatment of pre-petition and future
obligations of CalPERS would not yet be ripe for litigation. As a result, proceeding to state court
on this narrow issue will not result in a complete resolution of potential issues with CalPERS.
The fourth Curtis factor also supports retention of the automatic stay: the California
Superior Court, in which CalPERS seeks to file its proposed lawsuit, is not a specialized tribunal
with necessary expertise established to hear CalPERS suit.
Finally, the tenth Curtis Factor, which concerns the interests of judicial economy, also
weighs in favor of the City. It would be a waste of the resources of the Court and the City to
litigate CalPERS entitlement to post-petition pension benefits. The cost of protracted litigation

23
See Mem. at 3.
24
This also satisfies the seventh Curtis factor and third A Partners LLC factor (prejudice to other
parties).
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would prejudice the interests of other creditors and parties-in-interest in the Citys chapter 9 case
by, among other things, increasing costs of the City and diverting resources from the vital task of
developing a feasible plan of adjustment. Importantly, granting CalPERS relief to pursue
remedies which could interfere with the Citys control of its property and revenue could be
deemed a violation of section 904 of the Bankruptcy Code.
For the foregoing reasons, alleged violations of state law are insufficient to justify relief
from the automatic stay.
B. The City Has Not Deferred or Failed to Pay Any Postpetition Administrative
Expenses that Justify Relief from the Stay
CalPERS second purported basis for relief from the automatic stay is that the Citys post-
petition obligations to CalPERS constitute administrative expenses that must be paid
immediately, in full, in cash, regardless of the detriment to the City and all other unsecured
creditors. Once again, CalPERS is wrong.
Post-petition operating expenses of a chapter 9 debtor are not priority administrative
expenses. See In re New York City Off-Track Betting Corp., 434 B.R. 131, 135 (Bankr. S.D.N.Y.
2010) (post-petition obligations imposed by state statute are not administrative expenses).
Although Code section 503 is incorporated into chapter 9, the concept of an "estate," created in
section 541, is not part of chapter 9. Vallejo I, 403 B.R. at 78, aff'd sub nom. Vallejo II, 403 B.R.
at 72. Such incorporation would violate the 10th amendment of the United States Constitution.
See In re Valley Health Sys., 429 B.R. 692, 714 (Bankr. C.D. Cal. 2010); 11 U.S.C. 901.
Section 503(b)(1)(A), which provides that the necessary costs and expenses of preserving the
estate are administrative expenses with priority under section 507(a)(2), is inapplicable because
no "estate" exists under chapter 9.
Second, even if post-petition obligations to CalPERS were administrative expenses
which they are not chapter 9 is devoid of any provisions requiring their payment on a current
basis. Indeed, section 904 prohibits bankruptcy courts from mandating that a chapter 9 debtor
make specific payments during the pendency of the case. See In re New York City Off-Track
Betting Corp., 434 B.R. at 140. Even when it comes to confirming a plan of adjustment,
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operating expenses need not be paid in full or be provided priority as a condition to confirmation.
In summary, a bankruptcy court need not and cannot require payment to CalPERS during the
proceeding, and a plan need not require payment of such expenses in full or to provide priority
payments of such expenses as a condition to confirmation. Although Bankruptcy Code section
1129(a)(9) requires a chapter 11 debtor to pay its administrative expenses in cash on the effective
date of the plan, this provision is conspicuously and deliberately excluded from application in
chapter 9. See Code 901.
Finally, CalPERS reliance (Mem. at 7, 8-10) on cases dealing with the treatment of
chapter 11 administrative expenses, including Tuscon Yellow Cab Co., Inc., 789 F.2d 701 (9th
Cir. 1986) and In re World Sales, 183 B.R. 872 (Bankr. 9th Cir. 1995), is simply misplaced:
chapter 9 does not incorporate the notion of an estate and does not require the payment of
administrative expenses at any particular stage of the proceeding. CalPERS citation to Bildisco is
outright misleading. Mem. at 8, 10.
25

In summary, no cause exists to lift the automatic stay.
CONCLUSION
For the foregoing reasons, the Bond Creditors respectfully request that the Court deny the
Motion and issue an order declaring that (i) CalPERS is not exempt from the automatic stay; and
(ii) CalPERS has failed to show cause for relief from the automatic stay.

25
Far from providing for administrative expense treatment for post-petition wages, Bildisco held that
post-petition wages must be treated as general unsecured claims in the event the applicable collective
bargaining agreement is ultimately rejected. N.L.R.B. v. Bildisco & Bildisco, 465 U.S. 513, 531 (1984).
This same rationale extends to post-petition pension obligations at issue here. See In re Bastian Co., Inc.,
45 B.R. 717, 722 (Bankr. W.D.N.Y. 1985), citing Bildisco.
EXHIBIT 1
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Exhibit 1 (1 of 2) Page 2 of 7
1
2
3
4
5
6
7
8
9
10
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28
STATE OF CALIFORNIA )
COUNTY OF SAN BERNARDINO) SS
CITY OF SAN BERNARDINO )
I, GEORGEANN HANNA, City Clerk for the City of San
Bernardino,
DO HEREBY CERTIFY that the foregoing and attached copy of the City of
San Bernardino Resolution No. 2012-278 is a full, true and correct copy of that now
on file in the Office of the City Clerk.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
the official seal of the City of San Bernardino this 29th day of November,
2012.
> ~ # ~
Georgeann anna, City Clerk
- 29 -
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1
RESOLUTION NO. 2012-278
2 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF
SAN BERNARDINO ADOPTING THE FISCAL YEAR 2012/13 AND FISCAL YEAR
3 2013/14 GENERAL FUND BUDGETS AS REVISED BY THE CHANGES
4 DESCRIBED IN THIS REPORT, WHICH JNCORPORATE JlY REFERENCE THE
PRE-PENDENCY PLAN INCLUDING THE 9-POINT ADJUSTMENT PLAN
5 ADOPTED ON SEPTEMBER 5, 2012, AND THE REVISED FIRE DEPARTMENT
ADJUSTMENTS ADOPTED ON OCTOBER 1, 2012; AND AUTHORIZE THE
6 CONTINUATION OF THE FISCAL EMERGENCY THROUGH JUNE 30, 2014, AS
ADOPTED BY COUNCIL RESOLUTION NO. 2012-205 OF THE MAYOR AND
7 COMMON COUNCIL ADOPTED ON JULY 16, 2012; AND AUTHORIZE THE CITY
8 MANAGER TO APPROPRIATE 1112 OF THE FISCAL YEAR 2010/11 OPERATING
BUDGET PER MONTH THRqUGH DECEMBER 31,2012. .
9
10
BE IT RESOLVED BY THE MAYOR AND COMMON COUNCIL OF THE
CITY OF SAN BERNARDINO AS FOLLOWS:
11
SECTION 1. That the Fiscal Year 2012113 and Fiscal Year 2013/14 General Fund
12
Budgets as revised by the -changes described in this report, which incorporate by reference
13 the Pre-Pendency Plan including the 9-Point Adjustment Plan adopted on September 5, 2012,
14 and the revised Fire Department adjustments adopted on October 1,2012; and attached hereto
as Exhibit "A" is adopted; and .
15
16 SECTION 2. Authorize the continuation of the Fiscal Emergency through June 30,
2014, as adopted by. Council Resolution No_ 2012-205 of the Mayor and Common Council
17 adopted on July 16, 2012; and
18
SECTION 3. Authorize the City Manager to appropriate 1112 of the Fiscal Year
19 2010/11 operating budget per month through December 31, 2012.
20 III
21
III
22
23 III
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25
26
27
28
- 30 -
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Exhibit 1 (1 ' of 2) Page 4 of 7
RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF
1 SAN BERNARDINO ADOPTING THE FISCAL YEAR 2012/13 AND FISCAL YEAR
2 2013/14 GENERAL FUND BUDGETS AS REVISED BY THE CHANGES
DESCRIBED IN THIS REPORT, WHICH INCORPORATE BY REFERENCE THE
3 PRE-PENDENCY PLAN INCLUDING THE 9-POINT ADJUSTMENT PLAN
4 ADOPTED ON SEPTEMBER 5, 2012, AND THE REVISED. FIRE DEPARTMENT
ADJUSTMENTS ADOPTED ON OCTOBER 1, 2012; AND AUTHORIZE THE
5 CONTINUATION OF THE FISCAL EMERGENCY THROUGH JUNE 30, 2014, AS
ADOPTED BY COUNCIL RESOLUTION NO. 2012-205 OF THE MAYOR AND
6 COMMON COUNCIL ADOPTED ON JULY 16,2012; AND AUTHORIZE THE CITY
7 MANAGER TO APPROPRIATE 1112 OF THE FISCAL YEAR 2010/11 OPERATING
BUDGET PER MONTH THROUGH DECEMBER 31, 2012.
8 I HEREBY CERTIFy that the foregoing Resolution was duly adopted by the Mayor and
1
9
Common Council of the City of San Bernardino at a Joint Adjourned
10 thereof, held on the 26thday of November . 2012, by the following vote, to wit:
11
12
13
14
15
16
17
18
19
20
21
22
Council Members:
MARQUEZ
JENKINS
VALDNIA
SHORETT .
KELLEY
JOHNSON
MCCAMMACK
AYES NAYS ABSTAIN ABSENT
X
X
x
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_ X_
x
X

meeting
23 The foregoing Resolution is hereby approved this -=------"-__ _ ___ ,2012.
, 24
25
26 Approved as to form:
JAMES F. PENMAN,
27 City A tomey
28 By:
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PENDENCY PLAN
City of San Bernardino
Prepared by:
Andrea Travis-Miller, Acting City Manager
Jason Simpson, Director of Finance
Michael Busch, President, Urban Futures, Inc.
The Pendency Plan was reviewed by the Mayor and Common Council at the regular meeting of
November 19,2012, and was approved at a Special Meeting on November 26,2012. This final
document reflects amendments suggested by and approved by the Common Council.
November 27, 2012
SUMMARY'
This report proposes to take a number of actions related to the City'S budget that combined
represent the City's financial plan for Fiscal Years 2012-13 and 2013-14 and, if approved by the
Common Council, will serve as the City'S Pendency Plan. The City's Pre-Pendency Plan submitted to
the Mayor and Common Council by the City Manager on August 29, 2012, September 5, 2012, and
October 1, 2012 included a plan for all of the City's funds for Fiscal 2012-13. It was noted that the
General Fund remained out of balance while the City worked through labor negotiations and
discussions with its creditors in an attempt to restructure financial obligations that would balance the
fund. While the negotiations process continues, the City must present a balanced financial plan, or
Pendency Plan, for the General Fund that allows the City to continue to provide effective service.
This Pendency Plan would serve as the City's budget while it is under Chapter 9 protection and is
presented for Council consideration as part of this staff report.
The Pendency Plan provides a balanced General Fund through cost reductions to labor, benefits,
debt and other obligations, the details of which are provided below and in the supporting financial
schedules. It should be noted that solvent funds may experience some beneficial impact of the
Pendency Plan changes due to organization wide changes to labor agreements. After the Pendency
Plan is approved, staff will return to the Mayor and Common Council and present the balance of the
non-General Fund operating and capital budgets for approval.
DISCUSSION
The City of San Bernardino has reached a cross roads. Years of financial struggles and challenges from
declining revenues and increasing fixed costs have placed in the City in the position of making difficult
service delivery decisions and financial restructuring a necessity. Continued financial imbalance
between revenues and expenses have now exhausted the City's general financial reserves and burdened
it with obligations it cannot pay, obligations that exceed its current year General Fund resources by
$45.8 million in Fiscal Year 2012-2013 and that, unless addressed structurally to be sustainable, will
continue to grow in future years.
Like most cities in the State, the City of San Bernardino enjoyed the building boom in the past decade
and the aggressive asset valuation and increasing sales tax growth that followed. Unfortunately, when
the boom ended, San Bernardino found itself terribly exposed to the combined impacts of the Great
Recession, the collapse of the housing market and the credit/ banking crisis of2008-2009. Revenues
City of San Bernardino Pendency Plan Page 1
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plummeted combined with generous pay and benefit packages, became unsupportable. This situation
is further exacerbated by a high foreclosure rate and one of the highest unemployment rates in the
country.
This Council has had to deal with plummeting revenues and steadily increasing fixed costs that
increased the City's vulnerability to the economic storm. Despite efforts to reduce expenditures and
put the City's financial house in order, the City is insolvent. During the past two years it became
clear the Cit y 's financial position was weakening and its employment contracts, post-employment
benefits and unfunded liabilities incurred over the last 1 5 years cannot be supported if the City is to
continue delivering services crucial to protecting the health, safety and welfare of the community.
The overall poverty level in the City has steadily increased over the past 15 years and the City has few
resources to support its most vulnerable citizens. At the same time, drug and gang activity have
left the City growing concern for increasing levels of violent crime.
As described in extensive reports to the Mayor and Common Council in recent months, the City is
insolvent. Now, only the difficult process of restructuring its long-term financial obligations and
fixed costs will enable the Mayor and Common Council to protect the community and make
sure that the City emerges from this financial crisis as a viable, sustainable institution. The Mayor
and Common Council began that work on June 26, 2012, when it authorized the City Manager to
develop a financial and organizational restructuring plan necessary to balance revenues against
expenses.
The City is working with its employee unions and associations, and its creditors, to reach agreements
that would restructure the City's unsustainable financial obligations. Negotiations continue as this
report is being drafted.
At this time, however, the City cannot assume that agreements reached will enable the Mayor and
Common Council to completely close the budget gap. The City must be prepared to balance its
budget through a Pendency Plan implemented in the Chapter 9 case .. The alternative to a Pendency
Plan that imposes selective reductions in the City's financial obligations are deep service reductions
that are simply unacceptable because they are dangerous to our citizens or they threaten the future
economic viability of the City. Should any tentative agreements be reached by the parties, they will
be honored and will contribute to the City's ability to use bankruptcy as efficiently and
expeditiously as possible. If agreements are reached and ratified with some or all of creditors after
adoption of this agenda item and its contents, those new Memoranda of Understanding or agreements
would modifY the actions in the Pendency Plan.
Without the changes incorporated into the budget as part of its Pendency Plan for the General
Fund, the City cannot adopt the balanced budget required by its Charter and the State Constitution.
This would affect its ability to pay its employees and suppliers and further interrupting critical
service delivery during the fiscal year. In fact, by approving this Pendency Plan, the Mayor and
Common Council will be protecting critical services and the San Bernardino citizenry.
The City's Capital Improvement Program (CIP) is a five year plan that addresses facility and
infrastructure needs for the City and is currently being updated and finalized for review once the
Pendency Plan measures are known. The bulk of the funding for Capital Improvements come from
restricted sources such as Measure I, a voter approved sales tax for street improvements,
State Gas Tax or from the City's utility funds restricted for improvements to the utility systems.
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Although the ClP will not receive funding from the General Fund in Fiscal 2012-13 nor under the
Pendency Plan. This level is far below the amount needed to address existing deficiencies or
ongoing needs for maintenance of capital assets essential to functions funded through the General
Fund.
An amendment to the California Constitution intended to limit growth in local government
spending requires establishment of a maximum limit for expenditures from general taxes. The limit is
indexed to specified growth factors approved by the Legislature. The City's annual appropriation limit
will be calculated once the Pendency Plan measures are known for 2012-13 pursuant to the
requirements of the California Governnient Code. This limit pertains to appropriations from general
taxes and is far above the general taxes the City has available to appropriate. The City of San
Bernardino uses the "change in California per capita personal income" for the "change in cost of
living" component of the calculation of the appropriation limit. The growth of the index and recent
declines in tax revenues leave the appropriation limit much higher than the general taxes available
for expenditure.
PENDENCY PLAN
The Preliminary FY 2012-13 Operating Budget included a General Fund deficit of $45.8 million and
indicated that a contingency, or balancing, plan to close the gap would be forthcoming. That plan is
known as the Pendency Plan.
The Pre-Pendency Plan presented on August 29, 2012, and the amendments to the Pre-Pendency
Plan referenced in this Report, together, represent the City's Fiscal Years 2012-13 and 2013-14 Budget.
The Pendency Plan represents the spending levels the City needs to implement to become and
,remain solvent. Those spending levels are lower than the levels that would be required to deliver
adequate services and meet all the requirements of the City'S contractual obligations. Spending levels
adequate to pay contractual obligations would exceed revenues and there are no reserves to make up
the difference. The California State Constitution and the City Charter prohibit the City from
adopting a budget that is out of balance, preventing the City approving expenditures unless the
budget is balanced. Without restructuring its finances or maintaining the protection of Chapter 9,
the City could not pay its employees, retirees, bondholders or vendors. This would result in
uncontrolled default and, presumably, a collapse of public services.
Bankruptcy protection assures that this will not happen in San Bernardino, though we cannot say
how much creditors will, or will not, receive. The term "Pendency Plan" was developed in the City
of Vallejo Chapter 9 case to describe the plan the City would operate under pending the completion
of the bankruptcy process. Amendments to the plan or extension of the plan into future fiscal years
could occur. Because the Great Recession struck Vallejo after it filed for bankruptcy protection it
had to make many changes in its plan to adjust to worsening economic conditions.
During the period the City operates under the Pendency Plan in bankruptcy, the differences
between payments required by contracts and the amount actually paid become claims in bankruptcy
and are resolved through negotiations and, ultimately, the Plan of Adjustment submitted to the
creditors for approval and to the bankruptcy court for confirmation. In Vallejo, after three years,
all classes of creditors voted to accept the Plan of Adjustment; however, under the B.ankruptcy Code,
the court can confirm a Plan of Adjustment even if some classes of creditors disapprove; a process
known as "cram down".
- 34 -
The Vallejo Chapter 9 case took many months because suits determining General Fund access to
restricted fund resources and issues regarding bankruptcy court jurisdiction and California labor laws
had to be decided. We hope decisions in this case will provide the appropriate guidance in our case
and reduce the litigations costs while in bankruptcy.
Amendments to the Pre-Pendency Plan
This Report describes further changes to the Pre-Pendency Plan required for solvency in Fiscal
Years 2012-13 and 2013-14 under the protection of Chapter 9. The changes are based on
adjustments intended to implement important principles that have guided the preparation of the
Proposed Budget, especially in the General Fund. In addition minor technical corrections in
estimates and calculations have been included based on actuals for the first quarter of the fiscal year.
The changes described below will be important to the City's creditors. A description is included
below of these principles and how they play out in the budget balancing plan.
Promote Health. Safety and Welfare - Protecting the health, safety and welfare of the
community continues to be the top priority for ' the financial restructuring process. Service levels are
inadequate throughout the City, though public safety has received special attention as the City
balances competing demands for resources. Given the extremely high crime rates in San
Bernardino, the foundation of the City's future must be safety, and the City's actions to assure that
grant funded public safety positions continue to receive funding as grant funds expire reflect the
commitment to that. Due to turnover, the base budget also includes funding to assure that the Police
Department has resources to recruit and train new officers to fill vacancies, to take advantage of
new staffing grants, and to assure that services are available for the community. This principle
shaped the decision to recommend no additional significant service reductions.
Minimize Impact on Future Services - The future also depends on stewardship of public assets in
the form of maintenance, repair and replacement. Unfortunately, funding limitations do not allow
even the modest expansion of these investments in the Pendency Plan despite ongoing deterioration
of assets. In fact, some minor reductions in Public Works contract work and transfer of right of way
median maintenance to Gas Tax funding is included. Other services that will assure the City can
rebuild its reputation as a great place to live and invest continue with only very minor cost
reductions planned for recreation, parks and libraries. The City's sewer and integrated waste utilities
and other solvent funds are structured to operate with only indirect impacts from the insolvency of
the General Fund and the Pendency Plan. Solvent funds, like utility enterprises will actually benefit
from some of the organization wide reductions made as part of the Pendency Plan.
Maintain Competitive Compensation Packages - It is essential the City maintain competitive
pay and benefit programs to retain and attract qualified, motivated employees. In the past, the City's
pay and benefit packages were among the most generous in its market area, sometimes significantly
above the regional market. The City has, through negotiation or through imposition of reductions
covered by its fiscal emergency powers, reduced compensation and benefit packages fot its employees.
These include employee payment of their PERS contributions, capping contributions to employee
health, plans and reducing costs by changing carriers, limiting payouts, seeking new; lower pension
benefit levels for new hires and eliminating retiree health insurance for new hires. The additional, but
selective, changes here continue to address situations where compensation is above market and has
created excessive liabilities that cannot be paid without unacceptable reductions in service. The
primary reductions proposed herein relate to retirement costs and benefit structure.
- 35 -
Balance Costs and Service Impacts of Reductions - Cost reductions in the Pendency Plan have been
designed to minimize service impacts. As noted above, reductions in employment benefits will not
affect service levels. In comparison, significantly reducing salaries could have immediate direct
impacts on current employees and would make recruiting and retaining qualified staff nearly
impossible.
Build Fiscal Sustain ability - The Mayor and Common Council's often-stated goal for the
restructuring process has focused on sustainability, which means building adequate reserves, covering
the full cost of operations, implementing proper stewardship of public assets and building
competitive, affordable compensation packages over the long run. Inadequate financial resources
result in compromises in the Pendency Plan. Elements of the Proposed Budget aimed at stabilization
and sustainability like maintenance investments are deferred in the Pendency Plan. Other
sustainability measures like restoration of adequate, pay-as-you-go funding of internal service costs
and the basic commitment to competitive compensation remain. The Pendency Plan must
appropriate funding for restructuring expenses because sustain ability is central to the City's effort
to return to fiscal health.
General Fund Spending Changes Implemented in this Pendency Plan
The principles built' into the Pendency Plan come in different forms. They include suspension of
debt payments and payments for legal claims, continued reductions on pay and benefits imposed
under emergency powers, reductions to over market compensation components, transfers of eligible
costs to other funds, necessary legal and financial consulting services to pursue the City's interests
via bankruptcy and, possibly, via labor negotiations and limited revenue increases. These changes
eliminate the $45 million F Y 2 0 1 2 - 1 3 General Fund gap identified in the preliminary budget
and begin to address the City's General Fund cash deficit of$18 million. The City'S current deficiency
and efforts taken to date are addressed in greater detail on page 8 of this Report.
The further reductions proposed in the Pendency Plan are detailed on pages 9 and 10 of this Report.
Impacts are ongoing in nature unless otherwise noted and are reflected in the attached schedules.
Summary of Pendency Plan Reductions and Deferrals
Salary, Wages, and Benefits Balancing Measures ($25,980,742)
1. Complete implementation of the Pre-Pendency Plan approved by the Mayor and Common
Council.
2. Maintain vacant sworn positions in the Police Department above 260 as unfunded.
3. Achieve employee concessions that reflect full implementation of the State's pension reform.
4. Reduce Fire overtime by 35 percent by employing a minimum staffing model of a 3-person
engine/truck company made up of a Captain, Engineer, and ParamediciFirefighter at all fire
stations on all shifts.
5. Phase out the Other Post Employment Benefit (OPEB) implied subsidy for retiree health.
6. Reduce the OPEB direct payment for health care for police retirees to the amount afforded to
other employees.
7. Eliminate the 9% Employer Paid Member Contribution (EPMC) for police and fire.
Deferral of General Fund Obligations ($34,959,311)
1. Defer reimbursement of the Restricted and Non-Restricted Funds. Reimbursement would be
addressed in future years.
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2. Defer the CalPERS payments less the Employee Withholding and negotiate repayment over
time.
3. Suspend payment of accruals to employees tenninating employment with the City until an
alternative program is approved. This does not apply to employees that continue
employment with the City.
4. Defer debt service on 2005 Pension Obligation Bonds.
5. Discuss the reamortization of the CalPERS liability with CalPERS actuarials.
Revenue Related Balancing Measures
While new revenues are not projected in FY 2012-13 due to the timing of implementation, it is
recommended the Council consider and provide direction related to new revenue measures to be
explored further. The Pendency Plan identities four measures for Council consideration or the
Council may identify other measures.
Indirect Impacts on Other Funds
The Pendency Plan focuses on the insolvent General Fund but has implications for other funds.
All reductions apply to employees equally. regardless of their fund assignment or allocation, and all
funds will have cost reductions associated with personnel cost changes. Potential changes in
required subsidy levels from the General Fund reSUlting from those savings have not been
programmed at this time.
The primary impact of these Pendency Plan changes on other funds is a reduction in salary, wages,
and benefit costs. These changes will be offset by allocations of costs related to the Chapter 9
process and continuing efforts to work with investors, rating agencies and insurers of bonds to '
emphasize and clearly disclose the strength of the revenue and cash balances that support repayment
of these bonds.
STATE OF FISCAL EMERGENCY
The Mayor and Common Council, by Resolution 2012-205, declared a state of fiscal emergency
based on fiscal circumstances on July 16, 2012. It is recommended the Council authorize the
continuation of the Fiscal Emergency through June 30, 2014. With respect to MOUs that have
expired and to the extent that the meet and confer process under the Meyers Milias Brown Act is
not yet complete, the Council hereby finds that the need to immediately implement the Pendency
P Ian constitutes an emergency within the meaning of Government Code section 3504.5, authorizing
the immediate implementation of such plans while the City completes any remaining aspects of the
meet and confer process. This emergency is based upon the findings in this Report, and in the staff
report and accompanying Resolution adopted by the Mayor and Common Council.
CONCLUSION
Despite the drastic reductions in staffing and service levels, the City of San Bernardino is insolvent from
both a financial and service delivery perspective. Further reductions to service levels would jeopardize
the health, safety and welfare of residents, and would severely limit the City's chances for economic
development. The City has a responsibility to provide the services the citizens deserve and require, and
the limited resources available to the City need to be focused on preserving basic services and providing
for public health and safety given the high crime rates, poverty levels and other socio-economic
challenges facing the community. It is with hope for a financially stable and fiscally responsible future,
that the proposed Pendency Plan is submitted. We are committed to continuing to participate in good
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faith negotiations with our creditors going forward in the bankruptcy process and remain committed to
getting San Bernardino to a position of fiscal solvency such that it can remain able to deliver essential
servIces.
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CITY OF SAN BERNARDINO, CALIFORNIA
PENDENCY PLAN
FY 2012-13 Base Year
CURRENT FINANCIAL SITUATION
General Fund Cash Projection
Receipts
Disbursements
Deficiency Before Transfers
Transfers
IWF Transfer (FV 12-13 and FV 13-14)
Total Operating Deficiency
Initial Cash Deficit
IWF Transfer Reversal (FY 10-11)
Total Beginning Cash Deficit
Total Deficiency
Pre-Pendency Plan
Notwithstanding any references or changes to the Pre-Pendency Plan subsequently
approved by the Mayor and Common Council not specifically mentioned in this Plan being
submitted to the Court.
9-Point Plan Adjustment
Net Pre-Pendency Impact
Total Deficiency with Pre-Pendency
Projected Average Deficiency Over 5 Years
Required Percentage Impact to Total Annual Expenditures
OR
Required Percentage Impact to Salary, Wages, & Benefits
Notes:
FY 2013 Base Year
$ 120,424
(166,237)
(45,812)
4,830
2,200
(38,783)
(18,946)
(3,722)
(22,668)
(61,451)
9,318
(296)
9,022
(52,429)
(43,271)
26.0%
35.0%
1. The table above reflects the July 31, 2012 General Fund cash deficit, the FV 2012-13
General Fund preliminary budget ("Baseline") deficit, the impact of the Pre-Pendency
Plan as adjusted by the 9-Point Plan, the Adjusted Fire Department Plan, and the
projected 5 year average General Fund deficiency.
2. The proposed receipts of $120,424 million includes repayment by the Successor Agency
of $2 million for costs related to the Regal Theater.
3. The Integrated Waste Fund Transfer Reversal is for FV 2010-11.
4. The reference to the Pre-Pendency Plan includes the Adjusted Fire Department Plan
approved subsequently by the Mayor and Common Council.
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PENDENCY PLAN ELEMENTS - FY2012-13 and FY2013-14
Salary, Wages, Benefits, and
Expense Balancing Measures
1. Workforce and Service
Reductions
2. Police Vacancies
(Voluntary Separations)
3. Police 13.989% Benefit
Concession
4.Fire 13.989% Benefit
Concession
5.Miscellaneous 9.304%
Benefit Concession
6.Flre Overtime ("OT")
Reduction
7.0PEB Implied Subsidy
Phase Out
S.OPEB Direct Subsidy
Phase Out
9.EPMC
City of San Bernardino Pendency Plan
FY 2013
Impact
$ 13,452,000 Reflects the additional savings from Pre-Pendency Plan less
SAFER grant.
3,280,000 Sworn positions included in the proposed FY 2012-13 budget
totaled 299. The Pre-Pendency Plan addressed the 18
vacancies that existed at that time, reducing the number of
sworn to 281. It is anticipated there will be 268 sworn
pOSitions filled as of 12/2012 and 258 filled as of 01/2013. As
proposed, 260 positions would be funded and the remainder
would be unfunded. The City is currently awaiting a proposal
from the San Bernardino County Sheriffs Department as
there may be significant savings or adjustments In the City's
overall cost to effectively police the City.
3,252,000 Reflects 50% of the normal PERS costs; the recent change to
state law encourages cities to implement the full cost sharing
by 2018.
1,894,000 Reflects ~ O % of the normal PERS costs; the recent change to
by 2018.
651,000 Reflects 50% of the normal PERS costs; the recent change to
by 2018.
921,375 This number reflects a 35% reduction in Fire overtime by
employing a minimum staffing model of a 3-person
engine/truck company made up of a Captain, Engineer, and
Paramedic/Firefighter at all fire stations on all shifts.
a Reflects the reduction of the implied subsidy to existing
retirees of roughly $800,000 to $1 Million annually beginning
January 1, 2014.
213,750 Reflects the reduction of,the direct payment to existing police
retirees to the $112 per month afforded to other retirees
beginning January 1, 2013. Elimination of the subsidy would
result in savings of $427,000 for FY 2012-13.
2,400,000 The City currently provides through an MOU a 9% salary
adjustment for Police and Fire employees to cover the cost of
the Employer Paid Member Contribution (EPMC) benefit. The
City could eliminate the 9% contribution and require the
employees receiving this benefit to pay the contribution
through salary deductions. The annual savings to the City is
$2AM.
Page 9
- 40 -
Item FY 2013 Notes
Impact
10. Council Office $64,156 less Reflects expense reductions in the Council office.
Expense Reductions $211,695
Subtotal Salary, Wages & $25,980,742
Benefits
Deferral of General Fund
Obligations
11. Defer $ 15,156,944 Reimbursement will be addressed in future years.
Reimbursement to
Restricted and Non-
Restricted Funds
12. CalPERS Payments 12,974,727 Reflects the deferral plus the balance of the payments due
less Employee and payable and not paid. Assumes repayment at some
Withholding (ER) future date to be negotiated with creditor and assumes
resumption of payments in FY 2013-14.
13. Paid Time Off 3.453,175 Vacation, sick leave, holiday and concession leave time
Payments accruals.
14. Pension Bond 3,374,465 Reflects deferral of principal and interest.
Payments
15. Reamortize CalPERS Discussions with CalPERS actuarial staff are underway; would
Liability over 30 yrs realize value of $1.3 million per year starting Fiscal Year 2014.
(Fresh Start)
Subtotal Deferrals $ 34,959
1
311
Revenue Related Balancing
Measures
1. Real Property
$ - Increase to $5 per $1,000 transferred; projected $3 million
Transfer Tax annually in future years. Alternatively, consider a
comprehensive tiered structure.
2. Transient - Increase from 10% to 12% projected $800,000 annually in
Occupancy Tax future years.
3. Utility User Tax
- Increase from 7.75% to 9.5%; projected $5.25 million
annually in future years.
4. 911 - Projected $6.7 million annually in future years.
Communications
Fee
Subtotal Revenue
$
~
Projection model assumes about $5.1 million in new revenue
in future years (33% of total revenues) .
.
Total Balancing Measures $61,023,436
- 41 -
Additional Expenditure Reducti,on Measures Being Considered (Not an Exhaustive list):
1. Capping of vacation and sick leave and use policies are continuin'g to be evaluated.
2. The City is continuing to review options to reduce unfunded liabilities related to retiree
health and evaluate the impacts of the Affordable Health Care Act, Medicare eligibility, and
implementation of health savings accounts.
City of San Bernardino Pendency Plan Page II
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EXHIBIT 2
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C - 1
ANNOTATED
CHARTER
of the
CITY OF SAN BERNARDINO
STATE OF CALIFORNIA

(THIS CHARTER EFFECTIVE MARCH 6, 2006 EXCEPT
THOSE SECTIONS OTHERWISE NOTED)

RATIFIED BY THE VOTERS AT THE ELECTION ON NOVEMBER 2, 2004,
FILED IN THE OFFICE OF THE SECRETARY OF STATE OF THE STATE
OF CALIFORNIA ON MARCH 16, 2005 AND ASSIGNED CHARTER
CHAPTER NUMBER 26 FOR PUBLICATION IN THE STATUTES OF 2005,
STATE OF CALIFORNIA.

PREAMBLE

We, the citizens of the City of San Bernardino, hereby establish this Charter
to promote economic, environmental, and cultural prosperity throughout our
community; to enable our City government to meet the needs of the people
effectively and efficiently; to provide for accountability and ethics in public service;
and to ensure equality of opportunity for every resident.

Article I
Boundaries, Rights and Liabilities

Section 1. Powers of City. The municipal corporation now existing known
as the City of San Bernardino shall remain and continue a body politic and
corporate in name and in fact, by the name of the City of San Bernardino, and by
that name shall have perpetual succession and may sue and defend in all courts
and places and in all matters and proceedings, whatever, and all property, rights
and interests of the said City shall continue and vest in and belong to said City
under this Charter. It may have and use a common seal and alter it at pleasure;
may purchase, receive and hold real and personal property within and without the
City limits; may sell and dispose of the same for the common benefit; receive
bequests and donations of all kinds of property in trust for charitable or other
purposes and do all acts necessary to carry out the purposes of such bequests
and donations, with power to manage, sell or otherwise dispose of the same in
accordance with the terms of the bequest or donation.

The City of San Bernardino may make and enforce all laws and regulations
in respect to municipal affairs, subject only to the restrictions and limitations
provided in this Charter, and in respect to other matters it shall be subject to
general laws. (As amended by special election held on April 11, 1921.) (Wilson v. City (1960)
186 Cal.App.2d 603, 605; Scott v. Common Council (1996) 44 Cal.App.4th 684, 695; City Attorney
Opinion No. 90-18)
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Section 2. Boundaries - Jurisdiction. The boundaries of the City of San
Bernardino shall be as follows: Commencing at the southeast corner of block
seven of the Rancho San Bernardino, at the intersection of the center lines of Mill
Street and Waterman Avenue, and running thence north along said center line of
Waterman Avenue, and along the east boundary of said block seven, and of blocks
six, five, four, three, two, one and thirty-two of said Rancho, to the northeast corner
of lot one of said block thirty-two; thence west along the north boundary of said lot
one and of lot fourteen of said block thirty-two, and the north line of lots one and
fourteen of block thirty-three, lots one and fourteen of block thirty-four, lots one and
fourteen of block thirty-five, lots one and fourteen of block thirty-six, lots three and
six of block fifty-three, and lots three and six of block fifty-nine, to the northwest
corner of said lot six of block fifty-nine; thence south along west line of lots six and
five of said block fifty-nine, to the southwest corner of said lot five of block fifty-
nine; thence east along the south line of said lot five to the intersection of the west
line of lot twenty-four of block twenty-one with the north line of Base Line Street;
thence south along the west line of lots twenty-four and seven in said block twenty-
one, lots twenty-four and seven of block twenty-two, lots twenty-four and seven of
block twenty-three, lots twenty-four and seven of block twenty-four, and lots
twenty-four and seven in block twenty-five, to the southwest corner of said lot
seven of block twenty-five, at the intersection of said west line with the north line of
First Street; thence east along the south line of said block twenty-five and along
said north line of First Street to the northwest corner of lot eight in block sixty-six,
at the intersection of the west line of said lot eight with the said north line of First
Street; thence south along the west line of lots eight and one of block sixty-six, to
the southwest corner of said lot one of block sixty-six, at the intersection of said
west line with the center line of Mill Street; thence east along the center line of said
Mill Street and along the southline of blocks sixty-six, fourteen, thirteen, twelve,
eleven, ten, nine, eight and seven, to the southeast corner of said block seven at
the place of beginning; all being in and of the Rancho San Bernardino, according to
the plan of survey of said Rancho, of record in the office of the County Recorder of
said San Bernardino County.

The jurisdiction of said city, for all purposes of ownership, control,
protection, management and maintenance, shall extend to and embrace all that
parcel of land about two and one-half miles northwest of the courthouse in the City
of San Bernardino, consisting of ten acres, more or less, and known as the "City
Reservoir Tract," and that other parcel of land of about twenty-two acres about
one-half mile east of the city limits known as the "Job Antil Tract," and such
jurisdiction shall also extend to any other real property that may hereafter be
acquired by said City of San Bernardino.

Section 3. Time and Change of Boundaries. The Mayor and Common
Council by ordinance shall divide the area of the City into seven (7) wards of
approximately equal population and thereafter shall periodically change the
boundaries of the wards to maintain them in compact form and as nearly equal in
population as possible, provided that such changes shall not be made more than
once in any two (2) year period nor within ninety (90) days of any general
municipal election. (As amended by election held June 7, 1966)
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C - 3
Article II
Elective Officers and Elections

Section 10. Primary and General Election. A primary election shall be
held in said City on the first Tuesday after the first Monday in March of each odd
numbered year, for the nomination of candidates to be elected at the ensuing
general election, and a general election shall be held in said City on the first
Tuesday in May of each odd numbered year, for the election of City officers.
Beginning with the primary election in 1995, and thereafter a primary election shall
be held in said City on the first Tuesday after the first Monday in November in each
odd numbered year for the nomination of candidates to be elected at the ensuing
general election, and a general election shall be held in said City on the first
Tuesday in February of the following even numbered year for the election of City
Officers. Said election shall be conducted in the manner provided for by general
law; provided, however, that the Mayor and Common Council shall have power, by
ordinance, to provide for the manner of holding such election. (As amended by
elections held June 4, 1974 and June 2, 1992) (City Attorney Opinion No. 96-3; City Attorney
Opinion No. 91-7; City Attorney Opinion No. 91-5)

Section 10-A. Election to Office. Any candidate for any City office who at
a primary election shall receive votes on a majority of all the ballots cast for
candidates for the office for which such candidates seek nomination, shall be
elected to such office. Where two or more candidates are to be elected to a given
office and a greater number of candidates receive a majority than the number to be
elected, those candidates shall be elected who secure the highest votes of those
receiving such majority, and equal in number to the number to be elected. Any
officer elected shall hold office until his or her successor is elected and qualifies.
(City Attorney Opinion No. 91-5)

Section 11. Provision for Elections - Returns - Certificate. The Mayor
and Common Council shall provide for the holding of all City elections.

On the second day after a City election, exclusive of holidays, at 1:30 p.m.
the Mayor and Common Council, or the City Clerk, or a canvassing board
appointed by the City Clerk by order of the Mayor and Common Council shall meet
at the City Hall, San Bernardino, California and proceed to canvass the election
returns.

The previous paragraph notwithstanding, all City elections consolidated with
elections conducted by the County of San Bernardino, and all City elections that
are conducted pursuant to agreement with the County of San Bernardino shall
follow the Countys process for the conduct of such elections and the canvass of
such returns.

At the next regular or adjourned regular council meeting following the
completion of the canvass, the Mayor and Common Council shall declare the
results of said election as certified by the City Clerk or the Registrar of Voters of
the County of San Bernardino as being official. (City Attorney Opinion No. 96-3)

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C - 4
Section 11-A. Compensation For Officers. That the Mayor and Common
Council shall, regardless of the provisions of the foregoing section, fix the
compensation for each inspector, judge, clerk, and other election officers.

Section 12. Approval and Filing of Bond. After the result of an election is
declared, or an appointment made, the City Clerk under his/her hand and official
seal shall issue a certificate thereof to the person elected or appointed by
delivering it to him/her personally, or by depositing it with postage pre-paid in the
post office, addressed to him/her at the City of San Bernardino; and within ten days
thereafter such person so elected or appointed, shall file the certificate with his/her
oath of office attached, in the office of the City Clerk. When an Official Bond is
required of an officer it shall be approved and filed before entering upon the duties
of his/her office, within twenty (20) days after the certificate of election is issued to
him/her.

Section 13. Officers Elected. There shall be elected at the general
election in 1998, and every fourth year thereafter three members of the Common
Council, one each from the First, Second and Fourth Wards, who shall have been
qualified electors and residents of their respective wards for a period of at least
thirty (30) consecutive days next preceding the date of filing of their nomination
papers for the office and who shall be elected by the qualified electors of their
respective wards for terms of four years commencing on the first Monday in March
next succeeding their elections. (As amended by elections held June 4, 1974, November 2,
1976, and June 2, 1992) (City Attorney Opinion No. 97-2)

Section 14. Officers and Terms. There shall be elected at its general
election in 1996 and every fourth year thereafter, four members of the Common
Council, one each from the Third, Fifth, Sixth and Seventh Wards, who shall have
been qualified electors and residents of their respective wards for at least thirty
(30) consecutive days next preceding the date of filing of their nomination papers
for the office and who shall be elected by the qualified electors of their respective
wards, a City Attorney, City Clerk and City Treasurer elected at large who shall
hold office for terms of four years from and after the first Monday in March and next
succeeding their elections.

There shall be elected at the general election in 1998 and every fourth year
thereafter, a Mayor who shall be elected at large for a term of four years
commencing on the first Monday in March next succeeding such election. (As
amended by election held June 4, 1974, November 2, 1976, and June 2, 1992) (City Attorney
Opinion No. 97-2; City Attorney Opinion No. 96-3; City Attorney Opinion No. 90-31; City Attorney
Opinion No. 88-10)

Section 14-A. Vacancy on Council. A vacancy on the Common Council,
from whatever cause arising, shall be filled for the unexpired term thereof through
the election of a successor Council Member by the qualified electors of the ward in
which the vacancy has occurred. Such Council Member shall have been a qualified
elector and resident of the ward for at least thirty (30) consecutive days next
preceding the date of filing of nomination papers for the office.

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C - 5
Said election shall be held at the time established by the Mayor and
Common Council and shall be conducted in the manner provided for by general
law; provided that the Mayor and Common Council shall have power by ordinance
to provide for the manner of holding such election and such ordinance shall prevail
over the general law. (City Attorney Opinion No. 96-3)

Section 14-B. Consolidated General Election. Notwithstanding any
other section of this Charter, whenever a County-wide election is scheduled to be
held within sixty (60) days after the date which a City general election would
otherwise be held pursuant to this Charter, the City shall consolidate the City
general election with the County-wide election. In the event said consolidated
general election causes the successful candidate to be qualified to take office after
the expiration of the term of the incumbent, the term of said incumbent shall be
extended until said successor qualifies and takes office, or until the incumbent
qualifies and takes office in the event of re-election. Any such successful
candidate elected in said consolidated general election shall take office at the first
Council meeting of the month following the month in which the consolidated
general election is held. (As added by election held on November 2, 1999.)

Section 15. Vacancies. An office becomes vacant when the incumbent
thereof dies, resigns, is adjudged insane, convicted of a felony or of any major
offense involving a violation of his/her official duties, or is removed from office, or
ceases, in the case of a Council Member to be a resident of his/her ward, or, in the
case of any other elected official to be a resident of the City, or refuses after notice
from the Mayor and Common Council to qualify by taking the oath of office and
filing his/her official bond. (City Attorney Opinion No. 96-3)

Section 16. Military Leave of Absence. Anything in this Charter to the
contrary notwithstanding, all employees or officers, excepting elective officers, who
have heretofore or shall hereafter enter the armed forces of the United States
during war or national emergency as declared by the President or the Congress of
the United States shall be entitled to a leave of absence during such service in
accordance with applicable State and Federal laws, and for a period of ninety (90)
days thereafter. Every such employee or officer returning to the City within the time
herein specified, and who has been honorably discharged from such services, shall
be reinstated without loss of status or seniority, provided he/she is still qualified for
such office or position. If the office or position no longer exists, or the employee or
officer is no longer qualified for his/her former position, he/she has the right to
return to a position to which he/she meets the qualifications at the same
compensation, status and seniority.

All persons appointed to fill such positions during war or national emergency
shall be temporary appointees only.

Bonds and Salaries
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C - 6

Section 20. Approval of Bonds. Officers of the City, before entering upon
the discharge of their official duties, shall execute to said City such Official Bond as
may be required by law, ordinance or this Charter. When the amount of any bond
is not fixed by law, ordinance or this Charter, and power to fix same is not herein
conferred upon any board or officer, it may be fixed by ordinance. All bonds shall
be approved by the authorized designee of the Mayor and Common Council and
filed with the City Clerk, and shall be recorded by the City Clerk in a book entitled
"Official Bonds" and kept for that purpose, except the Bond of the City Clerk, which
shall be filed with the Mayor, after being so recorded. The approval of every Official
Bond must be endorsed thereon and signed by the officers approving the same
after the examination of the surety.

Section 21. City Officials as Surety - Form - Liability - Bond of Surety
Company. City Officers shall not be accepted as surety for each other on Official
Bonds. Every Bond shall be in form joint and several and made payable to the City
of San Bernardino, and contain a condition that the principal will faithfully perform
all official duties that may be imposed upon or required of him/her by law or
ordinance, and that at the expiration of his/her term of office he/she will surrender
to his/her successor all property, books, papers and documents that may come
into his/her possession as such officer. Said Bond must be executed by two or
more sureties, but when the amount of the bond is more than five thousand dollars
($5,000.00), the sureties may become severally liable for a portion of not less than
twenty-five hundred ($2,500.00), when there are more than two sureties, said
sureties may justify in an amount which in the aggregate shall equal double the
amount of said bond. But the Mayor and Common Council may require the
Treasurer to give a Surety Company Bond in which case the expense of such bond
shall be borne by the City, and may accept and approve of a Surety Company
Bond for any officer without other surety.

Section 23. Additional bond - Vacancy. When an Official Bond is
required of an officer, the Mayor and Common Council may require an additional
bond if, in their opinion, the original bond or any surety becomes insufficient. If
such additional bond be not given in thirty (30) days, the Mayor and Common
Council must declare the office vacant and thereupon it shall become vacant.

Section 24. Salary of Mayor. The Office of Mayor shall be a full time
position and the incumbent shall not engage in any business, professional or
occupational activities which interfere with the discharge of the duties of such
office. Effective January 1, 2003, the annual salary of the Mayor shall be set at
fifty percent (50%) of the salary for a Superior Court Judge, County of San
Bernardino, State of California, as of July 1, 2002, and shall thereafter be adjusted
and implemented January 1 of each subsequent year at the same fifty percent
(50%) figure of the salary for said Superior Court Judge then in effect on said
January 1 date. (As amended by elections held November 5, 2002, June 4, 1974, and March 6,
1979) (City Attorney Opinion No. 96-3; City Attorney Opinion No. 92-10; City Attorney Opinion No.
88-30; City Attorney Opinion No. 88-13; City Attorney Opinion No. 88-10)

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C - 7
Section 24-A. Salary of Council. The Council Members shall each receive
an annual salary of six hundred dollars ($600.00), payable monthly. (City Attorney
Opinion No. 96-3)

Section 24-B. Salary of City Clerk. That the salary to be received by the
City Clerk shall be fixed by the Mayor and the Common Council. (As amended by
special election held on March 15, 1937.)

Article III
Legislative Department - The Common Council

Section 30. Legislative Power. The legislative power of the City is hereby
vested in the Common Council consisting of seven members, four of whom shall
constitute a quorum, but a less number may adjourn from time to time, or compel
the attendance of other members. No order, except to adjourn for lack of quorum,
or to compel the attendance of a quorum, and no ordinance or resolution shall be
valid unless it receives the affirmative vote of four Council Members, or, in the
event of a tie vote by the Council Members present, if it receives the affirmative
vote of three Council Members and the Mayor. (Scott v. Common Council (1996) 44
Cal.App.4th 684, 696, ftnt. 8; City Attorney Opinion No. 92-10; City Attorney Opinion No. 91-33)

Section 31. Ordinances - Adoption - Emergency and Urgency. Except
for emergency or urgency ordinances, no ordinance may be adopted by the
Common Council on the day of its introduction, nor within five (5) days thereafter,
nor except at a regular or adjourned regular meeting. At the time of adoption of an
ordinance or resolution it shall be read in full unless, except for its title, the reading
thereof is waived by unanimous consent of all Council Members present. If an
ordinance is altered after its introduction (except for correction of typographical or
clerical errors), it shall not be adopted except at a regular or adjourned regular
meeting held not less than five (5) days after the date of such alteration.
Ordinances and codes may be adopted by reference in accordance with general
law.

Emergency or urgency ordinances and each resolution may be adopted on
the day of introduction and may take effect upon adoption; provided, however, that
this section is not intended, nor shall it be deemed to affect the method of adopting
special ordinances and resolutions as required by municipal improvement act, laws
relating to elections, taxation, and annexations, or other provisions of law
prescribing the time, form and manner for the adoption of ordinances and
resolutions of special cases.

No order, resolution or ordinance shall have effect without approval of the
Mayor, except when five (5) members of the Common Council concur in its
adoption. In case of orders, the approval of the Mayor shall be presumed unless at
the same meeting at which the order is passed, the Mayor causes his/her
disapproval, with his/her reasons therefore, to be spread upon the minutes. All
resolutions and ordinances after passage must be submitted to the Mayor who
shall, within five (5) days after he/she has received the same, endorse his/her
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C - 8
approval or disapproval thereon, giving the reasons for his/her disapproval. Each
ordinance or resolution to be valid must be passed by a vote of not less than four
(4) Council Members and approval by the Mayor, provided that if the Mayor fails to
approve the same it may be passed by a vote of not less than five (5) Council
Members, and shall take effect as if approved by the Mayor. (Castaneda v. Holcomb
(1981) 114 Cal.App.3d 939, 941-946; City Attorney Opinion No. 96-10; City Attorney Opinion No.
96-7; City Attorney Opinion No. 88-13; City Attorney Opinion No. 88-7)

Section 32. Ordinances - Enacting Clause. The enacting clause of all
ordinances shall be: "The Mayor and Common Council of the City of San
Bernardino do ordain as follows."

Section 33. Ordinances - Publication. After the passage of each
ordinance, and at all times thereafter, the City Clerk shall maintain on file and open
to public inspection a certified copy of the full text of the ordinance. Within fifteen
(15) days after the passage of each ordinance, it shall be published by the City
Clerk once in a newspaper of general circulation published and circulated in the
City with the names of the members of the Common Council voting for and against
the ordinance and the name of the Mayor approving or disapproving the ordinance.
The publication of the ordinance may be satisfied by the publication of the entire
ordinance or by the publication of a summary of the ordinance, the number and
title of the ordinance, and the names of the members of the Common Council
voting for and against the ordinance and the name of the Mayor approving or
disapproving the ordinance. Such summary shall be prepared by the City Clerk, or
other official designated by the Mayor and Common Council, and approved by the
City Attorney. The publication shall include a statement that the full text of the
ordinance is available for inspection in the office of the City Clerk. The Mayor and
Common Council may direct the publication of the entire ordinance in special
cases. Ordinances shall not be published in a newspaper if the charge exceeds the
customary rate charged by the newspaper for publication of private legal notices,
but such ordinances shall be posted by the City Clerk in at least three public places
in the City within fifteen (15) days after passage of the ordinances. Except as
otherwise provided in this Charter, an ordinance shall not take effect or be valid
unless it is published in substantially the manner and at the time required herein.
(As amended by elections held February 4, 1969; and November 6, 1979) (City Attorney Opinion
No. 88-18)

Section 34. Powers of Common Council - Written Charges. The
Common Council shall have power to adopt rules for its own proceedings; to
compel the attendance of witnesses and absent members; the production of
papers in any matters under investigation; to judge of the qualification and election
of its own members; to punish any member by a fine not exceeding two hundred
fifty dollars ($250.00) for disorderly or contemptuous behavior in its presence; and
may expel a member or any city officer appointed by the Mayor and Common
Council for continued neglect of his/her duty, or the willful violation of any penal
law, or any provision of this Charter; but in every case the member or officer
accused, if holding office for a definite term shall be entitled to have written
charges presented and be heard on his/her own behalf.

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The Ayes and Noes shall be taken and entered in the Journal of its
proceedings at the request of any member and must be so taken and entered upon
the passage of all Ordinances and Resolutions, and in matters concerning the
granting of franchises, making of contracts, allowing bills, ordering work to be
done, or supplies to be furnished, disposing of City property, or any act that may
involve the payment of money or the incurring of a debt against the City.

Section 35. Meetings - Time of - Adjournments. All meetings of the
Common Council shall be public, and the regular meetings shall be held on the first
and third Mondays in each month, unless such days be a legal holiday, when the
meeting shall be held on the following day. Adjournments may be taken from a
meeting to a day certain, and in such case the adjourned meeting shall be deemed
an adjourned regular meeting.

Section 36. Mayor to Preside - Temporary Absence of Mayor; Mayor
Temporarily Unable to Perform Duties. The Mayor shall preside at all meetings
of the Common Council, but shall not be entitled to vote except in the event of a
tie. In the absence of the Mayor from any Council meeting, the Common Council
may choose one of their own number to preside over that meeting who shall retain
the right to vote upon all questions under consideration, and shall have the same
power to disapprove any order made by the Common Council, and with like effect
as the Mayor would have had if present at this meeting, however, that member
shall not have the ability to cast an additional vote in the event of a tie.

In case of temporary absence from the City, or sickness, or due to any other
cause, the Mayor is temporarily unable to perform the duties of his/her office, the
Common Council shall appoint one of their own number Mayor Pro-Tempore who
shall have all powers and authority which the Mayor would have possessed if
personally present and attending to such duties, and such Mayor Pro-Tempore
shall not lose his/her vote as Council Member, but shall not have the ability to cast
an additional vote in the event of a tie. (City Attorney Opinion No. 96-10; City Attorney
Opinion No. 88-10)

Section 37. Council Committees. Notwithstanding any other provision(s)
of this Charter, the Common Council may create such standing and ad hoc
committees as it deems appropriate, to be composed entirely of Council Members
and said committee members shall be appointed by the Common Council.

Section 39. Power to Override Mayor. Any order, directive and/or
decision of the Mayor made either formally or informally may be overridden,
amended, revised or withdrawn by two-thirds (2/3) vote of the Common Council.

Subjects of Legislation

Section 40. Powers of Mayor and Common Council. The Mayor and
Common Council of the City of San Bernardino, hereafter referred to as Council,
shall have the following enumerated powers.
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(a) Purchase and Sale of Property. Council shall have power to purchase,
lease, receive and hold real and personal property within or without the city limits,
and to control, sell and dispose of the same for the common benefit, provided that
the procedure for the sale of real property shall be established by the Council by
ordinance but such sale shall not be for less than the fair market value of the
property as determined by the Council, based on good and sufficient evidence in
the record. (As amended by election held on March 7, 1995)

(b) Police and Sanitary Regulations. Council shall have power, subject to
any pre-emptive law(s) of the State of California, to make and enforce all such
local, police, sanitary and other regulations, as pertain to municipal affairs, and for
this purpose may define misdemeanors committed within the city limits or on lands
under the jurisdiction of the City, and provide penalties and punishment therefor.

(c) Nuisances. Council shall have power to define nuisances and provide for
their removal.

(d) License Fee. Council shall have power to license for purposes of
revenue all and every kind of business, occupations, shows, exhibitions, and lawful
games carried on in the City and to fix the rate of license fee thereon.

(e) Taxes. Council shall have power to levy and collect taxes subject to
State law.

(f) Fire Department. Council shall have power to establish and maintain a
fire department, prescribe fire limits and adopt regulations for the protection of the
City against fires.

(g) Police. Council shall have power to establish and maintain a police force.

(h) Overflow. Council shall have power to protect the City against overflow.

(i) Houses of Ill Fame. Council shall have power to prohibit and suppress
lewdness and houses of ill fame and buildings or places used for lewdness,
assignation or prostitution.

(j) Storage. Council shall have power to prohibit the storage of gunpowder,
oils or other combustible substances in quantity.

(k) Parks. Council shall have power to lay out and maintain parks.

(I) Hospitals, etc. Council shall have power to regulate hospitals, pesthouses
and slaughter houses, and to provide for their removal or discontinuance.

(m) Cemeteries. Council shall have power to provide cemeteries and
regulate their management.

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(n) Animal Shelter. Council shall have power to establish and regulate a
public animal shelter.

(o) City Jail/Holding Area; Use of Inmates. Council shall have power to
provide a City jail/holding area and to provide for the utilization of the services of
any person(s) sentenced by the court to perform such community service as may
be prescribed.

(p) Sewers. Council shall have power to acquire, establish, construct,
reconstruct, maintain, operate, manage, repair, improve or finance any building,
system, plant, works, facilities or undertaking used for or useful in the collection,
treatment or disposal of sewage and the reclamation of effluent therefrom, or storm
water, including drainage.

(q) Bridges, Streets, etc. Council shall have power to establish, build and
repair bridges; to establish, lay out, alter, keep open, open, close, improve and
repair streets, sidewalks, alleys, squares, and other public highways, and places
within the City, and to drain, sprinkle, oil and light the same; to remove all
obstructions therein; to establish the grades thereof; to grade, pave, macadamize,
gravel and curb the same in whole or part, and to construct gutters, culverts,
sidewalks and crosswalks thereon, or upon any part thereof; to cause to be
planted, set out and cultivated shade trees therein, and generally to manage and
control all such highways and places.

(r) Fines and Penalties. Council shall have power to impose fines, penalties
and forfeitures for any and all violations or ordinances; and for any breach or
violation of ordinances; to fix the penalty by fine or imprisonment, or both. The
violation of any lawful ordinance made by the Mayor and Common Council shall
constitute either a misdemeanor or an infraction, as determined by the Council by
ordinance, and shall be prosecuted in the name of the people of the State of
California.

(s) Compensation and Removal of Officer. Council shall have power to
appoint, confirm and remove such appointed officers and appointed full-time
permanent employees, and to fix the qualifications, duties and compensations of
City employees subject to the civil service provisions and other provisions of this
Charter upon the recommendation of the City Manager except that the
appointment and removal of the City Manager, Acting City Manager, Chief of
Police and Chief of the Fire Department shall only be acted upon in response to
the Mayors nomination in instances of appointments and the Mayors
recommendation in instances of removal(s). The Council may not, however,
remove officers appointed for a definite term, nor deputies, assistants, clerks, and
attachs holding office at the pleasure of an elective officer, nor may the Council
remove employees of a City Manager-directed department except the Council may
give consent to such removal as provided in Section 102(b) herein. Other
provisions of this Charter notwithstanding, a Mayor Pro Tempore, acting as the
Mayor shall not remove, discharge or recommend the removal or discharge of the
City Manager, Acting City Manager, Chief of Police or Chief of the Fire Department
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unless, and until, said Mayor Pro Tempore, acting as the Mayor shall have been
acting as Mayor for a period of not less than sixty (60) consecutive days prior to
said removal or discharge, or prior to making a recommendation to remove or
discharge. The authority of a Mayor Pro Tempore, while acting as Mayor, to
suspend for cause is not limited by the preceding sentence.

(t) Public Utilities. Council shall have power to contract for supplying the City
water for municipal purposes, or to acquire, construct, repair and manage pumps,
aqueducts, reservoirs or other works necessary or proper for supplying water for
the use of such City or its inhabitants, or for irrigating purposes therein, subject to
the powers and supervision of the Board of Water Commissioners as in this
Charter provided.

(u) Public Works. Council shall have power to acquire, own, construct,
maintain and operate street railways, telephone and telegraph lines, gas, electrical
and other works for light, power and heat, and to supply such light, power and heat
to the municipality and the inhabitants thereof; and to acquire, own and maintain
public libraries, museums, gymnasiums, parks and baths.

(v) Permit for Construction in Proximity to City Streets. Council shall have
power to permit, under such restrictions, as they may deem proper, the laying of
railroad tracks and the construction and operation of street railways and the
running of cars drawn by steam, electricity or other power thereon; and the laying
of gas and water pipes in the public streets; and the construction and maintenance
of telephone and telegraph lines therein.

(w) Schools. Council shall have power to maintain public schools.

(x) Duties Not Defined. Council shall have power to prescribe by ordinance
the duties of all officers whose duties are not defined by this Charter, and to
prescribe for any officer, duties other than herein prescribed.

(y) Animal Licensing Fee. Council shall have power to impose and collect an
annual license fee on any canine owned or harbored within the limits of the City.

(z) Make and Enforce Laws and Regulations. Council shall have power to
make and enforce all laws and regulations in respect to municipal affairs, subject
only to the restriction and limitations provided in this Charter or by State law.

(aa) Other Powers. Council shall have power to pass all orders, resolutions
and ordinances and to do and perform any and all other acts and things necessary
or proper to complete execution of the powers vested by law or this Charter, or
inherent in the municipality, or that may be necessary or proper for the general
welfare of the City or its inhabitants.
(In Re Pedrosian (1932) 124 Cal.App. 692, 695 regarding (c) and (z) above; City Attorney Opinion
No. 93-19; City Attorney Opinion No. 92-26; City Attorney Opinion No. 92-10; City Attorney Opinion
No. 89-11; City Attorney Opinion No. 88-30; City Attorney Opinion No. 88-10)
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Section 41. System for Assessment, Levy, and Collection of Taxes.
The Mayor and Common Council shall have power, and it shall be their duty, to
provide by ordinance a system for the assessment, levy and collection of all City
taxes, which system shall conform as nearly as the circumstances of the case may
permit, to the provisions of the laws of this State in reference to assessment, levy
and collection of State and County taxes, except as to the time for such
assessment, levy and collection, and except as to the officers by whom such duties
are to be performed. All taxes assessed together with any percentage imposed for
delinquency, and the cost of collection, shall constitute liens on the property
assessed, from and after the first Monday in March in each year, which liens may
be enforced by a summary sale of such property and the execution and delivery of
all necessary certificates and deeds therefor, and such regulations as may be
prescribed by ordinance, or by action in any court of competent jurisdiction to
foreclose such lien; provided that any property sold for such taxes shall be subject
to redemption within the time and in the manner provided, or that may thereafter be
provided by law for the redemption of property sold for State or County taxes. All
deeds made upon any sale of property for taxes, or special assessment under the
provisions of this Charter shall have the same force and effect in evidence as is, or
may hereafter be provided by law for deeds for property sold for nonpayment of
State or County taxes. The maximum rate of taxation shall not exceed in any one
(1) year one dollar and thirty-five cents ($1.35) upon each hundred dollars
($100.00) of valuation or property assessed exclusive of the amount necessary to
pay the principal of and interest on the bonded indebtedness of the City. (As
amended by special election held June 5, 1956)

Article IV
Elected Municipal Officers

Mayor

Section 50. Chief Executive Officer. The Mayor shall be the Chief
Executive Officer, and chief spokesperson, of the City of San Bernardino and a
citizen of the State of California who shall be at least thirty years of age and a
resident and qualified elector of the City for a period of at least thirty (30)
consecutive days next preceding the date of filing nomination papers for the office.
The Mayor shall vigilantly observe the official conduct of all public officers, and take
notice of the fidelity and exactitude, or the want thereof, with which they execute
their duties and obligations, especially in the collection, administration and
disbursement of public funds and property. The books, records and official papers
of all departments, boards, officers and persons in the employ or service of the City
shall, at all times be open to all persons for inspection and examination. Any
defamation or willful neglect of duty or official misconduct which may be reported
or discovered by the Mayor shall be laid before the Common Council in order that
public interests may be protected and the person in default proceeded against
according to law. The Mayor shall, from time to time, give the Common Council
information in writing relative to the state of the City's municipal affairs and
business, and shall recommend such measures as may be deemed beneficial.
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The Mayor shall have the books and records of all public departments,
pertaining to the finances of the City, experted by a competent person at least
once in every year. Any person refusing to submit to, or permit such examination,
or purposely delaying, or impeding the same, may be suspended from office by the
Mayor and removed for malfeasance by the Mayor and Common Council. The
Mayor shall have general supervision over all the departments and public
institutions of the City. The Mayor shall take all proper measures for the
preservation of public order and suppression of all riots and tumults. (City Attorney
Opinion No. 12; City Attorney Opinion No. 88-10)

Section 51. Appointments and Vacancies. The Mayor, with the consent
and approval of the Common Council, shall appoint all officers, and all members of
joint powers authorities, committees, and commissions, regardless of whether they
are local, county, regional, state or otherwise, except those appointments made by
the City Manager or by elected officials pursuant to this Charter, and except any
other appointments for which this Charter expressly provides otherwise, and shall
fill all vacancies in an elective office not otherwise provided for in this Charter;
provided that in no case where a vacancy has occurred and an appointment been
made to an elective office, shall the officer hold beyond the next general municipal
election at which time an election shall be held for that office so vacated to fill the
unexpired term. In case of a vacancy in the office of Mayor, the vacancy shall be
filled by the Common Council by a majority vote, and the appointee shall be a
person meeting all of the requirements for the office of Mayor found in Section 50,
and said person shall hold office for the unexpired term. In filling a vacancy in the
office of Mayor, and in the process of filling such vacancy, the Mayor Pro Tempore
shall not have the authority to exercise any veto or vetoes. (City Attorney Opinion No.
96-10; City Attorney Opinion 93-19; City Attorney Opinion No. 92-18; City Attorney Opinion No. 91-
33; City Attorney Opinion No. 88-30; City Attorney Opinion No. 88-13; City Attorney Opinion No. 88-
12; City Attorney Opinion No. 88-10)

Section 52. Supervision by Mayor. The Mayor shall have the general
supervision of the City Manager, Acting City Manager, Chief of Police, Chief of the
Fire Department, and of all elected officers, except Council Members. The Mayor
shall have the authority to suspend and discharge, for cause, the City Manager
and/or the Acting City Manager subject to the laws of the State of California. (City
Attorney Opinion No. 96-1; City Attorney Opinion No. 95-2; City Attorney Opinion No. 93-19; City
Attorney Opinion No. 88-19; City Attorney Opinion No. 88-13; City Attorney Opinion No. 12; City
Attorney Opinion No. 88-10)

City Attorney

Section 55. Position - Duties - Salary. (a) The office of City Attorney shall
be a full-time position, and the incumbent shall not engage in private practice.
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(b) To be eligible to hold the office of City Attorney, the person elected or
appointed shall be an attorney at law, duly licensed as such under the laws of the
State of California, and shall have been engaged in the practice of law for at least
five (5) years prior to his/her election or appointment, and shall have been a
resident and elector of the City for a period of at least thirty (30) consecutive days
next preceding the appointment or the filing of nomination papers for election to the
office.

(c) In the event a vacancy shall occur in the office of City Attorney during
his/her term, such vacancy shall be filled by appointment by the Mayor and
Common Council, which appointment shall be valid until the next general municipal
election, at which time a City Attorney shall be elected for the remainder of any
unexpired term, or for a full term in accordance with Article II of this Charter.

(d) The City Attorney shall be the chief legal officer of the City; he or she
shall represent and advise the Mayor and Common Council and all City officers in
all matters of law pertaining to their offices; he or she shall represent and appear
for the City in all legal actions brought by or against the City, and prosecute
violations of City ordinances, and may prosecute violations of State law which are
misdemeanors or infractions and for which the City Attorney is specifically granted
the power of enforcement by State law without approval of the District Attorney, or
those violations which are drug or vice related; he or she shall also act and appear
as attorney for any City officer or employee who is a party to any legal action in his
or her official capacity; he or she shall attend meetings of the City Council, draft
proposed ordinances and resolutions, give his or her advice or opinion in writing
when requested to do so in writing by the Mayor or Common Council or other City
official upon any matter pertaining to Municipal affairs; and otherwise to do and
perform all services incident to his or her position and required by statute, this
Charter or general law.

(e) The salary of the City Attorney shall be fixed by the Mayor and Common
Council, but shall not be less than seventy-five hundred dollars ($7,500.00) per
annum. He/She shall be provided with office space and equipment, and clerical
help by the City.

(Scott v. Common Council (1996) 44 Cal.App.4th 684, 686, 696, regarding Section 55 (d).) (City
Attorney Opinion No. 96-3; City Attorney Opinion No.89-11; City Attorney Opinion No. 87-59; City

City Clerk

Section 60. Duties. The duties of the City Clerk shall be to keep the
corporate seal and all books, papers, records and other documents belonging to
his/her office, attend all meetings of the Mayor and Common Council and keep a
journal of the proceedings. He/She shall have full power and authority to take all
affidavits and administer all oaths necessary in the transaction of city business, but
shall make no charge therefor. His/Her official books and records shall be kept
properly indexed and be open to public inspection during office hours. He/She shall
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number and keep a record of all demands allowed and certified to him/her,
showing the date of approval, to whom the same is allowed, the nature of the
claim, and the fund out of which the same is payable. He/She shall issue all
licenses and countersign all warrants on the City Treasury, except warrants of the
boards, and shall do and perform all other acts required of him/her by this Charter,
or by ordinance, or which may be required of him/her by the Mayor and Common
Council. (City Attorney Opinion No. 90-31)

Treasurer

Section 70. Duties. The Treasurer shall receive and pay out all moneys
belonging to the City, and shall keep an account of all receipts and expenditures,
under such rules and regulations as may be prescribed. He/She shall make a
monthly statement to the Mayor and Common Council of the receipts and
expenditures of the preceding month, and shall perform all duties required of
him/her by law and the Mayor and the Common Council. He/She shall not pay out
any monies belonging to the City except on claims presented, allowed and
submitted in the manner provided by this Charter. (Scott v. Common Council (1996) 44
Cal.App.4th 684, 696)

Section 90. Veto Power of Mayor in Community Development
Commission. When pursuant to state law the Mayor and Common Council have
designated themselves as the Community Development Commission of the City,
the Mayor shall have the power of veto of all orders and resolutions of the
Commission, in the same manner as he or she has as Mayor of the City, subject to
the power of the Commission to override the veto, in the same manner as the
Council has in the City. (As added by election held November 5, 1996)

Article V
City Manager

Section 100. Selection and Qualifications. The Mayor shall appoint,
subject to confirmation by the Common Council, a City Manager who shall be the
chief administrative officer of the City. The City Manager shall be responsible for
the administration of all City departments except the Offices of the Mayor, City
Attorney, City Clerk, City Treasurer, the Water Department, the Free Public Library
and the Civil Service System. Said City Manager shall be at least 30 years of age
and shall be a resident of the City or shall become a resident of the City within 180
days of assuming office. Said City Manager shall have received, from an
accredited college or university, a masters degree in public administration,
business administration, or an equivalent degree in a related field, or a higher
degree, and said City Manager shall have served as a City Manager, or as a City
Administrator, or Chief Executive Officer of a county, or as an Assistant City
Manager, City Administrator, or Chief Executive Officer of a county for a minimum
of three years. The Mayor shall appoint the person deemed best qualified on the
basis of executive and administrative capabilities, giving preference to candidates
with management experience, and knowledge of accepted practices with respect to
the duties of the office as set forth in this Charter.
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Section 101. Assistant City Manager. The City Manager shall have the
power to appoint, with the confirmation of the Mayor and Common Council, an
Assistant City Manager, who shall be empowered to perform all duties of the City
Manager in the event of the absence or disability of the City Manager and such
other duties as the City Manager shall direct. The Assistant Manager shall serve
at the pleasure of the City Manager.

Section 102. Authority and Duties of the City Manager. The City
Manager shall have the following authority and duties:

(a) To direct and exercise immediate supervision over the administration
of all Manager-directed departments of the City;

(b) To appoint, subject to section 40(s) of this charter; exercise
immediate supervision over, suspend, and remove, all City employees of all
Manager-directed departments of the City in both the classified and unclassified
service; except that for the classified service, such powers shall be pursuant to the
Civil Service provisions of this Charter, Civil Service rules, regulations and
ordinances, and except that the removal of such employees in the unclassified
service is subject to the consent of the Mayor and Common Council; and to
appoint any temporary, part-time employees of all Manager-directed departments
of the City;

(c) To ensure, in cooperation with the Attorney General, District
Attorney, City Attorney, Police Chief and Fire Chief, that all laws, ordinances,
orders, resolutions, contracts and franchises are enforced and executed;

(d) To attend all meetings of the Mayor and Common Council or council
committee meetings, and to have the right to participate in the discussion without
vote;

(e) To prepare and submit the annual budget and to keep the Mayor
and/or the Mayor and Common Council fully advised as to the financial condition
and needs of the City, including the filing of annual and interim financial reports;

(f) To submit such reports as the Mayor and/or the Mayor and Common
Council may require concerning the operations of Manager-directed departments,
and to recommend to the Mayor and Common Council the adoption of measures
deemed advisable;

(g) To perform such other duties as are specified in the Charter, by law
or required by the Mayor and/or the Mayor and Common Council;

(h) To confer regularly with the Mayor, to implement the policies of the
Mayor and Common Council as directed by the Mayor and to keep the Mayor
informed of any issues, events and controversies that may arise; to be responsible
for the implementation of the Mayors policy directives and to insure that those
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directives are acted upon by all supervisors and employees in the Manager-
directed departments of the City;

(i) To confer regularly with the City Attorney on legal issues; to
immediately notify the City Attorney of any important legal issues or difficulties that
arise; to obtain the legal advice of the City Attorney, and to carefully consider such
advice, understanding that recommendations of the City Attorney are advisory
only. Neither the City Attorney, nor employees of the Office of the City Attorney,
has authority to issue orders to the City Manager or any of his/her subordinates; it
is the responsibility of the City Manager to insure that all Manager-directed
departments and the employees of those departments perform all of their duties
legally and that those departments and their employees are faithful in the
observance, adherence, and enforcement of all pertinent laws, ordinances, and
legal requirements in the performance of their duties and in their official conduct;

(j) To confer regularly with the City Treasurer on financial issues, to
obtain the financial advice of the City Treasurer and to carefully consider that
advice, and to keep the Treasurer informed of all financial matters and to
immediately notify the City Treasurer of any important financial issues or difficulties
that arise.

Section 103. Vacancy. Whenever a vacancy occurs in the office of the
City Manager, the Mayor shall proceed immediately to appoint a City Manager,
subject to confirmation by the Common Council. Until a City Manager is appointed
and has assumed the duties of the office, the Assistant City Manager shall be
designated as Acting City Manager. He/She shall perform all of the duties of City
Manager and be vested with all the powers of City Manager as set forth in this
Charter. The Assistant City Manager shall continue in the position of Acting City
Manager, subject to the Mayors authority to remove the Acting City Manager, until
a new City Manager has been appointed and has assumed the duties of that office.

Section 104. Mayor and Common Council's Authority Over the City
Manager and Other City Employees. Neither the Mayor nor any member of the
Common Council, nor any other elected City official, nor the Common Council, nor
any of its committees or members shall dictate or attempt to dictate, either directly
or indirectly, the appointment of any person to office or employment by the City
Manager, or in any manner interfere with or prevent the City Manager, from
exercising judgment in the appointment of officers and employees in the
administrative service. Neither the Mayor, Common Council Members, employees
of the Common Council, nor employees of the Office of the Mayor, shall give
orders to any of the subordinates of the City Manager, either publicly or privately.

Section 105. Non-Eligibility of Elected Officials. No person who held
any elected office in the City, between June 1, 1987, and the effective date of this
Charter, regardless of how long any such person held any such elected office, may
be employed as City Manager until eight years passes from the effective date of
this Charter, and no person who holds any elected office on or after the effective
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date of this Charter may be employed as City Manager until eight years passes
after such person leaves said elected office.

Article Vl
Reserved

Article Vll
Initiative, Referendum and Recall

Section 120. The Initiative. Any proposed ordinance may be submitted to
the Common Council by a petition signed by qualified and registered electors of the
City equal in number to the percentage hereinafter required. The signatures to the
petition need not all be appended to one paper, but each signer shall add to his/her
signature his/her place of residence, giving the street and such other identification
as may be required by the registration law. One of the signers of each such paper
shall make oath before an officer qualified to administer oaths, that the statements
therein made are true, and that each signature to the paper appended is the
genuine signature of the person whose name purports to be thereunto subscribed.
Within ten days from the date of filing such petition, the City Clerk shall examine
and from the great register ascertain whether, or not, said petition is signed by the
requisite number of qualified electors and if necessary, the Council shall allow
him/her extra help for that purpose, and he/she shall attach to said petition his/her
certificate showing the results of said examination. If, by the Clerk's certificate, the
number of signatures on the petition is shown to be insufficient, it shall be returned
forthwith by the Clerk to the filer(s) thereof who shall have an additional ten (10)
days from the date the petition is returned to them by the Clerk, to obtain the
required number of signatures. The Clerk shall, within ten (10) days after such
additional ten (10) day period to obtain additional signatures, make like
examination of said petition, and if his/her certificate shall show the same to be
insufficient, it shall be returned to the person filing same, without prejudice,
however, to the filing of a new petition to the same effect. If the petition shall be
found to be sufficient the Clerk shall submit the same to the Council without delay.

If the petition accompanying the proposed ordinance be signed by electors
equal in number to thirty percent (30%) of the entire vote cast for all candidates for
Mayor at the last preceding City election at which a Mayor was elected, and
contains a request that said ordinance be submitted forthwith to a vote of the
people at a special, or general municipal election, then the Council shall either:

(a) Pass such ordinance without alteration within twenty (20) days after the
attachment of the Clerk's certificate of sufficiency to the accompanying petition
(subject to referendary vote), and if the ordinance shall be passed by the Council,
but shall be vetoed by the Mayor, and on reconsideration shall fail of passage by
the Council, then, within five (5) days after determination that said ordinance shall
have so failed of final adoption, the Council shall proceed to call a special election
at which said ordinance without alteration, shall be submitted to a vote of the
people; or,

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(b) Forthwith after the Clerk shall attach to the petition accompanying such
Ordinance his/her certificate of sufficiency, the Council shall proceed to call a
special election at which said ordinance, without alteration, shall be submitted to a
vote of the people.

The ballots used when voting upon said proposed ordinance shall contain
the words, "For the Ordinance," (stating the general nature of the proposed
ordinance) and "Against the Ordinance," (stating the general nature of the
proposed ordinance). If a majority of the qualified electors voting on said proposed
ordinance shall vote in favor thereof, such ordinance shall thereupon become a
valid and binding ordinance of the City; and any ordinance proposed by petition, or
which shall be adopted by a vote of the people, cannot be repealed or amended
except by a vote of the people obtained in like manner.

Any number of proposed ordinances may be voted upon at the same
election. In accordance with the provisions of this section; provided that there shall
not be held under this section of the Charter more than one special election in any
period of twelve months. (Effective March 16, 2005)

Section 121. The Referendum. No ordinance passed by the Common
Council (except when otherwise required by the general laws of the State, or by
the provisions of this Charter, respecting street improvements and except an
ordinance for the immediate preservation of the public peace, health, or safety,
which contains a statement of its urgency, and is passed by a two-thirds (2/3) vote
of the Council, but no grant of any franchise shall be construed to be an urgency
matter, but all franchises shall be subject to the referendary vote herein provided)
shall go into effect before thirty (30) days from the time of its final passage and its
approval by the Mayor; and if during said thirty days a petition signed by electors of
the City equal in number to at least thirty percent (30%) of the entire vote cast for
all candidates for Mayor at the last preceding City election at which time a Mayor
was elected, protesting against the passage of such ordinance, be presented to
the Council, the same shall thereupon be suspended from going into operation,
and it shall be the duty of the Council to reconsider such ordinance, and if the
same is not entirely repealed, the Council shall submit the ordinance proposed to
the vote of the electors of the City either at the next general municipal election or at
a special municipal election to be called for that purpose, and such ordinance shall
not go into effect or become operative unless a majority of the qualified electors
voting on the same, shall vote in favor thereof. Said petition shall be in all respects
in accordance with the provisions of the first section of this article (The Initiative)
and shall be examined and certified by the Clerk in all respects as therein provided.
(City Attorney Opinion No. 96-7; City Attorney Opinion No. 96-4)

Section 122. The Recall. Proceedings may be commenced for recall of the
holder of any elective office of this City and the election of a successor of the
holder sought to be removed by the service, filing and publication of a notice of
intention to circulate a recall petition. Such proceedings may not be commenced
against the holder of an office unless, at the time of commencement, the holder
has held office for at least ninety days and no recall petition has been filed against
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such holder within the preceding six months. A petition demanding the recall of the
officer sought to be recalled shall be submitted to the City Clerk. The petition shall
be signed by not less than fifteen percent (15%) of the voters of the City, or in the
case of a City Council Member elected by ward twenty-five percent (25%) of the
voters of that ward, according to the County Clerk's last official report of
registration to the Secretary of State. No signature may be affixed to the petition
until the proponents have served, filed and published a notice of intention to
circulate a recall petition, containing the name of the officer sought to be recalled
and the title of his/her office, a statement in not more than 500 words of the
grounds on which the recall is sought, and the name and address of at least one,
but not more than five proponents. The notice of intention shall be served,
personally or by certified mail, on the officer sought to be recalled, and a copy
thereof with a certificate of the time and manner of service shall be filed with the
clerk of the legislative body. Within seven (7) days after the filing of the notice of
intention, the officer sought to be recalled may file with the City Clerk an answer in
not more than 500 words to the statement of the proponents and if an answer is
filed, shall serve a copy thereof, personally or by certified mail, on one of the
proponents named in the notice of intention. At the time the proponents publish
the notice and statement referred to above, the officer sought to be recalled may
have the answer published at his/her expense. If the answer is to be published the
officer shall file with the City Clerk at the time the answer is filed a statement
declaring his/her intent that the answer be published. The statement and answer
are intended solely for the information of the voters and no insufficiency in the form
or substance thereof shall affect the validity of the election or proceedings. The
notice and statement as referred to above, and the answer, if it is to be published
shall be published at least once in a newspaper of general circulation, as described
in Sections 6000 to 6066 of the Government Code, adjudicated as such.

Seven (7) days after the publication of the notice, statement and answer, if it
is to be published, the recall petition may be circulated and signed. The petition
shall bear a copy of the notice of intention, statement and answer, if any. If the
officer has not answered, the petition shall so state. Signatures shall be secured
and the petition filed within ninety (90) days from the filing of the notice of intention.
If such petition is not filed within the time permitted by this section, the same shall
be void for all purposes. The signatures to the petition need not all be appended to
one paper; but each signer shall add to his/her signature his/her place of
residence, giving the street and such other identification as may be required by the
registration law. One of the signers of each such paper shall make oath before an
officer qualified to administer oaths, that the statements therein made are true, and
that each signature to the paper appended, is the genuine signature of the person
whose name purports to be thereunto subscribed. Within thirty (30) days after the
date of filing such petition the City Clerk shall examine and ascertain whether or
not said petition is signed by the requisite number of qualified electors and, if
necessary, the Council shall allow extra help for that purpose, and the City Clerk
shall attach to said petition a certificate showing the result of said examination. If,
by the City Clerk's certificate, the number of signatures on the petition is shown to
be insufficient, it shall be returned forthwith by the Clerk to the filer(s) thereof who
shall have an additional thirty (30) days from the date the petition is returned to
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them by the Clerk to obtain the required number of signatures. The City Clerk shall,
within thirty (30) days after such additional thirty (30) day period to obtain
additional signatures, make like examination of said petition, and, if his/her
certificate shall show the same to be insufficient it shall be void for all purposes. If
the petition shall be found to be sufficient, the City Clerk shall submit the same to
the Council without delay and the Council shall thereupon order and fix a date for
holding said election, not less than fifty (50) days, nor more than seventy (70) days
from the date of the City Clerk's certificate to the Council that a sufficient petition is
filed.

The ballots used when voting upon said proposed recall shall contain the
words "shall (title of office and the name of the person against whom the recall is
filed) be recalled?" and the words "yes" and "no."

The Council and the City Clerk shall make, or cause to be made, publication
of notice and all arrangements for conducting, returning and declaring the results
of such election in the same manner as other City elections.

Qualified candidates to succeed the person against whom the recall is filed,
shall be listed on the ballot, except that the incumbent shall not be eligible to
succeed himself/herself in any such recall election.

In any such removal election, if a majority of the votes cast is for "yes" on
the question of whether or not the incumbent should be recalled, the candidate
receiving the highest number of votes shall be declared elected. The incumbent
shall thereupon be deemed removed from the office upon qualification of his/her
successor. In case the party who received the highest number of votes should fail
to qualify within ten (10) days after receiving notification of election, the office shall
be deemed vacant. The successor of any officer so removed shall hold office
during the unexpired term of his/her predecessor. (Effective March 16, 2005)

Article VIII
Revenue and Finance

Section 130. Reports and Estimates. On or before the first Monday in
June in each year the City Manager shall transmit to the Mayor and Common
Council, accompanied with the estimates and reports of each department an
estimate of the probable financial necessities of the City Government for the fiscal
year, stating the amount required to meet the interest and principal on all bonded
or funded indebtedness of the City, together with the amount needed for the
salaries and probable wants of all the departments of the Municipal Government in
detail, showing specifically the necessities of each fund in the treasury. Such
estimate shall also show what amount of income and revenue will probably be
collected from fines, licenses and other sources of revenue, exclusive of taxes
upon property, and what amount will probably be required to be levied and raised
by taxation in order to meet the necessities of each specific fund for such fiscal
year. (Scott v. Common Council (1996) 44 Cal.App.4th 684, 696; City Attorney Opinion No. 92-10)

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Section 131. Ordinance To Be Passed. The Mayor and Common Council
on or before the first Monday of January, 1907, and annually thereafter while any
valid law exists for the assessment and collection of City taxes by officers of the
County of San Bernardino, shall pass an ordinance electing to avail the City of San
Bernardino of the provisions of an act entitled: "An Act to provide for the levy and
Collection of taxes by and for the use of municipal corporations and cities
incorporated under the laws of the State of California, except municipal
corporations of the first class, and to provide for the consolidation and abolition of
certain municipal offices, and to provide that their duties may be performed by
certain officers of the County, and fixing the compensation to be allowed for such
County officers for the services so rendered to such municipal corporation,"
approved March 27, 1895, and shall cause a certified copy of such ordinance to be
filed with the Auditor of said County of San Bernardino. If said act shall be
amended, or some other law be substituted in its stead providing for the
assessment and collection of City taxes by County officers, the Mayor and
Common Council shall conform to the provisions of such amended act or such law
in order to avail the City of the privilege of having its taxes assessed and collected
by such County officers. Such ordinances shall take effect immediately after their
passage and shall not be subject to "The Referendum" as hereinbefore provided.

Section 132. Ex-officio Assessor and Tax Collector. After the time of
noon on the first Monday of March, 1907, if for any cause there shall not be in
force any ordinance availing the City of the privilege of having its taxes assessed
and collected by the officers of the County, and during the time that there shall be
no such ordinance or provision in force, the City Clerk shall be ex-officio Assessor,
and the Chief of Police shall be ex-officio Tax Collector; they shall perform
respectively the duties and have all the powers prescribed by law or ordinance for
Assessors and Tax Collectors. While the City avails itself of the privilege of having
its taxes assessed and collected by the County officers, the offices of City
Assessor and City Tax Collector shall not exist. The Mayor and the Common
Council shall have power, by ordinance, to provide for the compensation of the City
Clerk, while acting as ex-officio Assessor and of the Chief of Police while acting as
ex-officio Tax Collector for such extra services. The taxes so levied and collected
shall be apportioned by the Treasurer to the several specific funds.

Section 133. Indebtedness for Municipal Improvement. General
obligation bonded indebtedness of the City for any purpose for which the City is
authorized to provide or for carrying out any of the powers possessed by the City
may be incurred in the manner provided by the general laws of the State of
California at the time such proceedings are taken. The City shall not incur any
indebtedness evidenced by general obligation bonds which shall in the aggregate
exceed fifteen percent (15%) of the total assessed value for purposes of City
taxation of all the taxable real and personal property in the City. The City shall not
incur any bonded indebtedness constituting a general obligation of the City unless
such indebtedness is authorized by the affirmative votes of not less than two-thirds
(2/3) of those electors voting on the question of incurring such indebtedness at any
election at which such question is submitted to the electors of the City.
Notwithstanding any other provision or limit in this Charter, bonds of the City
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payable solely from the revenues of any revenue-producing improvement, building,
system, plant works, facilities or undertaking used for or useful in (a) the producing,
obtaining, conserving, treating, storing, transmitting, distributing and supplying of
water for domestic use, irrigation, sanitation, industrial use, fire protection,
recreation or any other public or private use, and (b) the collection, treatment or
disposal of sewage, garbage, refuse waste or storm water, including drainage, may
be authorized and issued in the manner provided by the general laws of the State
of California at the time such proceedings are taken. The issuance of such revenue
bonds must be authorized by the affirmative votes of a majority of the electors
voting upon the proposition of their issuance at any election at which such question
is submitted to the electors of the City.

When two or more questions or propositions for the incurring of general
obligation bonded debt or for the issuance of revenue bonds are submitted at the
same election to the votes cast for and against each question or proposition shall
be counted separately. (As amended by special election held June 5, 1956)

Section 134. Sewer Service Charges. The Mayor and Common Council
shall levy charges for sewer service which, if so ordered by the Mayor and
Common Council, may be collected together with or separately from charges for
water service and all charges received for sewer service and all other income and
receipts derived from the operations of the sewer system, including any sewage
treatment and effluent reclamation works, or arising from the sewer system or said
works shall be paid into the Sewer Fund. Said charges shall be at least sufficient to
pay the following amounts in the order set forth:

(a) The necessary and reasonable maintenance and operation costs of the
sewer system, including any sewage treatment and effluent reclamation works
(which include the reasonable expenses of billing and collection of service charges,
management, repair and other expenses necessary to maintain and preserve the
sewer system and said works in good repair and working order);

(b) The principal and interest on bonds issued for sewer purposes;

(c) Any payment specifically authorized or required by the Mayor and
Common Council in any ordinance or resolution providing for the issuance of said
bonds. (As amended by election held March 19, 1957)

Section 135. Demands Against City. The provisions of the laws of the
State of California relating to the processing of demands and claims against the
municipality, the establishment and operation of funds and the transfer of revenue
between funds which apply to general law cities shall be applicable to and given
full force and effect in the City, provided that the Mayor and Common Council are
empowered to and may, by ordinance, prescribe and provide for such matters and
other matters directly related thereto and such ordinance after its adoption shall
prevail over said provisions of the general law. (As amended by election held February 6,
1973)

Section 139. Valid Claims. No claim for commodities furnished, or service
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performed, shall be valid unless prior to furnishing such commodities, or the
rendition of the service, authority for the same had been given by the Common
Council, the City Manager or some department of City government, having the
authority so to do. No member of the Common Council, the City Manager or
member of any department, and no City officer, shall have power to create an
indebtedness against the City, or to furnish the basis of a claim without said
authority. (More v. City (1931) 118 Cal.App. 732, 735-737; Good v. City (1920) 49 Cal.App. 559,
560)

Section 140. Advertisement For Supplies, Etc. The purchase of any
goods, equipment, materials, supplies, or other personal property, except
purchases from other governments or governmental agencies or as otherwise
excepted by law, shall be made in the manner prescribed by ordinance which shall
provide that such purchases or contracts for purchases where the amount therefor
equals or exceeds an amount fixed by such ordinance, shall be open to
competitive bidding and that the procedures for such bidding shall include public
advertisement therefor, and consideration of factors in the award including low bid,
expertise, and such other relevant factors as may be determined by the Mayor and
Common Council from time to time. The Mayor and Common Council or any
board or officer advertising for sealed proposals hereunder shall have the power to
reject any and all bids and readvertise at their discretion. (As amended by elections
held June 4, 1974, November 6, 1979 and June 2, 1992) (Cody v. City (1908) 153 Cal. 24, 26; City

Section 143. Special Funds. There is hereby created the following specific
funds, to wit: Library Fund, Sewer Fund, Water Fund, and such other funds as may
be designated by ordinance or resolution duly passed by the Mayor and Common
Council. (As amended by election held February 6, 1973)

Section 146. Water Fund. Out of the Water Fund shall be paid all
warrants drawn thereon duly authorized by the Board of Water Commissioners.

Section 148. Library Fund. Out of the Library Fund shall be paid all
warrants drawn thereon duly authorized by the Board of Library Trustees.

Section 149. Sewer Fund. Out of the Sewer Fund shall be paid:

(a) The necessary and reasonable maintenance and operation costs of the
sewer system, including any sewage treatment and effluent reclamation works
which include the reasonable expenses of billing and collection of sewer charges,
management, repair and other expenses necessary to maintain and preserve the
sewer system and said works in good repair and working order;

(b) The principal and interest of bonds issued for sewer purposes;

(c) Any payments specifically authorized or required by the Mayor and
Common Council in any ordinance or resolution providing for the issuance of said
bonds;

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(d) Amounts, as the Mayor and Common Council may direct, for the
payment of the costs of extensions and improvements of or additions to the sewer
system and said works or for any other sewer purposes. (As amended by election held
March 19, 1957)

Article IX
Water Department

Section 160. Water Commissioners - Term of Office - Qualifications -
Duties. There is hereby created a board consisting of five members which shall be
known as the Board of Water Commissioners. Members of such board shall be
appointed by the Mayor, subject to the confirmation of the Common Council. The
term of office of each commissioner shall be six years; provided, however, that on
or after twelve o'clock noon on the second Monday in May 1935, one member of
the Board shall then be appointed for a term of six years; that on or after twelve
o'clock noon on the second Monday of May, 1937, one member of such board
shall be appointed for a term of two years, and one member shall be appointed for
a term of six years; and thereafter, on or after twelve o'clock noon on the second
Monday of May of each odd numbered year, one member of the Board shall be
appointed for a term of six years; provided further that on or after twelve o'clock
noon on the second Monday of May, 1971, two members of the Board shall be
appointed, one for a one year term and one for a three year term, commencing on
the second Monday of May, 1971; and thereafter such members shall be
appointed for six year terms commencing on the second Monday of May, 1972,
and of May, 1974, and for every six years thereafter. Any member of the Board
may be removed at any time by the affirmative vote of five Council Members, and
upon any such removal, the vacancy shall be filled by the Mayor, with the consent
of the Common Council, for the unexpired term. No person shall be eligible to
appointment as a member of said Board unless he/she shall have been a qualified
elector of said City for the period of five (5) years next preceding the date of his/her
appointment.

The Board of Water Commissioners shall perform the duties and
responsibilities prescribed in this Charter and shall perform such other duties and
responsibilities as are or may be prescribed or delegated by the Mayor and
Common Council with the concurrence of the Board. (As amended by election held
April 13, 1971) (City Attorney Opinion No. 94-3; City Attorney Opinion No. 93-8; City Attorney

Section 161. Oath of Office. Before entering upon the duties of his/her
office, each member of the Board of Water Commissioners shall make and
subscribe before some officer authorized by law to certify oaths, the same oath of
office required of other City officers. (City Attorney Opinion No. 94-3)

Section 162. President - Inventory of Property. The first Board of Water
Commissioners appointed hereunder shall, within one week after their confirmation
by the Common Council, and thereafter their successors shall biennially, meet and
organize by the election of one of their number as president. And said Board shall
within a reasonable time thereafter, not to exceed thirty (30) days, make an
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inventory of all the property of the City pertaining to the Water Department that is
on hand and in use, consisting of lands, reservoirs, conduits, rights of way, pipes,
pipe lines, hydrants, gates, engines, pumps, tools, wells and private water service
connection, and shall estimate the value of all such property to determine the
whole amount the City has invested in its water system; and shall enter said
inventory, together with such estimates, in a record book to be kept by said
Commission and shall therein keep a record of all property belonging to the water
service of the City, afterwards acquired, together with a record and account of the
disposition of any property of said department which has been, or may be sold,
lost, destroyed or worn out. (City Attorney Opinion No. 94-3)

Section 163. Powers. The Board of Water Commissioners is hereby
authorized and empowered:

1. To establish and collect all water rates, collect all rentals from water
bearing lands and generally regulate, control, manage, renew, repair and extend
the entire water system of the City;

2. To employ such persons as the necessities of the water service may
require, to fix and pay out of the Water Fund the compensation of any and all
employees in said water service and to require of any employee in the Water
Department an adequate bond for the faithful performance of his/her duties;

3. Upon the order of and in the manner directed by the Mayor and Common
Council, to generally regulate, control, manage, renew, repair and extend the City
waste water treatment (sewage disposal) plants and that portion of the outfall
sewer lines extending from Mill and "E" Streets to said plants, and if so ordered by
the Mayor and Common Council to pay all costs and expenses in connection
therewith from the Water Fund;

4. To incur any indebtedness or liability not exceeding in any year the
income and revenue provided for such year, subject to the debt limitation
provisions of the Constitution of the State of California;

5. To make rules and regulations governing the conduct of said Board and
the members thereof. (Livingstone v. MacGillivray (1934) 1 Cal.2d 546, 552; Good v. City
(1920) 49 Cal.App. 559, 562; City Attorney Opinion No. 94-3; City Attorney Opinion No. 93-8)

Section 164. Sale And Use Of Water. The Board shall have power to
control and order the expenditure of all money received from sale or use of water,
for the defraying of expenses or maintenance and repairs and operation of the
water system, and for any expenses for additions to the same; and for supplying
the City with water for any and all purposes; provided that all such money shall be
deposited in the treasury of the City to the credit of a fund to be known as the
Water Fund, and shall be kept separate and apart from other moneys of the City,
and shall only be drawn from said fund upon demands authenticated by the
signature of the President and Secretary of the Board, or in the absence of the
President, by the signatures of two members and the Secretary of the Board,
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except that the Common Council may, in its discretion, monthly transfer from the
Water Fund to the General Fund not more than ten percent (10%) of the revenues
of the Water Department during the preceding month, and except that the Mayor
and Common Council may, in its discretion, monthly transfer from the Water Fund
to the proper Bond Fund an amount of money equal to one-twelfth (1/12) of the
amount which will become due and payable during the current year for interest or
principal, or for interest and principal, upon any or all outstanding Water Works
Bonds. (As amended by special election held April 8, 1935) (City Attorney Opinion No. 94-3)

Section 165. Receipts and Disbursements of Water Funds. Said Board
shall cause to be kept in proper books provided therefor, a complete and accurate
account of all the receipts and disbursements on account of said water system,
and the same shall be kept open to the inspection of the public at any and all
reasonable hours. (City Attorney Opinion No. 94-3)

Section 166. Map Of Water System And Service. Said Board appointed
hereunder shall within a reasonable time after their appointment, cause to be made
and drafted by a competent engineer a suitable map showing the entire water
system of the City; its source of supply, reservoirs, mains, gates, stop-off cocks,
size of pipe, hydrants and all individual water service connections; said map to be
the official map of the water system of the City. And from time to time, as the
water service of the City increases, said Board shall cause to be made additional
maps showing in detail the increased water service of the City. (City Attorney Opinion
No. 94-3)

Section 167. Financial Condition Of Water Department, Etc. Not less
than thirty (30) days, nor more than forty (40) days, prior to the fixing of the general
tax levy by the Common Council, and at any other time when required by the
Common Council, said Board shall make and file with the Clerk of said Common
Council a report, showing a full detailed statement of the financial condition of the
Water Department; together with an estimate of the needs and requirements of
said department for the ensuing year and the costs thereof. And whenever
required by the Common Council said Board shall make and file with the Clerk of
said Common Council, a full and detailed statement of all property of whatsoever
nature or kind belonging to said Water Department. (City Attorney Opinion No. 94-3)

Section 168. City Clerk Ex-Officio Secretary. The City Clerk shall be ex-
officio Secretary of said Board, and shall keep a record of the proceedings thereof;
and shall, whenever required so to do, certify such proceedings under his/her
hand, the same to be authenticated by seal, if a seal is adopted and provided by
said Board for that purpose. (City Attorney Opinion No. 94-3)

Section 169. Meetings. The Board shall hold regular stated meetings at
the City Hall at least twice in each month, and as often as the necessities of the
Water Department require. (City Attorney Opinion No. 94-3)

Section 170. Compensation of Members. The members of said Board
shall each receive a salary as compensation for his/her services, payable out of
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the Water Fund of the City, as follows: The President, three hundred dollars
($300.00) a year, and each of the other members, one hundred fifty dollars
($150.00) a year. (City Attorney Opinion No. 94-3)

Section 171. Ordinance to Enforce Rules. It shall be the duty of the
Mayor and Common Council to pass such ordinances as may be necessary to
enforce the rules and regulations of said Board of Water Commissioners. (City

Article X

Police and Fire Departments

Section 180. Powers of Mayor and Common Council. The police and fire
departments shall be under the general supervision of the Mayor. The City
Manager shall be the immediate supervisor of the Chief of Police and the Chief of
the Fire Department. Neither the Mayor nor the City Manager shall interfere or
attempt to interfere with the discharge of those duties of the Police or Fire Chief(s)
the performance of which are required by law.

The Mayor and Common Council shall have power upon the
recommendation of the City Manager to fix and prescribe the salaries,
qualifications, duties, rank, badges of office and uniforms of the officers, members
and employees of said departments; to prescribe rules and regulations for the
organization, government and discipline of the same, and to prescribe penalties for
violations thereof; subject to the civil service provisions of this Charter.

The Mayor shall determine any and all complaints of misconduct,
inefficiency or violation of rules or other charges against the chiefs of said
departments, and shall take such action thereon as shall be most conducive to the
maintenance and discipline and efficiency of such departments, including
suspending and or dismissing, for cause, the Chief of Police and/or the Chief of the
Fire Department subject to the laws of the State of California. (City Attorney Opinion
No. 91-2; City Attorney Opinion No. 90-25)

Section 181. Police Department - Membership. The Police Department
shall consist of a Chief of Police, and as many ranking officers, police officers and
other employees as the Mayor and Common Council may from time to time
determine. (City Attorney Opinion No. 95-2; City Attorney Opinion No. 91-2; City Attorney Opinion
No. 89-11)

Section 182. Chief of Police - Duties. The Mayor shall appoint a Chief of
Police, subject to the approval of the Common Council. The Chief of Police shall
have the powers and duties that are now or that may hereafter be conferred upon
chiefs of police by the laws of the State, and such powers and duties shall in all
respects be promptly executed by the Chief of Police, police officers, and by
authorized personnel in the Police Department. The Chief of Police shall enforce
the laws of the State and the ordinances of said City, and shall arrest or cause to
be arrested all persons for whom probable cause exists to believe said person(s)
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may be guilty of violations of the same. He/she shall also have charge of the City
jail, if one is in existence, of all prisoners and of all those who are sentenced to
labor upon the public streets, public works or other places of said City and shall
execute and enforce all orders and sentences in reference thereto; and he/she
shall perform such other duties as may be prescribed by the Mayor and Common
Council or by the City Manager. (City Attorney Opinion No. 91-2; City Attorney Opinion No.
90-25)

Section 183. Fire Department - Membership. The Fire Department shall
consist of a Chief of the Fire Department and as many ranking officers, firefighters
and other employees as the Mayor and Council may determine. (City Attorney
Opinion No. 91-21)

A. Chief of the Fire Department - Duties. The Mayor shall appoint a Chief
of the Fire Department, subject to the approval of the Common Council. The Chief
of the Fire Department shall have the powers and duties that are now or that may
hereafter be conferred upon chiefs of fire departments by the laws of the State,
and such powers and duties shall in all respects be promptly executed by the Fire
Chief and by authorized personnel in the Fire Department; and he/she shall
perform such other duties as may be prescribed by the Mayor and Common
Council or by the City Manager.

Section 184. Supervision of City Manager Over Funds, Moneys, Etc.
The City Manager shall supervise and possess power and authority over all the
funds, moneys and appropriations for the use of the Police and Fire Department,
also the organization, government and discipline, subject to the restrictions in
Section 180 of this Charter, of said Departments, and shall have control of all the
property and equipments belonging to the same. (City Attorney Opinion No. 91-2)

Section 185. Power to Make Rules and Regulations. Said Mayor and
Common Council shall have power to make all necessary rules and regulations,
upon the recommendation of the City Manager, to carry into execution and effect
the foregoing powers contained in this Article, and in general to enable the
appropriate city officers to manage and control said departments. (City Attorney
Opinion No. 90-25)

Section 186. Salaries. There is hereby established for the City of San
Bernardino a basic standard for fixing salaries, classifications, and working
conditions of the employees of the Police and Fire Departments of the City of San
Bernardino, and the Mayor and the Common Council in exercising the
responsibility over these departments vested in them by this Charter shall hereafter
be guided and limited by the following provisions:

FIRST: Classification

The following classes of positions are hereby created in the Fire Department
and Police Department of the City of San Bernardino, and the code numbers, titles,
and salaries as hereinafter set forth are hereby established and fixed for such
classes of positions. The letter "P" represents "Position" and the five steps in
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Positions 1, 2 and 3 being represented by the letters "a," "b," "c," "d" and "e" are:
"a" designating the first six months of service in the respective departments, "b"
designating the following eighteen months of service in the respective
departments, "c" designating the third year of service in the respective
departments, "d" designating the fourth year of service in the respective
departments, and "e" designating the fifth and all subsequent years of service.
Advancements in salary shall be made automatically step by step after each step
of aggregate active service in the department in which the member is employed.
Each person employed in the Fire Department and Police Department shall be
entitled to receive for his/her services in his/her position the applicable respective
rate or rates of compensation prescribed for the class in which his/her position is
allocated. Additional titles may be established by the Mayor and Common Council,
upon the recommendation of the City Manager, but only titles for Local Safety
members of the Police and Fire Departments shall be placed in one of the following
classifications having the most nearly equal duties and responsibilities. Local
Safety members of the Police and Fire Departments shall mean any local police
officer or local firefighter as defined under the provisions of the Public Employees
Retirement System Law as specified in the California Government Code or
amendments thereto.

Class of Position

Classification Title Title
Number Fire Department Police Department

P1 (Steps a,b,c,d,e) Firefighter, Battalion Chief Aide Police Officer

P2 (Steps a,b,c,d,e) Fire Prevention Inspector Juvenile Officer, Detective,
Senior Identification Inspector

P3 (Steps a,b,c,d,e) Engineer Sergeant

P4 Captain, Assistant Fire Lieutenant
Prevention Engineer

P5 Battalion Chief, Drill Captain, Superintendent
Master, Fire Prevention of Records and
Engineer Identification

P6 Assistant Chief Assistant Chief

P7 Chief Chief

SECOND: Basic Salary Schedule

(a) The monthly salaries of Local Safety members of the San Bernardino
Police and Fire Departments included in classifications P1, P2, P3 steps "a" and
"e" of P4, P5, P6 and P7 shall be fixed on August 1, 1976, for the balance of the
current fiscal year and, thereafter, annually on August 1 of each succeeding year
at the amount equal to the arithmetic average of the monthly salaries, paid or
approved for payment to Local Safety members of like or most nearly comparable
positions of the police and fire departments of ten cities of California with
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populations of between 100,000 and 250,000 as shown in the latest Annual Report
of Financial Transactions of California Cities published by the State Controller.

(b) The ten cities used for fixing the monthly salaries shall be those ten
cities remaining from an original and complete list of all California Cities in the
100,000 to 250,000 population range based on the latest Annual Report of
Financial Transactions of California Cities, published by the State Controller after
representatives of the City and the appropriate recognized employee organization
have alternately struck the names of cities from the list one at a time until the
names of ten cities remain. The representatives to strike the first name from the list
shall be determined by lot.

(c) In the event one or more of the ten cities does not have one or more of
the comparable position classifications, the monthly salary for the particular
classification, shall be computed as the arithmetic average of the next highest and
next lowest comparable position classification of that City.

(d) The salaries paid in step "a" shall be the same as the arithmetic average
of the starting salaries of the comparable positions in the ten cities and the salaries
paid in step "e" shall be the same as the average of the top salaries paid in the
comparable positions in the ten cities. The salaries paid in steps "b," "c" and "d"
shall be fixed at amounts which will cause the Local Safety members of the San
Bernardino Police and Fire Departments to advance from the starting steps to the
maximum pay steps in approximately equal salary advances.

THIRD: Special Salary Provisions

The following special provisions shall apply in addition to the compensation
received in accordance with the above salary positions:

(a) Police Department: Each police officer assigned to traffic enforcement
duties on a motorcycle shall be paid when performing such duties during the period
of assignment at the rate of not less than fifty dollars per month in addition to the
pay step to which he/she is entitled as extra-hazard pay for motorcycle duty. The
Police Chief shall certify monthly as to the assignment and the period of time
worked to validate entitlement to the extra-hazard pay.

(b) Police and Fire Departments: Any Local Safety member of the Fire and
Police Departments temporarily acting in a position in a higher rank during periods
of absence of the incumbent or during a vacancy in the position for more than ten
(10) consecutive working days or five consecutive shifts, shall receive the same
salary for the higher rank to which he/she would be entitled, were he/she promoted
to that rank during the period in which the employee is acting in the higher rank.
The Chief of the department in which the assignment to the higher rank occurs
shall certify as to the assignment and the period of time worked in the higher rank
to validate entitlement to the salary of the higher rank.

(c) Fire Department - Paramedics. The Mayor and Common Council, upon
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the recommendation of the City Manager, may authorize additional salary to be
paid to local safety members of the Fire Department, assigned to duty as
paramedics, during the period of such assignment.

(d) Fire and Police Departments-Education/Longevity Incentive Pay. The
Mayor and Common Council, upon the recommendation of the City Manager, may
authorize additional salary to be paid to local safety members of the Police
Department and the Fire Department who have completed educational or longevity
requirements specified by the Mayor and Common Council.

(e) Fire Fighters

(1) All employees (below the rank of Battalion Chief) assigned to an
average 56 hours per week assignment shall be compensated at an hourly rate
of time and one-half (12) their regular hourly rate of base pay, such compensation
to be computed for each one quarter (3) hour increment worked in excess of their
average 56 hour weekly assignment.

(2) All employees (below the rank of Battalion Chief) working a 40
hour per week assignment shall be compensated at an hourly rate of time and one-
half (12) their regular hourly rate of base pay, such compensation to be computed
for each 30 minute increment worked in excess of their regular eight (8) hour per
day assignment of their 80 hours assignment during each pay period.

SIXTH: Definitions

The words and terms defined in this subsection shall have the following
meanings in this section:

(a) AShift" means a 24-hour duty for the Fire Department, except for the
positions of Chief, Assistant Chief, and local safety members working in the Fire
Prevention Bureau, and such other local safety positions as may hereafter be
granted a forty (40) hour average work week by resolution of the Common Council
upon the recommendation of the City Manager.
(San Bernardino Fire & Protective League v. City (1962) 199 Cal.App.2d 401, 404-419; City Attorney
Opinion No. 90-11; City Attorney Opinion No. 89-21; City Attorney Opinion No. 88-11)

Article XI
School Districts

Section 190. Definition. The San Bernardino City Unified School District,
as such term is used by this Charter, shall mean and include all of the public
schools of said District. (As amended by elections held March 21, 1961 and February 6, 1973.)
Board of Education

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Section 191. Members. The Board of Education of the San Bernardino City
Unified School District shall consist of seven members who shall be residents of
the Unified School District or, in the event trustee areas are established in said
District, of such trustee areas. The Board of Education shall have all the powers
and duties now or hereafter prescribed by the Education Code of the State of
California for such board. (As amended by elections held March 21, 1961 and February
6,1973.)

Board of Education: Term, Election

Section 192. Terms of Office - Election. The terms of office and the
election of the members of the Board of Education shall be in accordance with and
pursuant to the provisions of the Education Code of the State of California relating
to governing boards of such school districts. (As amended by elections held March 21,
1961 and February 6, 1973)

Vacancies

Section 193. How Filled. Vacancies in the office of members of the Board
of Education shall be filled by the remaining members of the Board at the next
regular meeting after such vacancy occurs. The member so appointed shall hold
such office for the unexpired term of his predecessor. (As amended by election held on
March 21, 1961)

Section 194. Meetings. The Board of Education shall enter upon the
discharge of their duties on the second Monday in May after their election, and the
Board shall meet upon said date and organize by electing one of their number
president and biennially thereafter. They shall hold regular meetings at least once
each month at such place and time as may be designated by its rules. Special
meetings may be called by the President, or by any three members. No business
shall be transacted at such special meetings that has not been distinctly stated in
the call. A majority of the members shall constitute a quorum, but an affirmative
vote of three members shall be necessary to pass an order. The sessions of the
Board shall be public and its minutes open to public inspection. The Board may
determine the rules of its proceedings and the ayes and noes shall be taken and
recorded when demanded, and they shall be taken and recorded on all questions
involving elections, or appointments, or the expenditure of money.

Section 200. Filing of Claims. All claims payable out of the School Fund
shall be filed with the Secretary of the Board and, before payment, shall be
approved by said Board upon a call of ayes and noes which shall be recorded. (As
amended by election held February 6, 1973)

Article XII
Free Public Library

Section 205. Trustees - Terms. The Free Public Library shall be under the
management of a Board of five Trustees who shall be appointed by the Mayor
subject to the approval of the Common Council; provided, that the first Board of
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Trustees under this Charter shall take office on the second Monday of May, 1905,
and shall at their first meeting so classify themselves by lot that three of their
number shall go out of office at the expiration of two years, and two at the
expiration of four years; otherwise their term of office shall be four years. On the
second Monday in May succeeding every General Municipal Election, the Board
shall organize by choosing one of their number President. They shall also elect
some suitable person as Secretary who shall act and hold office at the pleasure of
the Board.

Section 206. Trustees - No compensation. The position of Trustees shall
be one of honorary trust without salary, or compensation, and all appointments
made by them shall be made without regard to politics, and irrespective of sex.
Said Library Trustees shall not be less than twenty-five (25) years of age, and must
have been residents of said City at least five years prior to their appointment. (City

Section 207. Library Tax. The Mayor and Common Council shall at the
request of the Board of Trustees in making the annual tax levy, and as part thereof,
levy a rate which shall produce a minimum amount of at least two thousand dollars
($2,000.00) for the purpose of maintaining said Library and for purchasing books,
journals and periodicals.

Section 208. Donations - Bequests. If payment into the treasury of any
money or property derived by donations or bequest would be inconsistent with the
conditions, or terms of any such donations, or bequest, said Board shall provide for
the safety and preservation of the same, and the application thereof to the use of
said Library in accordance with the terms and conditions of such donation or
bequest.

Section 209. Title To Real And Personal Property. The title to all
property, real and personal, now owned or hereafter acquired by purchase,
donation or bequest, or otherwise, for the purpose, or use of said Library, when not
inconsistent with the terms of its acquisition, shall vest and be and remain in said
City, and in the name of said City may be sued for and defended by action at law,
or otherwise.

Section 210. Meetings. The Board shall meet at least once each month
and a majority shall constitute a quorum for the transaction of business, but a less
number may adjourn from time to time. It shall elect a Librarian and such
assistants as may be necessary. The Secretary shall keep a full account of all
property, money, receipts and expenditures and a record of all its proceedings.
The Secretary must serve without compensation.

Section 211. Powers of Board. The Board shall have power:

FIRST: To make and enforce all rules, regulations and by-laws necessary
for the administration, government, and protection of said Library and all property
belonging thereto, or that may be loaned thereto;
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SECOND: To administer any trust declared, or created for such Library and
reading rooms;

THIRD: To define the powers and prescribe the duties of all officers, to
determine the number of, and elect all necessary subordinate officers and
assistants, and at their pleasure to remove any such officer or assistant, subject to
the civil service provisions of this Charter;

FOURTH: To purchase necessary books, journals, publications and other
personal property;

FIFTH: To fix salaries of the Librarian and assistants, and other employees;
to rent and equip such building or buildings, room or rooms as may be necessary
for such Library or reading rooms;

SIXTH: To allow non-residents to borrow books upon such conditions as the
Board may prescribe;

SEVENTH: To provide memorial tablets and niches or other means to
perpetuate the memory of any person who makes donations or bequests to the
Public Library;

EIGHTH: To do all that may be necessary to carry into effect the provisions
of this Charter with reference to said Library and reading rooms. (As amended by
special election held November 4, 1924, with reference to THIRD.)

Section 212. Reports. Said Board on or before the third Monday in July of
each year, shall make a report to the Mayor and Common Council giving the
condition of its trust, with full statement of all property and money received,
whence derived, how used and expended, the number of books, journals and other
publications on hand, the number added by purchase, gift or otherwise, during the
next preceding fiscal year, the number lost or missing, the number and character of
those loaned, and such other statistics, information and suggestions as may be of
general interest; and also a financial report showing all receipts and
disbursements, with particulars thereof, and the names of all employees and the
salaries paid to each.

Article XII-A
Park and Recreation Commission

Section 213. Members - Term of Office. There is hereby created a Park
and Recreation Commission consisting of nine (9) members, whose terms of office
shall be four years. (As amended by election held February 4, 1969)

Section 214. Appointment. Each Council Member shall appoint one
commissioner whose term shall coincide with that of the appointing Council
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Member and the Mayor shall appoint two (2) commissioners, one of whom shall
initially have a two (2) year term coinciding with the term of the Mayor and the
other shall have a four (4) year term commencing on the second Monday of May,
1969. Thereafter, each Mayor and each Council Member, upon assuming office,
shall appoint one member to the Commission for a four (4) year term. Any vacancy
occurring for any reason shall be filled in the same manner as the original
appointment. (City Attorney Opinion No. 93-19; City Attorney Opinion No. 92-18)

Section 215. Removal From Office. Commissioners shall hold office for a
term of four (4) years and until their successors have been appointed and qualified.
Commissioners shall serve at the pleasure of the appointing officer and any
member of said Park and Recreation Commission may be removed at any time by
the affirmative vote of five (5) Council Members, and upon any such removal the
vacancy shall be filled as aforesaid for the unexpired term. (City Attorney Opinion No.
91-33)

Section 216. No Compensation - Meetings. The members of the Park
and Recreation Commission shall serve without compensation. Immediately after
appointment and qualification, said Commission shall organize by electing from
among its membership a Chairman and a Secretary. Regular meetings shall be
held at least once a month. (As amended by election held February 4, 1969)

Section 217. Duties. The Park and Recreation Commission shall:

(a) Act in an advisory capacity to the Mayor and Common Council and to
the City Manager in all matters pertaining to parks, recreation and parkways.

(b) Consider the annual budget of the Park and Recreation Department
during the process of its preparation and make recommendations with respect
thereto to the Mayor and Common Council and to the City Manager.

(c) Perform such other duties as may be prescribed by ordinance not
inconsistent with the provisions of this Charter. (As amended by election held February
4, 1969) (City Attorney Opinion No. 93-8)

Section 219. Appeal to Council. Any person dissatisfied with a decision of
ruling of the Park Commission may appeal to the Common Council, and said
Council by an affirmative vote of five (5) members may reverse or modify said
decision or ruling. (As amended by election held June 7, 1966) (City Attorney Opinion No. 93-8)
Article XlII
Miscellaneous

Section 220. Fiscal year. The fiscal year of the City of San Bernardino
shall begin on the first day of July and end on the last day of June of each year.

Section 221. Definitions. City: The word "City" wherever it occurs in this
Charter, unless it expressly appears otherwise, means the City of San Bernardino.

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General Supervision: The supervision by the Chief Executive Officer which
is supervision that includes giving general policy directions, but does not include
the authority to issue specific, day to day directives; requires the person exercising
the general supervision to vigilantly observe the official conduct of the
person/department/public institution being supervised, and take notice of the
fidelity and exactitude or want thereof, with which the person/department/public
institution being supervised executes his/her/its duties and obligations, especially
in the collection, administration and disbursement of public funds and property.
Any defamation or willful neglect of duty or official misconduct shall be laid before
the Common Council in order that public interests may be protected and the
person/department/public institution in default proceeded against according to law.

Immediate Supervisor: The person with authority to observe, evaluate, issue
specific, day to day directives to, approve/disapprove requests of, promote,
demote, recommend or not recommend salary increases for, suspend, and
recommend for termination, the person being supervised, except in cases of
recommendations for termination of persons who occupy positions for which this
Charter specifically provides otherwise.

Manager-Directed Departments of the City: All City departments except the
Offices of the Mayor, City Attorney, City Clerk and City Treasurer and except for
the Water Department, the Free Public Library and the Civil Service Administration.

Component Board: Board of Water Commissioners, Civil Service Board,
Free Public Library Board of Trustees, and/or any other board established under
the authority of the Mayor and Common Council which has the formal authority to
hire, terminate, promote, or demote, any person applying for or occupying a
salaried position under the City government.

Civil Service Administration: The Civil Service Chief Examiner and those
employees who work under his/her supervision.

Civil Service System: The Civil Service Board, the Chief Examiner, the
employees supervised by the Chief Examiner, the functions and work products of
the Civil Service Board, the Chief Examiner and the employees he/she supervises.

Current Charter: The Charter adopted by the voters on January 6, 1905,
and all amendments thereto, beginning with those approved on December 28,
1908, through November 5, 2002, and any other amendments that may be
adopted prior to the effective date of this Charter as provided in Section 244,
herein.

This Charter: This document and its full text.

Full-time Permanent Employee: Any person hired to work for the City who
works a minimum of thirty-two (32) hours per week, and who is hired as a
retirement benefits-eligible employee pursuant to the Public Employees Retirement
System (PERS) guidelines, and for whom there is no date of termination stated
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when said person is hired.

Section 222. Oath of office. Whenever oath of office is mentioned in this
Charter, it means the oath of office or affirmation in form as prescribed by the
Constitution of this State.

Section 223. Ordinances in Force. All laws, ordinances and resolutions
relating to the City of San Bernardino, now in force and not inconsistent with this
Charter, shall be and remain in force after this Charter takes effect until repealed or
changed by the proper authority; and all actions and proceedings in any court
wherein said City is a party, when this Charter takes effect, shall continue
thereafter with said City as a party until regularly disposed of. (As amended by special
election held April 11, 1921) (In re Baxter (1906) 3 Cal.App. 716, 719)

Section 225. Restrictions on Officers. No person holding a salaried office
of this City, whether by election or appointment, shall hold any other office of
honor, trust or emolument under the government of the United States, or of this
State, except the office of Notary Public, Court Commissioner, or an office in the
National Guard, and any person holding any salaried office of this City, who, during
his/her term of such office, shall accept or hold any other office as aforesaid,
except that of Notary Public, Court Commissioner, or in the National Guard, shall
be deemed thereby to have vacated the office held by him/her under this City
Government, and the same shall immediately become vacant. Nothing herein
shall be deemed to prohibit any person holding any salaried office of this City from
accepting an appointment to and serving on any Federal or State Commission or
Committee providing such appointment and service is not full-time.

Section 226. Delivery of Property. All Officers, Board, and
Commissioners shall each, on going out of office, turn over and deliver to their
respective successors in office, all books, papers, documents, records, archives
and all other property or things pertaining to their respective offices, boards or
departments, in their possession or under their charge or control.

Section 227. Office Hours. The Common Council shall provide by
ordinance the hours that the several offices of the City shall be kept open for the
transaction of business.

Section 229. Deposit of Money. It shall be the duty of every City officer,
upon receiving into his/her hands money belonging to the Municipality, to forthwith
deposit the same with the City Treasurer, except where otherwise provided by this
Charter.

Section 230. Term of Office. Every elective or appointive officer of the City
shall hold office during the term prescribed by this Charter, and until his/her
successor is elected or appointed and qualified, and every appointive officer or
employee, except employees in the classified service, whose term is not fixed,
shall hold office during the pleasure of the officer or board appointing him/her, and
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when an appointment is made to fill a vacancy in an unexpired term, the person
appointed shall, if it be an appointive office, hold for the unexpired term and if for
an elective office until the next succeeding general municipal election, at which
time the office shall be filled for the balance of the term by an election. (As amended
by special election held November 4, 1924.)

Section 234. Reimbursement For Expenses. That elective officers shall
be entitled to receive reimbursement for their necessary expenses while engaged
on Municipal business, including mileage in the City of San Bernardino, such
expenses not to exceed the expenses authorized for other City employees or
officers.

(a) The Mayor and Common Council shall, with all due diligence, contract
with the Board of Administration of the State Employees Retirement System, and
do all things necessary to provide for the participation by the City of San
Bernardino and the employees thereof, in the State Employees Retirement
System, with full credit being given to the employees of said City for prior service
rendered.

(b) That any contract so entered into by said Mayor and Common Council
with the Board of Administration of the State Employees Retirement System shall
only be terminated by an ordinance adopted by a majority vote of the electorate of
the City of San Bernardino. (As amended by elections held May 16, 1944, March 19, 1945
and March 7, 1989)

Section 235. Qualification of officers. The City Clerk and City Treasurer
shall have been qualified electors and residents of the City for a period of at least
thirty (30) consecutive days prior to their appointment or filing of their nomination
papers for election to office. (As amended by elections held February 6, 1973, and November
2, 1976)

Section 238. Power to Reject Bids and Readvertise. In all cases where
advertising is required for sealed proposals under Section 140 of this Charter, the
Mayor and Common Council, or any board or officer making such advertisement,
shall have power to reject any or all bids and readvertise in their discretion. (Section
238, Subsection (a) repealed by election held February 6, 1973)

Section 240. Taking or Damaging Private Property. Whenever it
becomes necessary for the City to take or damage private property for public use,
the Mayor and Common Council may direct proceedings to be taken therefor under
the provisions of the Code of Civil Procedure of this State to procure the same.

Section 241. Employment of Legal Counsel. Upon the recommendation,
and with the written consent, of the City Attorney, the Mayor and Common Council
shall have power and authority to employ and engage such legal counsel and
services and other assistants, as may be necessary and proper for the interest and
benefit of the City and the inhabitants thereof. (As amended by election held November 6,
2001.) (City Attorney Opinion No. 89-11; City Attorney Opinion No. 87-59; City Attorney Opinion No.
87-36)
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Section 242. Qualifications of City Employees and Appointment. The
Mayor and Common Council may prescribe the number, qualification and
compensation of the deputies, clerks, assistants, employees and attaches of the
City Attorney, City Treasurer and City Clerk. All deputies, clerks, assistants,
attaches and employees of the City Attorney, City Clerk and City Treasurer shall
be appointed by the respective officers with the consent and approval of the Mayor
and Common Council, and shall hold office at the pleasure of the officers
appointing them. (As amended by special election held November 4, 1924.) (Scott v. Common
Council (1996) 44 Cal.App.4th 684, 687-688, 696; City Attorney Opinion No. 93-19)

Section 243. Nepotism. Neither the Common Council, the Board of Water
Commissioners, the Free Public Library Board of Trustees, the Civil Service Board,
nor any elective officer, nor the City Manager, nor the Civil Service Chief Examiner,
shall recommend for hire, appoint, hire or confirm the hiring or appointment to a
salaried position under the City government or any of its components any person
who is a relative by blood or marriage within the third degree of any one or more of
the members of such Common Council, member of a component board, any
elected official of the City, the City Manager or the Civil Service Chief Examiner,
nor shall any department head or other officer recommend for appointment or
appoint any relative of such department head or other officer within such degree to
any such position.

This provision shall not affect the employment or promotional status of a
person who has attained a salaried position with the City prior to the existence of a
situation contemplated by this provision; however, those persons with appointive
powers and/or supervisorial powers in such a situation shall disqualify themselves
from all decisions affecting the employment and promotional status of such person.

Section 244. When Charter Takes Effect. This Charter shall take effect
on the day of the swearing in of the Mayor for the 2006 to 2010 term for the Office
of Mayor, but notwithstanding the foregoing, this Charter shall take effect no later
than April 3, 2006.

Section 245. Early Effective Date of Certain Sections of This Charter.
Notwithstanding the effective date of this Charter provided in Section 244 herein,
the provisions of Sections 120, 122 and this Section (245) shall take effect when
accepted and filed by the Secretary of State as amendments to the current
Charter; subsequently, Sections 120, 122 and 245 herein, shall continue in full
force and effect under this Article with the same text and same section
designations in this Charter, when this Charter takes effect as provided in Section
244 herein. (Effective March 16, 2005)

Section 246. Civil Service Board - Appointment. A Civil Service Board is
hereby created which shall consist of five members who shall be qualified electors
of the City and appointed as hereinafter provided. The three members in office on
the first Monday in May, 1959, shall continue to serve for the remainder of their
respective terms. On July 1, 1958, or as soon thereafter as this Charter
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amendment becomes effective, the Mayor, with the consent and approval of the
Council, shall appoint one member to serve until the first Monday of May, 1959,
and one to serve until the first Monday of May, 1961, and thereafter, by rotation in
the following manner: Two members shall be appointed on the first Monday of
May, 1959, two on the first Monday of May, 1961, and one on the first Monday of
May, 1963, each for a term of six years. On the first Monday of May, 1965, and
every odd numbered year thereafter, the Mayor with the consent and approval of
the Council, shall appoint the same number of members of the Civil Service Board
for a term of six years as the number of members whose term of office expires at
that time, who shall take office the first Monday of May of said year, or as soon
thereafter as appointed and qualified. Members of the Board shall not hold any
other public office. (As added by special election held November 4, 1924 and amended by
special election held June 3, 1958.) (City Attorney Opinion No. 95-12; City Attorney Opinion No. 93-
7; City Attorney Opinion No. 91-8; City Attorney Opinion No. 91-4)

Section 247. Civil Service to Organize and Appoint Secretary.
Immediately after appointment and qualification the Board shall organize by
electing one of its members chairperson. The Board shall appoint a Chief Examiner
who shall also act as Secretary of the Board. The Board may appoint such
subordinates as the City Council may, by ordinance, prescribe. (City Attorney Opinion
No. 95-12; City Attorney Opinion No 91-8; City Attorney Opinion No. 88-9.)

Section 248. Classified and Unclassified Civil Service. The Civil Service
of the City of San Bernardino is hereby divided into the unclassified and the
classified service:

(1) The unclassified service shall include:

(a) All officers elected by the people;
(b) All officers appointed for a definite term;
(c) All deputies and assistants of elective officers who hold office
during the pleasure of such elective officers;
(d) City Manager, Assistant City Manager, Deputies and/or other
Assistants of the City Manager;
(e) The heads of departments, and the heads of divisions of
departments and members of all appointive boards;
(f) One secretary for each department and one secretary for the
City Manager.

(2) The classified service shall comprise all positions not specifically
included in this Charter in the unclassified service. There shall be in the classified
service, the following three classes, to be known as the competitive class, the
uncompetitive class and the labor class:

(a) The competitive class shall include all positions and
employment for which it is practicable to determine the merit
and fitness of applicants by competitive examinations.
(b) The uncompetitive class shall consist of all positions requiring
peculiar and exceptional qualifications of a scientific,
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managerial, professional or educational character, or may be
determined by the rules of the Board.
(c) The labor class shall include ordinary unskilled labor.
(City Attorney Opinion No. 97-1; City Attorney Opinion No. 93-7; City Attorney Opinion No. 91-18;
City Attorney Opinion No. 91-4; City Attorney Opinion No. 89-15; City Attorney Opinion No. 88-19)

Section 249. Veteran Preference. In any open examination administered
by the Civil Service Board or its Board of Special Examiners or Chief Examiner,
any person who has served in the regular armed forces of the United States of
America in time of war and who has been honorably placed on inactive status or
has been honorably discharged from such service shall receive a bonus of five (5)
grade points which will be added to the final examination grade of said person who
has obtained a passing grade for such examination. An additional five (5) grade
points shall be added to the final examination grade of such person who qualified
for the initial five grade points for veteran preference and who have a service-
connected disability rated at not less than ten percent (10%) of an authorized
agency of the federal government. In any such open examination, ten (10) grade
points shall be added to the final examination grade of any successful applicant
who is a wife of any such United States veteran honorably discharged from the
service who, while in service in time of war, was disabled or crippled, thereby being
permanently prevented from engaging in a remunerative occupation; or who is the
widow of any such veteran who died or was killed in such service and who has not
remarried. The Civil Service Board shall define the phrase "in time of war" in its
rules and regulations and such definition shall include each war and any campaign
involving the United States for which the federal government allows veterans
preference. The Bonus granted under this section shall not apply to promotions or
promotional examinations. (As added by special election held November 4, 1924 and as
amended by election held February 4, 1969)

Section 250. Codes of Rules and Regulations. The Civil Service Board,
subject to the approval of the Mayor and Council, shall adopt, amend and enforce
a code of rules and regulations, providing for appointment and employments in all
positions in the classified service, based on merit, efficiency, character and
industry, which shall have the force and effect of law; shall make investigations
concerning the enforcement and effect of this article and of the rules adopted. (As
added by special election held November 4, 1924.) (City Attorney Opinion No. 96-9; City Attorney
Opinion No. 96-8; City Attorney Opinion No. 96-6; City Attorney Opinion No. 96-5.; City Attorney

Section 251. Examinations. The examiner shall approve examinations for
all positions in the classified service in accordance with regulations of the Civil
Service Board, and shall maintain lists of eligibles of each class of service of these
meeting the requirements of said regulations. All positions in the classified service
shall be filled from such eligible list. In making such appointment, preference shall
be given to bona fide residents of the City of San Bernardino who have been such
residents for at least one year next preceding the date of their appointment, and
who are, on said date, qualified electors of said City; subject, however, to the
preference provided for in Section 249 of this Charter. As positions are filled, the
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examiner shall certify the fact by proper and prescribed form to the City Treasurer
and the heads of the department in which the vacancy exists. (As added by special
election held November 4, 1924) (City Attorney Opinion No. 91-8; City Attorney Opinion No. 88-9)

Section 252. Promotion to Positions. The Civil Service Board shall
provide for promotion to all positions in the classified service, based on records of
merit, efficiency, character, conduct and seniority. (As added by special election held
November 4, 1924.) (City Attorney Opinion No. 96-5; City Attorney Opinion No. 90-29; City Attorney
Opinion No. 90-17)

Section 253. One Year Probation. An appointment or promotion shall not
be deemed complete until an applicable period of probation of not more than one
year has elapsed. The probationer may be discharged or reduced at any time
within said period upon the recommendation of the head of the department in
which said probationer is employed with the approval of a majority of the Civil
Service Board. Periods of probation shall be fixed by resolution of the Mayor and
Common Council upon the recommendation of the City Manager and procedures
for and effective dates of discharges and reductions shall be adopted by the Civil
Service Board in its rules and regulations. (City Attorney Opinion No. 96-13; City Attorney
Opinion 93-4; City Attorney Opinion No. 91-8; City Attorney Opinion No. 90-29; City Attorney
Opinion No. 90-12)

Section 254. Discharge or Reduction of Compensation. No employee in
the classified service shall be discharged or reduced in rank or compensation until
he/she has been presented with reasons for such discharge or reduction in rank or
compensation specifically stated in writing and has been given an opportunity to be
heard before the Board in his/her own defense. The reason for such discharge or
reduction and any reply thereto by such employee, shall be in writing and filed with
the Civil Service Board. Verified written charges may be filed by any qualified
elector of the City of San Bernardino under such rules and regulations as may be
prescribed by the Civil Service Board. All charges shall be heard and trials had
under such rules as the Civil Service may prescribe. PROVIDED, that the
provisions of this section are at all times subject and subordinate to the provisions
of Section 256. (City Attorney Opinion No. 97-1; City Attorney Opinion No. 96-9; City Attorney
Opinion No. 94-7; City Attorney Opinion No. 94-5.; City Attorney Opinion No. 93-8; City Attorney

Section 255. Appeal of Suspension. Any employee of any department in
the City in the classified service who is suspended, reduced in rank, or dismissed
from a department by the City Manager or by the Head of the Department, or by
any other authorized supervisor, may appeal from the decision of such officer to
the Civil Service Board, and such Board shall define the manner, time and place by
which such appeal shall be heard. The judgment of such board shall be final;
PROVIDED that the provisions of this section are at all times subject and
subordinate to the provisions of Section 256. (Livingstone v. MacGillivray (1934) 1 Cal.2d
546, 552, 553-554; City Attorney Opinion No. 96-9; City Attorney Opinion No. 95-10; City Attorney
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Opinion No. 91-8; City Attorney Opinion No. 88-9.)

Section 256. Power to Dismiss.

A. The City Manager, Acting City Manager, Chief of Police, Chief of the Fire
Department and any appointive commissioner, board member or committee
member of any committee, of the City of San Bernardino, except those
commissioners and members appointed for a definite term, and except for
any committees of which the membership is composed entirely of members
of the Common Council, may summarily be dismissed for the good of the
service by the Mayor, with the consent of two-thirds (2/3) of the Common
Council.

B. Any Department Head, Division Head or any employee in the unclassified
service except elected officers, officers appointed for a definite term, and
except deputies, assistants, clerks, employees, and attachs holding office at
the pleasure of an elective officer, may summarily be dismissed for the good
of the service by the City Manager with the consent of the Mayor and
Common Council. (Livingstone v. MacGillivray (1934) 1 Cal.2d 546, 553) (City Attorney
Opinion No. 93-19; City Attorney Opinion No. 92-18; City Attorney Opinion No. 92-8; City
Attorney Opinion No. 92-1; City Attorney Opinion No. 91-33; City Attorney Opinion No. 91-4;
City Attorney Opinion No. 88-20; City Attorney Opinion No. 88-19; City Attorney Opinion No.
88-13; City Attorney Opinion No. 88-10)

Section 257. Position in Classified Service. All persons in the employ of the City
holding positions in the classified service, as established by this Charter, at the time it takes
effect, shall retain the same until discharged, reduced, promoted or transferred in
accordance herewith. (As added by special election held November 4, 1924)

Section 258. Payment of Salaries. The City Treasurer shall not pay any salary or
compensation for service to any person holding a position in the classified service unless
the payroll or account for such salary or compensation shall bear the certificate of the Civil
Service Board, by its Secretary, that the persons named therein have been appointed or
employed and are performing a service in accordance with the provisions of this Charter
and of the rules established thereunder. (As added by special election held November 4, 1924)

Section 259. Investigations. In any investigation conducted by the Civil Service
Board, it shall have the power to subpoena and require the attendance of witnesses and
the production thereby of books and papers pertinent to the investigation, and to administer
oaths to such witnesses. (As added by special election held November 4, 1924) (City Attorney Opinion
No. 93-7; City Attorney Opinion No. 92-29; City Attorney Opinion No. 91-9)

Section 261. Penalties Fixed by Civil Service Board. The Civil Service Board,
subject to the approval of the Mayor and Council, shall determine the penalties for the
violation of the Civil Service provision of this Charter; such penalties, when fixed by
ordinance by the Mayor and Council, may be changed from time to time as required. (As
added by special election held November 4, 1924) (City Attorney Opinion No. 91-8)

Section 262. Effectiveness and Repeal of Former Charter. Upon the effective
date as set forth in Section 244, the provisions of this Charter shall be in full force and
- 88 -

C - 46
effect under the law, except for Sections 120, 122, and 245, which take effect when
accepted and filed by the Secretary of State as set forth in Section 245. Upon the effective
date as set forth in Section 244, the former Charter is hereby repealed except that the text
in those articles, sections, categories, and subparagraphs which have been reserved by
this Charter are not repealed nor otherwise amended and shall continue in full force and
effect in this Charter in their same text and same designations.

Section 263. Severability. The provisions of the Charter are severable, and, if any
sentence, section or other part of this Charter should be found to be invalid, such invalidity
shall not affect the remaining provisions, and the remaining provisions shall continue in full
force and effect.

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EXHIBIT 3
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BALLOT PAMPHLET
Nov 992
CERTIFICATE OF CORRECTNESS
I, March Fong Eu, Secretary of State of the State of California, do hereby certify that the foregoing
measures will be submitted to the electors of the State of California at the GENERAL ELECTION to be
held throughout the State on November 3, 1992, and that this pamphlet has been correctly p r e p a r ~ in
accordance' with law.
Witness my hand and the Great Seal of the State in Sacramento, California, .
this lOth day of August 1992.
MARCH FONC EU
Secretary of State
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, 2
SACRAMENTO 95614
Dear Californians: ,
. .; . . .
This is your California Ballot Pamphlet for the November 3,
1992, General Election. It contains the ballot title and a short
summary provided by the Attorney General, the Legislative
Analyst's analysis and an overview of the state bond debt, the pro
, and con arguments and rebuttals, and the complete texts for
,Propositions 155 through 167. It also contains the legislative votes
cast for and against each measure proposed by the Legislature.
Should any other measures be add,ed to the ballot at a later date,
materials relating to them will be sent in a supplemental ballot
pamphlet. This election, at the 'suggestion of the California
Commission on Campaign Financing; a private, non-profit
organization, we are also including summary'information
regarding the measures. Statements from political parties about
their philosophies and purposes are also included. '
, '
Many rights and responsibilities go along with citizenship.
Voting is one of the most important, as it is the foundation on
which our democratic system is built. Read carefully all of the
'measures and information about them contained in this',
pamphlet. Legislative propositions and citizen-sponsored.
initiatives are designed specifically to give you, the electorate,
the opportunity to influence the laws which regulate us all. ' .
Take advantage of this opportunity and exercise your rights by
,:'oting on November 3,1992. '
Please note that Proposition 155 is, the first proposition for this To avoid confusion with past
measures, the Legislature passed a law which requires propositions to be numbered consecutively starting
with' the next number after those used in the November 1982 General Election. This numbering scheme
runs in twenty-year cycles.' ,
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CONTENTS
. \
Proposition
Brief Swnma,rY of the Measures ................ .... : .......... : .......... ; ............ ..................... .
BOND ACTS
155 '1992 School Facilities Bond Act .. : ................................ .:. ... : ......... , .............. : ... .
156 Passenger RalI and Clean Air Bond Act of 199.2 ............. ; ..... : ......... ..... .. .
.. "
INITIATIVE CONSTITUTIONAL AMENDMENTS
AND STATUTES .. .
161 Physician.>\SsiS,ted Death. TerminalConditlon. Initiative Statute .... ; ....
162 . Public Employees' Retirement 'Systems .. Initiative Constiru:tional
Amendment. ............................ ........... :.: ....... : .......... ...... : ......... : ..... , .............. .
163 Ends Taxation of Certain' Food 'Products .. initiative Constitutional
Ani'endJnent' and Statute .............................. : ................ .. .............. : .......... .
'. 164 Congressional Term Limits. Initiative Statute ................. : .............. : .......... .
.. .
165' Budget Process. Welfare. Procedural and Substantive Changes.
Initiative Am:endJnent and StatUte ....................... : ........ .
166 . Care Cov'erage. Initiative ............ , .... :.: ................... :
167 State Taxes .. Stattite .... .................. : ........... : .................. : .................. .
.' . . ." " ". ,'".. '"I..
An Overview of State Bond Debt ................... : .................. : ....... : .................... : ........ ..
Texts of Proposed Laws .............. ............. :.; .......... .. , ...... : ..... : .................................... .
Political Party Statements of Purpose.: ........................ : ...... ; ..... ; ... : ........................ .
"
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Pages
4-7
8-lI
12-15
16-19
20-23
24-27
28-31
32-35
.' 36-39
.
42-45 .
46-51
52-vi
58-03
64
65-93
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November 3, 1992 Ballot Measures-Continued
SUMMARY ARGUMENTS
-
PRO CON
161
Establishes of mentally Allows adults Don't be fooled by claims of"stroDg
competent a u1t to request willing diagnosed as te . y UI by two .
safeguards." Read !Fl' 161 and youll see
PHYSICIk'l,ASSISTED physician to assist in dying in the physician.; to request physician assistance it LACKS REAL S GUARDS. Even
DEATH. TERML'IAL event terminal condition is in ending their life in a painless, hwnane those who favor the ide2 of ..
CONDmON diagnosed, Declares "not suicide." and dignified manner. Act is totally nbysiCia!l.assisted suicide oppose this
Physician not liable. Prohibits effect voluntary for physicians and patients. It is awed initiative. ..
Initiative Statute
on iruurance .. not suicide. Insurance policies unaffected.
WAflNIN<?' No. witnesses present No
Put on the Ballot by
Contairu strong safeguards against abuse,
family notification.. No waiting period. No
Petition Signatures
inel uding wi tnessed revocabl e directive.
COWlSeUng. No resIdency requirements.
l'fO on 161. ,.....
T-
Grants boards of public emJ;'oyee Prop. 162 protects pension funds. It will 152 doesn't protect pensions,
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162
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retirement systems sole'au ority st0K politicians from raiding the peru.ions It saves bureaucrats from answering to
,
<0
PUBUC EMPLOYEES' over investments and administration, of refighters, police, teachers and other and elected representatives. It
<0
RETIREMENT SYSTEMS including actuarial services. Restricts public employees. Retired workers depend en gers retirement funds bJ stopping <0
Initiative Constitutional
changes to boards. Gives precedence on their r.;;nsions to survive. Every time a independent reviews by oum e experts.
0-
t9 duty to participants and pensionund is raided bv politicians, It could force taxpayers 10 into
Amendment
beneficiaries, taxpayers are threatened with huge tu the retirement system, and mi t even
0
increases to pay back the mocey. . require tax increases. Voting no on Hi2

protects pensions and taxpayers..' .
Petition Signatures.
Prohibits saleS or use taxes on food Proposition 163 is the IDe:l.lUre that dumps No argument against Proposition 163 W2$
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163 u
exempt from tuation. the tax on food and Pottled water. It , filed,
;;
ENDS TAXATION OF empts candy, bottled water, and amends the California State Constitution
CC
CERIAL\' FOOD PRODUm mack foods from sales and use to prohibit forever state government or
LLJ
taxation. local governments from imposing sales or
(f)
use taxes on bottled water, candy, and
Amendment and Statute
food products, which are exempt from I-
such taxation under existing statutes. Z
Put on the Ballot by LlJ
Petition Signatures
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164
For seats in U.s. Congress, denies Congress needs new blood, fresh ideas. matter how you feel about term limits,
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ballot access to persons who have Currently, incumbents' first vote NO on Proposition 164. It's not about
>
TERM already held such office for specified reelection to keep their 'es Congressional reform; it's about .

UMITS period, Does not count prel99J and million dollar pensions. Term limits destroying California clout in Congress.

service. Does not restrict "write-in" will end the corrupt system and
Proposition 164 won't malce govenunent
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Initiative Statute candidates. restore CaIifornia's clout in ngress.
more responsive. It will just give (f)
Preserve your right to yote. STOP THE CaIifornians the short end of the stick.
a
CAREER POLmCIA.NS. Join the term
Vote NO on Proposition 164.
LLJ Petition Signatures
limits fight: 1-800-YES+164. . .
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165
Grants Governor constitutional Docks politicians' pay when bupget Why would promoters call 165 welfare

,power to reduce cer'.ain unbalanced. Limits welfare to new reform sincei!' doci:nYtouch fraud or deal

BUDCET PROCESS, expenditures to balance budget residents to amount receivable in borne with job creation and training?

....
WELFARE. PROCEDURAL during -fiscal emergency." Amends state. Cuts welfare while encouraging
Because language hidden in 165 gives one
.- AND SUBSTANTIVE statutes to reduce certain benefits in work. Provides incentives for teenage
person-the Governor- unprecedented .j
CHANGES specified welfare programs. welfare mothers to stay in school,
power to cut education, envirorunental
disincentives to have more children once
protections and health care. .
Amendment and Statute
on welfare. Gives Governor
Promoters would rather talk about
budgetbalancing authority similar to44
welfare than hidden consequences.in 165.'
other states. .
Petition Signatures
"
166
R:,Juires employers to provide Eliminate insurance company "red tape" Consuroers Union, AAlIP, workers, sm.aII
h th care coverage for most and patient hassles .. Prop. 166 provides businesses and nurses oppose Prop. 166 .
BASIC HEALTH CARE employees and health insurance coverage to working because it's not real health care reform.
COVERAGE Implements as f era! law permits.. Californians.and their children. Because 166 doesn't control costs,
Initiative Statute
Umits employee contributions. Guarantees currently insured workers will employers will reduce houn, wages and
Specifies benefits. Provides employer not lose health insurance. Refonns benefits. Many will lose their jobs. 166
tax credits. Establishes administrative iruurance company practices to prevent may cost taxpayers billions. There are
bodies. Appropriates money. loss of coverage when someone is sick. meaningful solutions that deserve your
Petition Signatures
Provides cost savings to individuals and support. Prop. 166 doesn:t
small business.
167
Increases taxes on top personal Proposition 167 closes special interest Proposition 167 includes more than one
income taxpayers, corporations, loopholes and taxes the super rich and big dozen tax increases! It would hurt
STATE TAXES banks, insurance companies, and aU cOT}l<lratioru. It uses the resulting middle-income families and small
producers. Repeals 1591 sales tu revenues to repeal recent sales tax . businesses the hardest. It would result in
Initiative Statute
increases, Provides for renters' tax increases on consumers and income tu higher auto and other insurance
credits. Changes business-owned real increases on renters. 167 also restores premiums, rents and gasoline prices.
property reappraisal rule, funds for schools and other services Studies show it would drive businesses
Petition Signatures
slashed during the state budget crisis. and more than 100,(0) jobs OUT of
California.
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November 3, 1992 Ballot Measures-Co'ntinued
SIGNERS.
FOR
Warren 1.. Bostick
M.D., Past California
Medical Association
MaeZiskin
Ph.D., Fonner PreSident, California
Psychological Association
Douglas 1. Norris
Senior Minister, Ftrrt United
Methodist Church, Palo Alto, CA
Charles Carbonaro
. Chainnan, 'CA State Legislative
Cnrunittee, American Association of
Retired Persons (MRP)
Pete,. J. Kane1cos .
Exectltive Director, REsponsible .
VOters for Lower Taxes (REVOLT)
CUHord F. Haskell
Retired Firefighter
Richard E. F10yd
Member of the Assembly,
SJrd District
Peter Jeasen .
EIecutive Director;California
Bottled Water Association
.. Jackie Speier ,;
Member of the Assembly;
19th District
Peter F. Schabarum
Chair:n.an, Citizens for Term Limits .
MartynB. Hopper ..
State Director, National Federation
of Independent Business
Alan Heslop
Ph.D., Professor of Government
Pete Wilson
Governor, State of California .. ';
Joel
President, Howard Jarvis
Taxpayers Association
Maureen Di.\{arco
Secretary of Child Development
and Education, State of California
Richard F. <Arlin .
M.D., President, California
Medical Association
Lenny Goldberg
EIecutive Director, California
Tax Refonn Association
Howard Owens
President, <Angres; of
California Semon
DanTeriy
P;esident, California Professional
Firefighters
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AGAJNST
Mary Foley
President, CaIifurnia .
Nurses ksocialion
Jo Ann Siemsen
President, California Sta te
Hospice .-\ssociation
Kushner
M.D., Family Pbysician
. Larry McCarJly
. President, California
Taxpayers' A.<roci2tion
Richard 1.. Gann
President, Paul Cann',
Citizen Committee
No argument against
. Proposition 163 was filed.
Daniel Lowenstein
. Fonner Chair, Fair Political
Practices <Ammission (FPPC)
. Eva Skinner .
. Former Member, of
Directors, American A.<Sociation
of Retired Persons (MRP)
]aan Claybrook
President, Public Citizen
Robyn C. Prud'homme-Bauer
League of Women
'. Voters of California
Reverend Lei 1.. Sauer
EIecutive <Ammittee, California
Council of Clurches
John F. Allard
BoUd Member, National Council
of Senior Citizell!. .
. Mary E. Foley
R.N., Presidect, California
. Nurses A.<roci2tioc
Martyn B. Hopper
State Director, National Federation'

Le;vis X. Uhler
The National
TaxLimitation Committee
- Jane A. Armstrong
State Vice Chairman, Alliance of
California Taxpayers and .
Involved Voters (ACI1V) ..
Lynne Choy Uyeda
President, Federation of Minority
Business Azociations .
!..airY Loa
Former Chair. California'
Cornmission on Aging
WHO TO CONTACT FOR MORE INFOR.,\1ATION
iFOR AGAINST
Californians Against
Human Suffering
5750 Wilshire Boulevard, Suite 561
Los Angeles, CA 90036
(213) 937-5706
. Mary Alice Keaton
Californians For Pension Protection
1717 I Street, Suite B
Sacramento, CA 95814
(916) 444-24&5
es on Prop. 163"
Paul Kinney or Bill Mashburn
910 2nd Street
(916) 444-5zn.
"Yes on Prop. 164" . .
2OOT5 S. Western Avenue, Suite 204
Torrance, CA 905011809
(BCO) YESH64 .
United Califoritia Taxpayers
1121 L Street, Suite 501
(916) 558-J33S
Patty Blomberg'
Affordable Basic Care
Initiative Committee
1201 K Street, Suite 1050
(916) 444-9587 .
Lenny Goidberg
California Tax Reform Association
926 J Street, Suite 710
(916) 44/H.'lOO
No on 161 <Arnmittee
l0017th Street, 2nd F100r
. Sacramento, CA 95814 .
(916) 44&-8161 ..
California T upa yers Association .
92.l 11th Street, Suite BOO
. (916) 441-00)0
. Not provided
. Not provided
No on 165 <Arnmittee
915 L Street, Suite C # III
(916) 449-9655
No on 166 Information Center
.. 915 L Street, Suite C240
. (BOO) 446-0166
(BOO) 44NO-I66
Vigo C. Nielsen
Californians for Jobs,
not More Taxes
A Coalition of Taxpayers and
. Business
..
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591 Redwood Highway,.Suite 40CIJ
Mill Valley, CA 94941 ..
(415) :J89.08OO
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162
Employees'" Retirement "Systems. ""
Initiative Constitu tionalArnendment.
Official Title and Sum.m.ary Prepared by the Attorney General.
PUBUC EMPLOYEES' RETIREMENT SYSTEMS. " .
L'ITTIATIVE CONSTITUTIONAL AMENDMENT. ".
Grants the board of a public employee retirememt" system sole and exClusive "authonty over" investment
decisions and administration of the system. . "
Requires board to administer system so as to assure prompt delivery of benefits to participants and
beneficiaries. . .
Provides that board's duty i:o participants and beneficiaries takes precedence over any other duty.
GrantS board sole and exclusive power to foractuaria:l services. " ,
. Prohibits changing number, terms, and method of selection or removal of members of board without
approval of voters of the jurisdiction in which participants of the retirement are employed.
Summary of Legislative Analyst's
Estimate of Net State and Local Governmellt Fiscal Impact:
Ullknown fiscal effect from giviiig public pension boards coinplete authority over assets and
administration of the systems, '. . '. .
Potential costs to employers asa result of public pension system giving highest prioritY to providing.
benefits to members and their beneficiaries. "
Annual savings of $1 million to $3 million to the state's Public Employees' Retirement'System for
actuarial services." .
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Analysis by the Legislative Analyst
Background
Public pension systems in California provide
retirement benefits to a 'wide range of state and local
government employees-such as teachers, firefighters,
and police officers. The largest of these pension systems
are the state's Public Employees' Retirement System
(PERS) and the State Teachers' Retirement System
(STRS). In addition, there are over 100 other public
retirement systems that serve counties, cities, special
districts, and the University of California.
Funds for payment of retirement benefits under these
public retirement systems come from assets held in trust
each system's governingboard. These assets include
contributions from employees and employers, plus
income earned on the investment of these contributions.
The members of many public retirement systems elect'
some members of their governing boards. The State
Constitution requires each board to use fund assets to;'
(1) provide benefits to members of the system and their
beneficiaries, (2) minimize .employer contributions, and
(3) pay reasonable administrative costs.
The Constitution specifies the general authority and
responsibilities of public pension systems. Within these
limits, the Legislature can .change various administrative
functions and activities of public pension systems. For
example, recent legislation remov'ed the actuarial
function from the PERS Board and placed this function
under a State Actuary appointed by the Governor and
confirmed by the Legislature. (A primary function of the'
actuary is to determine the employer's annual
contribution rate.) In addition, recent legislation also
allowed the use of certaiU PERS assets to offset employer
contribution costs ..
Proposal
This measure makes several changes to constitutional
provisions related to public systems: .
It gives the boar.ci..pfeach public pension system
complete authority for administration of the system's
assets and for the actuarial function. (This would
have the effect of returning the PERS actuarial
function to the PERS Board.)' .'
Each board must continue to provide benefits to
members of the system and their beneficiaries,
minimize employer contributions, and pay
reasonable administrative costs. The measure,
however, specifies that each board is to give highest
priority to providing benefits to members and their
beneficiaries. .
The measure specifies that the Legislature cannot
change terms and conditions of board membership
(for boards with elected employee members) unless
a majority of the persons registered to vote in the
jurisdiction of the retirement system approves the
change. For example, a change in a county
retirement system's board membership would.
require a countywide vote. .
Fiscal Effect
The measure could .have the following fiscal impacts
on state and local governments.
Adminutration of Assets. Giving complete authority
for administration of public retirement system assets to
the governing boards could reduce oversight of these
activities by state' or local government. This wo.uld have
an unlaiown effect on the costs of the systems.
Actuarial Responsibilities . . The boards of most
public retirement systems have the responsibility for the
actuarial function. As noted above, the responsibility for
this service for PERS was recently transferred to an
actuary appointed by the Governor. By returning the
function. to PERS, this measure would have two fiscal
effects. First, there would' be annual savings in the range
of $1 million to $3 million, as it appears that PERS can
now perform the task at less cost than an outside actuary.
These savings would be realized by all the public
employers in the PERS system. Second, there would be
an unknown effect on the cost of employer contributions
resulting from potentially different assumptions by an
actuary responsible to the PERS Board, rather than the
Governor. .
Board Responsibility to Pension Members. The
requirement that pension system boards give highest
priority to providing benefits :to members and their
beneficiaries could result in higher costs to employers. As
discussed above, providing benefits is currently one of
three basic, and equal, responsibilities of the pension
boards. Placing benefits as the highest priority could
result iIi higher .costs to employers if board decisions
increase benefits without equal consideration to the cost
for those benefits. These potential costs are unknown,
and are dependent on future decisions of pension system .'.1,1
1
boards.' .
Vote 'on Legislative Changes. The proviSion
requiring a vote within the jurisdiction of a pension
. system to approve legislative changes to the pensionli
. system board could result in increased election-related .U
costs. The average annual costs for these elections,
however, probably would not be significant.
For text of Proposition 162 see page 70
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162
. Public Emplqyees' Retireme:q.t Systems.
Initiative Constitutional Amendment ..
Argument in Favor of Proposition 162
Do you believe politicians should be able to.raid the
pension funds of retirees? . . ,
That's exactly what they have done-and will continue
to do-unless we pass PROPOSITION 162. ..
A YES vote on PROPOSITION 162 will prevent
politicians from raiding the pension funds of firefighters,
police officers an.d other active and retired public
employees. .. .
It's not right to allow politicians to balance their
budgets on the hacks of seniors and retirees. For many
retirees who have worked hard all of their lives, their
only source of dignity and security.is the pension they
earned. They depend on those pensions.to survive. .
It is morally wrong and unfair to take that away from
them. But politicians keep doing it. ...
And let's face it-if the politicians are allowed to raid
public pension funds today, private pension funds will be
nexi:. The big difference is that taxpayers are ultimately
responsible for public pensions. And that means
taxpayers will be socke.d if huge future tax increases are
needed to pay back tomorrow the funds .politicians loot
from public pension funds today. .. . .
That's why senior citizens, taxpayer groups and active
and retired people throughout California are united in
support of PROPOSITION 162. .
Is it any wonder that more thaq 1.2 MILLION of our
neighbors signed petitions to place PROPOSITION 162
on the ballot? .
The politiCians won't do the right thing, but we can!
Vote Yf:S on PROPOSmON 162.
ClU.RLES CARBONARO
CluJirman, C:lifornu. State Leg;"'lative CCJmmittee
American Association of Retired Penom (AARP)
PETER J. KANELOS
Executive Director,
REsponsible for Lower Ta:res (REVOLT)
CUFFORD F. HASKELL
. Retired Firefighter
Rebuttal to Argument in Favor of Proposition 162 . ,
PRO P 0 SIT ION 162 DOE S N T PRO V IDE . of taxpayers with those of retirees. This is only fair, since
ADDITIONAL PROTECTION AGAINST PENSION nearly $5 billion a year in tax dollars go toward public
RAIDS..' . pension funds. Proposition 162 destroys this balance, and
The California Constitution already protects public instead requires pension boards to make increased
pensions. And the idea that only :'politicians" raid benefits their number one priority, regardless of
pensions is ludicrous: State retirement ooards took nearly taxpayer cost. Next, Proposition 162 takes away nearly all
a billion dollars out of state pension investments in the authority of the executive and legislative b.ranches to
1980s, to fund a special reserve account. Proposition 162 oversee pension board decisions. So taxpayers would
does nothing to stop these bureaucrats from conducting have. no wa.y to k. eep these b. oards accoun. table fo. r tho eir
their O'W'Il "raids." . ... . .
PROPOSmON 162 IS TOO RISKY. actions.:. : '.. . :.
REJECT THE SLICK CLAIMS BEHIND
The state pension board has already been caught PROPOSITION 162. PROTECT PENSIONS AND
making bad investments: they have invested milli9DS in T.AX. PAYERS BY VOTIN.G NO ON 162.
junk bonds and speculated in risky real estate ventures.
Proposition 162 would give these boards even more
That's a risk we are. simply not pyepared
PROPOSmON 162 ENDS TAXPAYER OVERSIGHT.
Pension boards currentl-y have to balance the interests
RlCHARD GANN . .
Presidmt, Paul Conn Cilium Committee
LARRY McCARTHY
Prendent, Colifornia Ta:rpayen Association
.. ,
38 Arguments printed on this page are the opirrions of the authors and have not been checked for acc;rracy by any official agency. G92
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162
Public Employees' Retirement Systems.
Initiative Constitutional Amendment.
Argument Against Proposition 162
Proposition 162 doesn't protect pensions, it protects boards alone would have absolute authority to determine
the bureaucrats who have fai,led to curb rampant fraud the amount of money taxpayers must contribute to state, .
and abuse in state and local government retirement school and local government retirement funds each year ..
systems. . . Retirement boards would be able to demand from
on Proposition 162 is the only way to taxpayers excessive contributions when the retirement
PROTEt..:l PE;-iSIONS AND TAXPAYERS. system is overfunded. And in future budget crises, .
State auditors in 1990 found pension abuse in 75% of retirement costs could soar while vital public services are
cities studied-including one case where a former city cut to the bone.
manager was coUecting a$139,COO annual pension when BY TAKING MORE TAX DOLLARS THAN
his top salary was only $89,000. The Legislature quickly NECESSARY, RETIREMENT BOARDS COULD
au thorized sta te pension officials to hire six new . FORCE MORE TAX INCREASES ON CALIFOfu'lIA.
,auditors-but more than a year later, NOT ONE NEW The interests of taxpayers an'd s. tate and local
AUDITOR HAD BEEN HIRED:
STATE RETIREMENT BOARD MEMBERS government retirees are balanced carefully under
INVESTED Il'i JUNK BONDS, ACCEPTED TRAVEL current law. But Proposition 162 upsets that balance, and
JUNKETS WERE AND DINED BY the taxpayers end up losing .
. SPECIAL I"TERESTS, AND FAILED TO SPOT Proposition 162 requires retirement boards to make
OUTRAGEOUS FRAUD. providing or increasing benefits their number one
Proposition 162 would give the bureau'crats at the priority, regardless of the costs to the taxpayers. A
heart of this scandal more independence and more majority of contributions to the pension fund comes from ,
power-and'make it harder for taxpayers to ensure these the taxpayers each year. PROPOSITION 162 WOULD
retirement funds are properly managed. " REQUIRE A PENSION BOARD TO DISREGARD THE
162 ENDS TAXPAYER OVERSIGHT, INTERESTS OF TAXPAYERS.'
OF STATE RETIREMENT BOARDS. Last year, in the Bureaucrats have long employed scare tactics to get
middle of a recession and a budget crisis, the PERS board more money from ,the taxpayers, and Proposition 162 is
voted to pay its top bureaucrat $110,000 a year. The State based upon a colossal and phony claim that public
Controller blocked this pay increase, but would have no pension funds are at risk. They are not. State and local
authority to stop other outrageous salary hikes if government pensions are already protected by
Proposition 162 becomes law. '. . ' California's Constitution. And this initiative does not
Proposition 162 would end the mandatory use of change any .existing constitutional protections of
outside independent experts-called actuaries-to retirement funds.
review the amount of money taxpayers pay into the state Vote no on Proposition 162.
retirement system, Proposition 162 would take away this
independent voice in determining taxpayer LARRY McCARTHY
contributions to the nation's largest pension fund. Pre3idenl, <Alifomia T=payer3' A.ssocialion
TIL-\.T'S JUST TOO RICHARD 1.. GANN
And Proposition-162-:rlso dictates that retirement Pr ... idenl, Paul Gann's Citizens Committee
Rebuttal to Argument Against Proposition 162
Opponents of Proposition 162 are trying to mislead the Seniors and taxpayer groups who have ca:efully read
voters. . Proposition 162 agree that the real issues are protecting
The central purpose of this measure is to STOP, pension funds qnd taxpayer dollars. '. -
POLITICIANS FROM PUBLIC PENSION ,Pension fund security is crucial to.retired workers who
FlJNDS TO BAIL THEM OUT WHEN THEY FAIL TO are struggling to pay for food;shelter and health care. '
KEEP GOVERNMENT SPENDING UNDER And preventing pension raids is crucJ(J1 to a'l
CONTROL. Pension should be used to provide taxpayers to avoid future tax increases that would be
for retired workers, not as a slush fund needed to pay back the money taken by politicians.
for . .. .. . . Because politicians have repeatedly tried to loot
. Pro:posloon 162 has n?thmg .0 do WIth audItors v.:ho hundreds of millions of dollars from public pension .,
alleged pensJO.nabuse. In state pensJOn systems, Proposition 162 is needed to KEEP ;
were unable to. hire more au9i.tors because, the POLITICB.NS HA."l"DS OUT OF THE TILL. I
delayed f:.t?d.ing for the POSlti0?S' . . Vote Yes on Pro osition 152. t
Nor does PropOSItion 162 have anythmg to do WIth p t
retirement benefit levels. Onlv legislative bodies elected DERRELL KELCH ' [
, by voters and voters themselves have the power to set Pre3idenl, <Alifomia Seniors Coalition i
benefit levels. , . PETER J. f'
PROPOSITION 152 does have something to do with Execulir;e Director, !
taxes. It precents taxpayers from ffouged in the Rupornible VOter for Lower T= (REVOLT) ;
future to pay back pension money loot y politicians. '"
G92 Arguments printed on this pa;:e are the opinions of the authors and have not been chedied for accuracy by 'any official 39 J
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STA]ElfDiTOF WTTNESSES
I declare under penalty of perjury under the law: of California that the
perron who ;igned Of' adnowledged this document is personally hwum to
me (or proved to me on the basis of lalisfaclory eoidence) to be the
declarant of this that he Of' she signed and acknowledged this
Directive in my presence, that he Of'she appears to be of sound mind and
under no durrm, fraud, Of' undue influence; Ihail am not the atterrding
physician, an employee of the attenJing phyM.t1n, a hmlth cart pror;ider, .
an employee of a health cart provider, the aperator of a community care
facility, Of' lin employee of an operator of a ccmmunity cart facility,
I further declare under of perjury under the laws of CalifornUJ
that I am not related to the declarant by blood, marriage, M adoplicn, and,
to Ihe best of my knowl4dge, I am not entitled tc any part of the of
the principal upon the death of the principal under a will now erirHng or
by operatiqn of law, and have no claim ncr anticipate making a claim
against any of of the decUJrant upon his M her death.
Do/d
Witn=s Signature':..' _________ _
________ __
______________ __
__________ _
Witn=s Signature:..' _________ _
Print ________ -,.
Residence Addr== ___________ ...,-__
n . J
STATEMENT OF PA11EN! ADVOC4TE OR OMBUDSMAN
(If you are a patient in a skilled nursing facility, one of the witnesses mwt
be a Patient Adoocale Of' Ombud.-man, me folloU'ing statement is required
only if you are a patient in a skilled nursingjacility, a health ctJrt facility
that provides the following ba:ic St!rvices: Jkifled nursing and
mpportive carli 10 patienlJ whose primary need is for aooilability of .kilW
nursing care em an exle-nded basis. 1M Patient Advocate Of OmGudsman
must sign the "Statement of Witnesses" abo()C AND mrut auosign the
following stotement.) . .
I further declare under penalty of perjury under the law: of CalifornUJ
tMtl am a Patient Adrxxate or ombudsman as designated by the Stcu
Dl!partment of Aging and that I am serving as a witness as required by
Section 2.525.4 oj the California Chil Ctxk '. ,
_______________ __
SEC. 2. Pfu'iAL CODE AMENDMDlT
Section 401 of the Penal Code is amended to read:
401. Suicide, aiding. advising M =raging. Every person who deliberately
aids, or advises, or encourag!!$ another to commit suicide, is guiltY of a felony,
Death reJulting/.rom a request for aid-in-dying pursuant to Title 10.S
(commencing wit Section 2.525) of Di<Ji.rion 3 of Part 4 of the Ciail Code JhaI/
1Iot CtJrulitute'wicide, nor i.r a /icerued physician who lawfully administen
aid-in-dJling Of. a health cart providerM liam.red health CIlrt Urofessional acting
under the direction of a physician, lillble under this =tion. Death resulting from
aid-in-dying pursuant to" Di=tiDl! in acamiana u;lth the Death With Dignity .
Act dOeJ jar any purpose, corutitute a homicjde.
, SEC. 3, A..'v!&"IDMENT OF lNITlATIVE
This Act may be amended only by a statute passed by a two-thirds vote of each
house of the legislature and signed by the G<Jvernor.
Proposition 162: Text of Proposed Law
!hi> initiative measu're is submitted to the people in' accordance with the
provisions of Article II, Section 8 of tbe Constitution. "
!hi> initiative measure expressly amends the Con.stitution by lIDending a
seetion therecf; therefore, e.ti.sting provisions Eroposed to be deleted are pnnted
in and new provisioes proposed to be added are printed in italic
type to indicate that they are new, .
, PROPOSED LAW
The Pension Protection Act of 1992
Section One. Title. Thu 'act sball be hown and may be cited as
California Pension Protection Act of 1992. "
Section Two. Findings. and Declarations. The People of the State of
California bereby find and declare as follows: ' .
(al Retired citizens depend upon tbeir pension benefits to meet basic
neeessities such lIS food and shelter during tlieir retirement yean. For many
elderly citizelU wbo are not eligible to participate in Sccial Seeurity, pension
benefits are their sole source of financial support and securi!y.
. (b) Teacbers, firefighters, police officers and other local, scbool and state
employees depend on promised pension benefits, which must be protected from
political abuse and mi.sappropriation. '..
(c) Politicians have undermined the dignity and security of all citizens who
depend on pensioncbenefits for their retirement by repeatedly raiding their
pension funds. . , ' ,
(d) Political meddling bas driven the federal Social Security syrtem to the
brinlc of banlcruptcy. To protect the financial security of retired Californians,
politicians must beprevented from meddling in or looting pension funds. '
(e) Raids by politicians oli public pension funds will'Durden taxpayers with
massive tax increases in the future. . ,
'(f) To protect pension syrtem.:.retirement board trustees must be free from
political meddling and intimidation., '
(g) The integrity of our public pension syrtems demands that safeguards be
instituted to prevent political "paclcing" of retirement boards, and encroachment
upon the sole and e.xClusive fiduciary powers or infriDgement upon the actuarial
duties of those retirement boards. . .
(h) In order to pro teet pension benefits and to avoid the prospect of hiJlher
taxes, the People must act .now to shield the pension funds of this state trom
abuse, plunder and political c:orruption. ,. .
Section Three, Purpose and Intent. The People of the State of California ,
hereby declare that their purpose and intent in enacting this measure u as
follows: ,
,,(a) To protect pension funds so that retirees and employees will continue to
be able to enjoy a basic level of dignity and secur:ityin their retirement years.
(b) To give voters the right to approve cbanges in tbe composition of
retirement boards containing elected retirees or employee members.
(c) To protect the taxpayers of this state against future tax increases which will'
be required if state and local politicians are pennitted to divert public pension
funds to other uses. . ,
(d) To ellSUl'e that the assets of public pen.rion syrtems 1re wed exclusively for
70
the purpose of efficiently and promptly providing benefits and !ervices to
participants of these systems, and not for other purposes.
(e) To give the sole and exclusive power over the management and
investment of public pension funds to the retirement boards eleeted or appointed
for that purpose, to ,trictly limit the Legislature's pqwer over such funds, and to
prohibit the Governor or any executive or legislative body of any political'
subdivision of this state from tampering with public pension funds.
(f) To ensure that all actuarial determinatiolU necessary to safeguard the
competency of public pension funds are made under the sole and exclusive
dilection of the responsible retirement boards.
(g) To affirm the legal prinCiple that a retiremeTit board's duty to its
participants and their beneficiaries takes precedence over any other duty.
Section Four. Section 11 of Article XVI of the California Constitution is
hereby amended to read as follows: . ,
SEC. 11. Tbe State shall not in any manner loan its. Ilor ,ball it
subscribe to, or be interested in the stock aJSociation, or
corporation, except that tbe State and each political subdivision, district,
municipality, and public agency thereof is hereby authorized to acquire and bold
shares of the capital stock of any mutual water company or corpontion when the
stod: is so acquired or beld for the purpose of furnishing a supply of witer for
public, municipal or governmental purposes; and'the holding of the nod:: shall
entitle the bolder thereof to all of the rights, powers and privileges, and shall
subject the bolder to the obligations and liabilities conferred or imposed by law
upon other holders of stock in the mutual water company or c:orpora.tion in which
the stock is so beld. , .
NotwitbstaiJding any other provinoes or this Co1lstitulion to the
contrary 1ft ....e 6 !If. . , the Legiolohlre mer
!Be mlirement board of a public pension or retimnent rT/strmt shall
have plen4ry authority aru;t.uciary rerpcn.ribility fM investment of moneys
and administratiCn of ftfty the syrtelll, subject to all
of the following:
(a) 1M retirement board of a public pen:ion Of retirement rT/stem .hall have
the sole and erclurive fiduciary responsibility our the ilJsets of lhe f7Ublic
.penJion or relinment system. The retirement board shall also naoe !Ole and
erclusice rtSpOnsibility to administer the rT/stem in Q manner that wi/llJ.UUrrt
prompt delir;ery of benefits and related seroias to the participants and their'
beneficiaries. The assets of a public pension or retirement syrtem are ,trust fund.1
and shall be held for the exclusive purposes of proViding benefits to participanls
in the pension or retirement system and their beneficiaries and defraying
reasonable of administering the system.
(b) The members of the retirement board of Il!e a public pension or
retirement system shall discbirge l.i5 &f !tel' thefr duties with respect to the
system solely in the iIiterest of, and for the exclusive purposes of providing
benefits to, participants and tbeir beneficiaries, minimizing employer
contributiolU thereto, and defraying reasonable expenses of administering the
system. A retirement coord's duty UJ /IJ participants and their beneficiaries shall
toke pn:cedence ooer any other duty, "
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(c) The =bers of the rm=rumt board of !he a Dublic pension or
retirement svstem s!tall dLscharge ... their duties with respect to the
syrtem with the care, skill, prudence, and diligence ur.cer the circumstances then
prevailing that a prudent person acting in a like capacity and familiar with these
matters would use in the conduct of an enterprise or a like chancter and with like
aims. . .
(d) The =bers OJ lhe retiremenl board of !fie a public pension or
retirement system shall diversify the investments of the syrtem so lS to minimize
the risk ofloss and to maximize the rate of return, unless under the circumstances
it is dearly prudent to do so. .
. (e) The reffmnenl board of a public pensicm or rmremenl n;s/mJ, consistent
u;#h lhe e:rclu.rir:e jiduciJJry responsibililies rested in shall have the sole and
erclusiut power to {Jror;itk for actuari41 serr-'ices in order fa a.r.rure the competency
of the assets oflhe public peruicn or rmrement'n;rtcm.
(j) With regard to tht retirement board of a public pension or retirement
n;rIe71I which include: in its composition electid emplcyee memben, lhe numbet,
terms and method of relection or rernotXJI of member: of the retirement board
which required by law or otheru;ise in effect on jtJly I, 1991, shall nol be
changed, amended, or modified by the Legislature unlesJ the change,
or modifia1tion eriacted by 1M Legislature is ratified by a majority
00/4 of 1M .lect= if IMjurisdictWn in which 1M participants if 1M S1jsrem are
or wtmI, prior fa employed. . .
(g) The Legislature mall by statute amtinlle to prohibit certain investments by
a retirement board u:here it is in the public interul to do so, and protJided that
tM prohibition Jt1ti.r[lC3 tM standa rds of j.duciIJ ry C1m: and loyalty required of a
ttiiremenl board purruant to this section.
(h) As wed in Ihit =:'.on, Ihc lerm "retimnent board'; shall mean the board
of administration, board of trJStees, board of direct=, or other gm:eming body
or board of a public emplOyees' pension or retirement S1jsttm; provided, fwu:er:er.
that tM lerm "relirement (}O(frd" shall nol be interpreted to mean or include;
go-oerning body or board created afler luly 1, 1991 which does not administer
pension or retirement kuifits, or Ihe elec:ed legi.slalir;e body of a jurisdictkm
u:hich employ, participants in a public emplotj=' pension or retirement n;stcm.
Section Five. Uberal Interpretation. The proviSions of this act shaJJ be
liberally interpreted to effect their purposes... .;
Section Six. Conflicting Law. In the event that this measure and another
measure or measures relating to the public pension and retirement'syrtems of this
sute, or any of them, shall appear on the statewide general election ballot on
November 3, 1992, the provisions of these measures shall be deemed to be in
conflict. In the event that this measure shall receive a greater number of,
affirmative votes, the provisions of this measure shall prevail in their entirety and
the provisions of the other measure or shill be null and void. In the
event that the other measure or measures shall receive a greater number of
affirmative votes, the provisions of this measure shall take effect to the extent
permitted by law. .
Section Seven. . Severability. If any provision of this act ilialJ be found or held
by a court of competent jurisdiction to be invalid or unconstitutional for :my
reason, such invalldity or unconstitutionality shall not affect the remaining
provisiOns of this measure, and to this end the provisions of this measure are
severable. ..
Section .Eight. Effective Date. This act shall take effect immediately lIpon
certification of the official canvass by the Secretary of Sute. . i .
Propositlon 163: Text of Proposed Law
This initiative me3SUre is submitted to the peeple in accordance With the
provisions of Article II, Section 8 of the CDnstitution. ..
This initiative measure expressly amends the CDnstitution by adding a section
thereto, and amends section of the Revenue and Taxation Code; therefore,
existing proYisions proposed to be deleted are printed in and new
provisions proposed to be added printed in italic type to indic:tte that they are
new.
PROPOSED LAW
SECTION 1. Section:>4 is to Article XlII of the California CDnstitution,
to read:
SEC 34. Neither tM Slale of Colifornic nor any of its political rolxJidsions
shall Ieor; or colleCt a sales or use Ia:r on the Mis of. or fM storagt, we or other
consumption in this Slale of food products for human consumption ercepl as
prodded by J10tute 4f if the iffectir:e cW/4 if this ;eeo.on.. . .
SEC. 2. Section 6359 of tKe. Revenue and T:uaticn CDde, as amended by
Chapter 88 of the SUtutes of 1991, is amended to read: .
6:)59. (a) There are exempted from the taxes impose<! by this part the gross
receipts from the sale of and the storage, use, or other consumption. in this state of
food products for human consumption. .
(b) For the purposes of this section, "food products" include all of the
following: .. .
11) Cereals and cereal products, oleomargarine, meat and meat products, fish
and fisb products, eggs Jlld egg products, vegeubles and vegetable products, fruit
and fruit products, spices and salt, sugar and sugar products, Ml>ef tM.. candy eP,
gum, confectionery, coffee and coffee substitutes, tea, and cocoa and cocoa
products; e!het ... :
. (2) Milk and milk products, milkswe3, malted milks, and any other .timilar
type beverages whicb are composed at least in part of mille or a mille product and
wruch require the use of mille or a mille product in their preparation.
(3) All fruit juices, vegetable juices, and other whether liqilld or
frO'Zen, including bottled water, but e:rciudi1l!Pirituous, malt OJ vinous
liquor; or carbon.ated beverages... ..
(c) For purposes of this "food products" do not include &ft)' ef 1M
medicines and preparatioru in liquid, powdered, granular,
uhlet, capsule, lozenge, and pill form sold as dietary supelements or adjuncts.
f.IT s.-It ie<wk Mr ef tft;, :!medc __

=.%t:etI!'ft ...
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It t eell''''''l'tiep. *left"
...
(d) None of :he exemptions provided for in this section apply to any of the
following: .
G92
(1) When the food products are served as meals on or off the premises of the
retailer. .
(2) When the food products are furnished, prepared, or served for
consumption at ubles, cb.airs, or counters or from trays, glasses, dishes, or other
ubleware whether provided by the retailer or by a person with whom the retailer
contracts to furnisb, prepare, or serve foe<:l products to other;. . .
(3) When the foed products are ordinarily sold for immediate consumption on
or near a Ioc:o.tion at which parking facilities are provided priJ:n.arily for the use of
patroru in consuming the products purcba.sed at the location, even though such
product! are sold on a out" or "to go" order and are actually packaged or
wrapped and taken from the premises of the retailer.
(4) Wben the.food products are sold for consumption within a place, the
entrance to which is subject to an admission charge, except for n.ational and stlte
parks and monuments, marinas, campgrounds, and recreational vehicle parle.
(5) When the food products are sold through a. vending machine.
(5) When the food products sold are furnished in a form suitable for
consumption on the seller'sprernises, and both of the following apply: .
(.\) Over 80 percent of the seller's. gross receipts are from the sale of food
products. .
(B) Over 80 percent of the seller's retail sales of food products are sales subject
to tax pursuant'to paragraeh (1). (2), (3), or (1). .
(7) When .the fOOd products are sold as hot prepared food products.
. (e) "Hot prepared food products," for the pureoses Ot paragraph (7) of
subdivision (d), include a combination of hot and cold food it= or components
where a single price has been established for the combination and tbe food
products are sold in such combination, such as a hot meal, a hot specialty dUb or
serving, or a hot sandwich or a hot pizza, including anr cold componen.ts or side .
itenu. Paragraph (7) of subdivisiol) (d) shall not app y to a sale for a
. price-of bakery .goodS or beverages (other than bouillon, consomme, or soup) i or
where the food product is purchased cold or frozen; "bot prepared food
products" means those products, items, or components which have been
prepared for sale in a heated condition and which are sold at any temperature
which is higher than the air temperature of the room or placewbere they ue
sold. . .
-ftr ffl 8j' 1M tet ,.beli,;'ieft!boll
. eee- &I\}<>l,. fOO:t, ... ..
SEC. 3. Section 2 of this act shall take effect December 1. 1992. Section 1 of
this act ilialJ take effect January 1, 1993. . . .
SEC. 4. The provisions of Section 1 of this act shall supersede all proYisions of
this CDnstitution and laws enacted thereunder in conflict therewith.
SEC. 5. If any provision of this measure, or part thereof, is for any reason held
to be invalid or unconstitutional, the remaining provisioru shall not be affected,
but sball remain in full force and effect, and to this end the provisions of this
measure are severable.
71
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This form is mandatory. It has been approved for use by the United States Bankruptcy Court for the Central District of California.

June 2012 F 9013-3.1.PROOF.SERVICE
NYC/707059.1

PROOF OF SERVICE OF DOCUMENT

I am over the age of 18 and not a party to this bankruptcy case or adversary proceeding. My business address is:
Arent Fox LLP, Gas Company Tower, 555 West Fifth Street, 48th Floor, Los Angeles, CA 90013.

A true and correct copy of the foregoing document entitled (specify): JOINT OBJECTION OF THE BOND CREDITORS
TO THE MOTION TO LIFT AUTOMATIC STAY OF CALIFORNIA PUBLIC EMPLOYEES RETIREMENT SYSTEM will
be served or was served (a) on the judge in chambers in the form and manner required by LBR 5005-2(d); and (b) in the
manner stated below:

1. TO BE SERVED BY THE COURT VIA NOTICE OF ELECTRONIC FILING (NEF): Pursuant to controlling General
Orders and LBR, the foregoing document will be served by the court via NEF and hyperlink to the document. On (date)
December 10, 2012, I checked the CM/ECF docket for this bankruptcy case or adversary proceeding and determined that
the following persons are on the Electronic Mail Notice List to receive NEF transmission at the email addresses stated
below:

Service information continued on attached page

2. SERVED BY UNITED STATES MAIL:
On (date) December 10, 2012, I served the following persons and/or entities at the last known addresses in this
bankruptcy case or adversary proceeding by placing a true and correct copy thereof in a sealed envelope in the United
States mail, first class, postage prepaid, and addressed as follows. Listing the judge here constitutes a declaration that
mailing to the judge will be completed no later than 24 hours after the document is filed.


3. SERVED BY PERSONAL DELIVERY, OVERNIGHT MAIL, FACSIMILE TRANSMISSION OR EMAIL (state method
for each person or entity served): Pursuant to F.R.Civ.P. 5 and/or controlling LBR, on (date) December 10, 2012, I
served the following persons and/or entities by personal delivery, overnight mail service, or (for those who consented in
writing to such service method), by facsimile transmission and/or email as follows. Listing the judge here constitutes a
declaration that personal delivery on, or overnight mail to, the judge will be completed no later than 24 hours after the
document is filed.


I declare under penalty of perjury under the laws of the United States that the foregoing is true and correct.

December 10, 2012 ADRIANE I. LARK
/s/ Adriane I. Lark
Date Printed Name Signature


NYC/707059.1

1. TO BE SERVED BY THE COURT VIA NOTICE OF ELECTRONIC FILING (NEF):

Jerrold Abeles on behalf of Interested Party Ambac Assurance Company
abeles.jerry@arentfox.com, labarreda.vivian@arentfox.com

Joseph M Adams on behalf of Interested Party Courtesy NEF
jadams@lawjma.com

Andrew K Alper on behalf of Creditor BANK OF AMERICA, N.A.
aalper@frandzel.com, efiling@frandzel.com;ekidder@frandzel.com

Thomas V Askounis on behalf of Interested Party Courtesy NEF
taskounis@askounisdarcy.com

Anthony Bisconti on behalf of Interested Party Courtesy NEF
tbisconti@bmkattorneys.com

Jeffrey E Bjork on behalf of Interested Party Courtesy NEF
jbjork@sidley.com

Sarah C Boone on behalf of Interested Party Courtesy NEF
sboone@marshackhays.com, ecfmarshackhays@gmail.com

J Scott Bovitz on behalf of Creditor U.S. TelePacific Corp.
bovitz@bovitz-spitzer.com

Jeffrey W Broker on behalf of Interested Party Courtesy NEF
jbroker@brokerlaw.biz

Deana M Brown on behalf of Interested Party Courtesy NEF
dbrown@milbank.com

Michael J Bujold on behalf of U.S. Trustee United States Trustee (RS)
Michael.J.Bujold@usdoj.gov

Christina M Craige on behalf of Interested Party Courtesy NEF
ccraige@sidley.com

Alex Darcy on behalf of Creditor Marquette Bank
adarcy@askounisdarcy.com

Susan S Davis on behalf of Interested Party Courtesy NEF
sdavis@coxcastle.com

Robert H Dewberry on behalf of Creditor Allison Mechanical, Inc.
robert.dewberry@dewlaw.net

Todd J Dressel on behalf of Creditor Pinnacle Public Finance, Inc.
dressel@chapman.com, lubecki@chapman.com

Chrysta L Elliott on behalf of Interested Party Courtesy NEF
elliottc@ballardspahr.com, manthiek@ballardspahr.com



NYC/707059.1

Scott Ewing on behalf of Interested Party Rust Consulting/Omni Bankruptcy
contact@omnimgt.com, sewing@omnimgt.com

Paul R. Glassman on behalf of Debtor City of San Bernardino, California
pglassman@sycr.com

Everett L Green on behalf of U.S. Trustee United States Trustee (RS)
everett.l.green@usdoj.gov

Chad V Haes on behalf of Interested Party Courtesy NEF
chaes@marshackhays.com, ecfmarshackhays@gmail.com

James A Hayes on behalf of Interested Party Courtesy NEF
jhayes@cwlawyers.com

M Jonathan Hayes on behalf of Interested Party Courtesy NEF
jhayes@hayesbklaw.com, roksana@hayesbklaw.com;carolyn@hayesbklaw.com;elizabeth@hayesbklaw.com

D Edward Hays on behalf of Creditor San Bernardino City Professional Firefighters Local 891
ehays@marshackhays.com, ecfmarshackhays@gmail.com

Eric M Heller on behalf of Interested Party Courtesy NEF
eric.m.heller@irscounsel.treas.gov

Bonnie M Holcomb on behalf of Interested Party Courtesy NEF
bonnie.holcomb@doj.ca.gov

Whitman L Holt on behalf of Interested Party Courtesy NEF
wholt@ktbslaw.com

Michelle C Hribar on behalf of Interested Party San Bernardino Public Employees Association
mch@sdlaborlaw.com

Steven J Katzman on behalf of Creditor Certain Retired Employees of the City of San Bernardino
SKatzman@bmkattorneys.com

Jane Kespradit on behalf of Interested Party Courtesy NEF
jane.kespradit@limruger.com, amy.lee@limruger.com

Mette H Kurth on behalf of Interested Party Ambac Assurance Company
kurth.mette@arentfox.com

Richard A Marshack on behalf of Interested Party Courtesy NEF
rmarshack@marshackhays.com, lbergini@marshackhays.com;ecfmarshackhays@gmail.com

Gregory A Martin on behalf of Interested Party Courtesy NEF
gmartin@winston.com

David J Mccarty on behalf of Interested Party David McCarty
dmccarty@sheppardmullin.com, pibsen@sheppardmullin.com

Reed M Mercado on behalf of Interested Party M. Mercado
rmercado@sheppardmullin.com



NYC/707059.1

Aron M Oliner on behalf of Interested Party San Bernardino Police Officers Association
roliner@duanemorris.com

Scott H Olson on behalf of Creditor Kohl's Department Stores, Inc.
solson@seyfarth.com

Dean G Rallis on behalf of Interested Party Courtesy NEF
drallis@sulmeyerlaw.com

Christopher O Rivas on behalf of Interested Party Courtesy NEF
crivas@reedsmith.com

Kenneth N Russak on behalf of Interested Party Courtesy NEF
krussak@frandzel.com, efiling@frandzel.com;dmoore@frandzel.com

Gregory M Salvato on behalf of Interested Party Courtesy NEF
gsalvato@salvatolawoffices.com, calendar@salvatolawoffices.com

Mark C Schnitzer on behalf of Attorney Mark Schnitzer
mschnitzer@rhlaw.com, mschnitzer@verizon.net

Benjamin Seigel on behalf of Interested Party Courtesy NEF
bseigel@buchalter.com, IFS_filing@buchalter.com

Diane S Shaw on behalf of Interested Party Courtesy NEF
diane.shaw@doj.ca.gov

Jason D Strabo on behalf of Creditor U.S. Bank National Association, not individually, but as Indenture Trustee
jstrabo@mwe.com, zwinston@mwe.com

Matthew J Troy on behalf of Creditor United States of America
matthew.troy@usdoj.gov

United States Trustee (RS)
ustpregion16.rs.ecf@usdoj.gov

Anne A Uyeda on behalf of Interested Party Courtesy NEF
auyeda@bmkattorneys.com

Annie Verdries on behalf of Interested Party Courtesy NEF
verdries@lbbslaw.com

Brian D Wesley on behalf of Interested Party Courtesy NEF
brian.wesley@doj.ca.gov


NYC/707059.1

2. SERVED BY UNITED STATES MAIL:

Debtor

City of San Bernardino, California
City Hall
300 North "D" Street
San Bernardino, CA 92418

Special Notice List

Bryan C. Altman
The Altman Law Group
6300 Wilshire Blvd., Suite 980

Roger Jon Diamond on behalf of Creditor Manta
Management Corporation Inc
2115 Main Street
Santa Monica, CA 90405

Dale K Galipo on behalf of Defendant Michael Wade
21800 Burbank Blvd Ste 310
Woodland Hills, CA 91367

Jon Schlueter on behalf of Interested Party Jessica
Weeda
108 Orange St Ste 8
Redlands, CA 92373

Neil S Steiner on behalf of Defendant Jose Munoz
433 N Camden Drive Ste 730
Beverly Hills, CA 90210

Dennis J. Hayes, Esq.
Christopher H. Conti
Hayes & Cunningham, LLP
5925 Kearny Villa Road, Suite 201
San Diego, CA 92123

Michael J. Gearin
Michael B. Lubic
K&L Gates LLP
10100 Santa Monica Boulevard, Seventh Floor



NYC/707059.1

3. SERVED BY PERSONAL DELIVERY, OVERNIGHT MAIL, FACSIMILE TRANSMISSION OR EMAIL:

Via Personal Delivery

Judge

Honorable Meredith A. Jury
United States Bankruptcy Judge
United States Bankruptcy Court
3420 Twelfth Street
Suite 325 / Courtroom 301
Riverside, CA 92501-3819.

Courtesy Email

Paul R. Glassman on behalf of Debtor City of San Bernardino, California
pglassman@sycr.com


San Bernardino Bondholders Vs Calpers

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