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Years of Unraveling, Then Bankruptcy for a City

This inland port on the San Joaquin River recently became the largest city in the country to declare bankruptcy, but evidence of its unraveling has been mounting for years.

Stockton, California
Paul Morris | Bloomberg | Getty Images
Stockton, California

It is visible in the rising domestic violence rates, booming private security businesses and a seemingly unstoppable stream of foreclosures. And it can be seen in smaller form too — at a struggling piñata shop, on the once-yellow fire hydrants faded to gray, in a case of stolen koi.

“The police don’t respond to anything unless there’s blood involved,” said Marlene Hinson, 51, who, after living here for 22 years without incident, was burglarized three times in four months, including the fish theft from her pond in a neighborhood of lush lawns and towering shade trees.

Even as some parts of the country are tentatively emerging from the worst downturn since the Great Depression, this city cannot seem to find solid ground.

While 50 miles to the north, in Sacramento, a bankruptcy judge and lawyers for Stockton and its 18 creditors have begun to sort out who owes what to whom, Stockton’s 292,000 residents have been left trying to hold together some semblance of order and respect for themselves.

The indignities have piled up and compounded in ways few could have imagined. After housing prices shot up in the early 2000s, when commuters from the San Francisco Bay area bought and built up homes here, the median home price plummeted by more than 60 percent in the last five years. In the first half of this year, the city had the highest foreclosure rate of any in the country, according to RealtyTrac, a company that collects foreclosure data. While it has come down a few points in recent months, for the last few years the unemployment rate hovered around 17 percent, nearly double the national average.

While Stockton’s bankruptcy troubles can be traced in part to the collapse of the housing market and the subsequent erosion of the city’s tax base, for years city leaders also mismanaged and overspent funds, pushing the city into financial peril, analysts and current city officials say. Stockton cannot afford the $417 million it owes for retiree health benefits, city officials say, and this year a bank repossessed city-owned parking garages and a $40 million building the city had bought with plans for an upgraded City Hall.

Since 2009, the city has cut 25 percent of its police officers, 30 percent of its Fire Department and over 40 percent of all other city employees. And while the Police Department has started hiring again, much ground has already been lost. Last year, there were 58 homicides here, a record. Halfway through 2012, there have already been 35. Other cities across the state are also teetering. On Wednesday night, city leaders in San Bernardino, Calif., voted to declare a fiscal emergency, which would allow the city to file for bankruptcy within 30 days.

After the three burglaries, Ms. Hinson and her husband, John Hinson, 68, a retired city finance director, installed an alarm system, video cameras and a locking gate at their home. But when the alarm goes off, which it has on several occasions, they say the police do not come. “They used to serve and protect, but now they can’t protect us anymore,” said Ms. Hinson, who works for a company that manages homeowner associations. “We have to protect ourselves.”

To that end, the Hinsons joined their neighborhood watch group and have started patrolling the city park adjoining their house. Stockton now has about 100 neighborhood watch groups, and more are forming all the time as concern over rising crime spreads, according to police officials.

Some predict the city will see a boom in self-policing efforts similar to the one that occurred in nearby Vallejo, which experienced a 40-fold increase in neighborhood watch groups since it filed for bankruptcy in 2008.

Cuts at the Stockton Police Department have improved the fortunes of private security companies. Delta Hawkeye Security Services, the largest private security company in the city, has seen an 80 percent increase in business since 2009, according to Ron Cancio, the company’s manager. Homeowner associations, landlords and businesses hire officers for $18 to $25 an hour (with or without a gun) to do work that until recently was done by city police.

“People call us before they call the police because we respond quicker,” Mr. Cancio said.

This year, the increase in crime and clients prompted Delta Hawkeye to have 10 of its 75 officers certified to carry firearms and Tasers. The company intends to triple the number of armed officers by next summer, Mr. Cancio said.

Darien Wilson, 19, carries a gun during his graveyard shift, while he zigzags around town in his company-issued Hyundai, checking on dozens of foreclosed houses and responding to everything from domestic violence calls to reports of fistfights. If he sees a violent crime in progress, he calls the police. But he also uses his Taser and pepper spray and can handcuff people until the police arrive. He says most often the sight of an armed officer sends people running.

“Not very many 19-year-olds can say they’re armed and working security on the streets of one of the most dangerous cities in America,” Mr. Wilson said.

While the city’s financial morass has allowed Mr. Wilson’s ilk more responsibility and swagger, it has left a multitude of others in need of refuge, a roof and a hot meal.

In 2008, 716 battered women received counseling at the Women’s Center Youth & Family Services, a nonprofit here serving victims of domestic violence. Last year that number had jumped to 3,347. The center’s shelters are over-capacity, said Joelle Gomez, the center’s executive director. “We’ve never seen anything like the increases we’ve seen in the last four to five years in calls to our helplines, our emergency shelter, counseling services and requests for restraining orders,” Ms. Gomez added. They also arrive more brutalized. “The nature of the domestic violence that is occurring is more violent than we’ve seen before,” Ms. Gomez said. “People have lost their sense of hope and stability, and with that comes a lot of anger.”

The city’s homeless shelters are operating at 125 percent capacity and have been since 2009 when foreclosures left many, particularly renters, with nowhere to go, said John Reynolds, executive director of Stockton Shelter for the Homeless, a nonprofit with multiple shelters throughout city.

The hardships here are hardly limited to those already at the margins of poverty. The women’s shelter has seen more middle- and upper-middle-class battered women. “These days almost every person I see has been through foreclosure or their mortgages are seriously underwater,” said Timothy Miller, a psychologist who has served wealthier Stocktonians for 30 years. “People feel absolutely crushed by that pressure.”

Even the city’s cats, dogs and parakeets have become orphans of economic adversity. Officials at the Delta Humane Society & S.P.C.A. said the shelter was 60 percent over capacity, forced to turn away those who try to drop pets off they cannot afford, or animals that, along with their owners, lost homes to foreclosure.

“People are dropping off boxes of kittens at the gate during the night,” said Patrice Davidson, the executive director. “We’ve got kittens in the bathroom and cat cages in the lobby.”

Stocktonians disagree on whether bankruptcy will, in the end, help or harm their city. Some say Chapter 9 is a stain the city will never be rid of while others swear it is the last chance to crawl back from insolvency and tough luck.

Regardless of where they fall on that spectrum, many residents’ misfortunes track with the city’s own.

Yuri Campos’s grandparents first arrived here as farm workers from Mexico 50 years ago. As the city grew from an agricultural town into what was, until recently, a rapidly expanding exurb, Ms. Campos’ family grew with it. She bought a house, had a son and opened a shop called Party Barn specializing in handmade piñatas. But these days few here have the means, or the will, for parties.

As the city stumbled into financial ruin, Ms. Campos, 30, and her family fell with it. By last November, the bank had foreclosed on her house and the homes of three other family members in town.

Ms. Campos started looking at rental listings in Southern California cities like Oxnard and Long Beach. One of her aunts decamped for Arizona.

Then in March, Ms. Campos was at a bar when a fight broke out and a man was shot and killed. When she tried to contact the police with information about what happened, she says no one at the Police Department would meet with her or call her back.

By the end of June, the city’s bankruptcy made national headlines and for the first time in her life, Ms. Campos began to feel something akin to shame.

“People will ask me, ‘Where are you from?’ ” she said. “Sometime I hesitate to say. I just feel like they’ll think I’m a violent person. They’ll look at me like I might hurt them.”

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