Category Archives: Atwater California Could Be The Next City To File Chapter 9 Bankruptcy

Atwater California Could Be The Next California City To File Chapter 9 Bankruptcy


This really hits home for me given that I grew up about 8 miles south of Atwater in Merced, California. Atwater recently pursuant to AB 506 and Government Code Section 53760 declared a fiscal emergency. If you know anything about the Central Valley you already know that high unemployment and lack of good paying jobs is normal. Atwater has been hit particularly hard the last 15 years. The mortgage melt down seems to be the straw that broke the camel’s back.

California passed AB 506 requiring a municipality to either take part in a neutral evaluation process or declare a fiscal emergency before filing for bankruptcy protection under Chapter 9 of the Bankruptcy Code. Stockton California chose to take part in neutral evaluation process and it appears it failed miserably and participating in the neutral evaluation process further complicating Stockton’s bankruptcy case. Atwater on the other hand has declared a fiscal emergency. As a bankruptcy lawyer it appears this may be the trend for California cities that find themselves not able to pay the bills each month. Chapter 9 bankruptcy lawyers may be counseling cities to avoid the neutral evaluation process and just declare a fiscal emergency and then file a Chapter 9 bankruptcy petition.

Locals blame the mortgage crisis on reduced property taxes. In the Central Valley there was plenty of land to quickly build homes most people who lived and worked in the area could not really afford. Most homes have lost 60% of their value since the peak years ago. If you drive out “G” street in Merced towards UC Merced you can still see development after development where homes were supposed to be built and a few where there are only a few houses that were ever built. The brick walls and there, the roads are there, but there are no homes to be found.

Atwater’s claim to fame was Castle Air Force Base. Castle was home to B-52 bombers and KC-135 fuel tankers for years. After the Cold War Castle was slated for closure and closed around 1994. The closing of Castle hit the local economy pretty hard in both Atwater and Merced. Castle boasts one of the longest runways in the United States and it sits virtually unused today. Castle has struggled to convert to a viable civilian use since its closing and that has not helped the Atwater economy. When the Air Force left so did many thousands of dollars year after year. Castle does boast one of the best airplane museums around though. It is the first and only place I have ever cast my eyes on a SR71 Blackbird. The museum also has a rare B-36. Every year they host an open cockpit day that is fantastic.