A story on the Wall Street Journal’s website this morning highlights University Place as a poster child for municipal financial meltdowns nationwide.
Long a model American community with high-performing schools, beautiful parks and rising real estate values, this city of 31,000 on the Puget Sound has lately turned into a reluctant showcase for the downgrading of America.
It was in the midst of building a new downtown virtually from scratch when the financial crisis set in three years ago, leaving the city with a big debt and little of the new tax revenue it expected by now.
So, University Place cut its work force by 30% to save money. With growing unemployment, some residents lost their homes. Then, earlier this month, the coup de grace: Moody’s Investors Service cut the credit rating on the city’s debt and assigned it a “negative outlook.”
The story goes on to detail the city’s woes with the stalled Town Center project, and city government’s public relations efforts.
In University Place, city leaders earlier this year campaigned on television and online to counter concerns that the city was going broke. From shopping centers to public meetings, people were asking about public finances, showing a heightened awareness of municipal issues as some cities around the country were contemplating defaulting on debt and filing for bankruptcy protection.
“We had to work hard to explain that we are going to be OK,” says Mr. (Steve) Sugg, the city manager. The city, he notes, has a balanced budget with conservative estimates of future revenue that are not dependent on growth in real estate taxes or land sales. The city is in no danger of defaulting, he says.