CBS News ^ | 6/27/12 | Ben Tracy
And economists warn other large U.S. cities could be next.
Stockton was a city with big dreams.
In the mid 2000s, it overhauled its marina, built new parking garages, bought a new city hall, and put up a new arena.
The housing market was on fire, and tax revenues were pouring in, so the city took out $190 million in bonds and loans to pay for the projects.
"Everyone was still living high on the hog," recalls Bradley Koster, who owned a bar downtown. "On Friday and Saturday night, the hockey team played, and we packed the place."
But then the Great Recession came to Stockton. Unemployment is nearly 20 percent, and the foreclosure rate is one of the highest in the nation. Tax revenues have plummeted, and the city faces a $26 million deficit. The bank just took back those parking lots and the future city hall.
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