The city of St. Louis has recently begun to dig up the claims they made to the federal government that they were unable to pay off.
The city filed for bankruptcy in 2012, claiming that they owed $462 million more than their assets.
The bankruptcy filing was a result of poor fiscal management from the mayor’s office and was effectively a surrender from the city’s creditors, many who have been waiting over twenty years for payment on bonds issued by St. Louis taxpayers.
The city’s inability to come to an agreement for payments for the bonds led it to sell off its assets piece by piece, including lease agreements on the city’s parking garages and its airport operations.
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The city also cut back on public services, leading to a petition for bankruptcy by citizens who claimed that they were unable to receive basic services like police and fire protection.
The petition was denied earlier this year, but the city has since filed again. The filing has led people in St. Louis to believe that the only way out of their financial crisis is through bankruptcy.
Here are some points discussed Buried beneath the ground, who knows where it’s found-
1. What is the city of St. Louis’s current financial status?
Estimated sales of assets so far: $1.7 billion
Current debt for the city of St. Louis.: $2.84 billion
Debt payments for the city’s pension plan, which is underfunded by $20 to $30 billion: $.049 billion
Total debt payments for all creditors, who are owed money since 2001: $51.7 billion
Current value of the city’s assets: $3.6 billion
2.) How much do creditors want?
Preferred creditors, who are owed large sums of money by the March 2012 bankruptcy filing date- state agencies ($4.2 billion), state workers’ pension fund ($1.5 billion), and unions ($15.2 billion)
Unsecured creditors, who are owed smaller sums of money from the bankruptcy filing that followed- city residents ($24.9 billion), other government agencies ($1.5 billion) and debtors who purchased bonds from the city ($25.3 billion).
3.) Who’s in charge of the debt?
Uptown Management Group was established by the state in September 2012 to supervise and take control of how much money should be paid out to creditors.
4.) What are the city’s assets?
According to the Uptown Management Group, the city’s assets are small, with only $3.6 billion remaining compared to their remaining debt of $12.5 billion. Uptown Management Group is currently trying to sell off as much public property as possible in an attempt to pay down some of their debt.
5.) What are the pension issues surrounding the bankruptcy filing?
As mentioned before, there is a pension fund that is underfunded by an estimated $20-$30 billion. The underfunding is the result of employee contributions not being on par with what is earned by the fund.
6.) Why are there so many liens filed against the city?
There are many reasons why there are so many lines in the city of St. Louis. One reason is that, according to Uptown Management Group, over-spending left the city insolvent.
Over-spending was due to poor fiscal management that led to large deficits, leaving little money for overspending.
7.) What was the initial response to the filing of bankruptcy?
Initial responses to the city’s original filing were negative, with many people in St. Louis feeling that they had lost their city after years of mismanagement by both citizens and politicians.
8.) What is causing controversy in St. Louis?
The cause for controversy is the way the Uptown Management Group is handling its accounting for creditors.
As mentioned above, they are selling as much as they can as fast as possible because they want to decrease their debt burden.
9.) What other factors may play a role in what happens to St. Louis?
Other factors that may affect what happens to St. Louis are the economy, where the city of St. Louis is in relation to other cities, and what people think about their debt.
10.) What does this mean for the future of St. Louis?
This bankruptcy filing simply means that the city has officially cut ties with its creditors and will no longer give any payments to them.
This means that they will no longer be able to receive services like police and fire protection, among others.
Over the course of time, it is hard to say what will happen to St. Louis, but it is certain that something bad will happen if their current financial situation does not improve soon.
