The Building Boom That's Sinking Stockton

In 2005, Stockton, Calif., unveiled a gleaming sports arena on its waterfront, part of a $145 million plan to draw people downtown. The 10,000-seat facility, a glass-walled symbol of the city’s battle against downtown blight, was part of a redevelopment boom that also saw the addition of a 5,000-seat minor league ballpark, a 650-space parking garage, a 66-slip marina, and the purchase of an eight-story City Hall. “This is the project that’s going to bring folks home, and it’s going to bring people from around the region to Stockton,” then-council member Leslie Martin said in 2004 when the waterfront revival was approved.

The building boom was financed with a series of bond issues starting in 2003 that helped boost Stockton’s debt load to $977 million. Today the new City Hall stands empty because the government can’t afford to move in, and Stockton is on the brink of financial collapse. At the end of February the city said it would default on $2 million in bond payments and begin negotiations with creditors, the first step under an untested state law restricting municipal bankruptcy. If the talks fail, Stockton (population 292,000) stands to become the largest U.S. city to seek bankruptcy protection. It would join Central Falls, R.I., which filed in August after failing to win union concessions, and Jefferson County, Ala., which in November became the biggest municipal bankruptcy (in dollar terms) in U.S. history, with $4.2 billion in debt.