A California city still burdened by debt payments from its 2001 bankruptcy is struggling to avoid defaulting on those bonds or going insolvent for a second time in 13 years, Bloomberg News reported today. A decade after Desert Hot Springs, Calif., emerged from court protection, it’s again on the brink of fiscal collapse. Officials last night discussed dissolving the 27-employee police department and handing the service over to the surrounding county, the Desert Sun reported. The community of 28,000 in an arid valley east of Los Angeles is at risk of becoming the sixth U.S. city in the past 25 years to go bankrupt twice. City council declared a fiscal emergency in November, a step toward bankruptcy under California law, after staff warned the municipality would run out of cash by March because of “severe economic downturns, state takeaways and a decline in development activity.” Desert Hot Springs also faces about $740,000 in annual debt payments on securities issued in 2004 to cover the cost of a legal settlement that pushed it into bankruptcy in 2001.
