Tess Vigeland: Stockton, Calif. was one of the biggest casualties of the housing collapse. At one point in 2007, one in every 30 homes in the city was in foreclosure. Today, Stockton has the nation's highest foreclosure rate,it's out of cash and on the verge of bankruptcy. City leaders are trying to work out a deal with creditors. Along the way, they've made drastic cuts to services for the city's 300,000 residents.
From Capital Public Radio in Sacramento Marianne Russ reports.
Marianne Russ: It's not easy to be a Stocktonian these days. Unemployment is about 17 percent and the home foreclosure rate is the highest in the nation. But don't bother arguing about it with long-time resident Phyllis Henrietta.
Phyllis Henrietta: I don't go along with all this bad scuttlebutt. We enjoy Stockton. A lot of bad things are said about Stockton that just aren't true.
Henrietta stopped to chat on her way to a hair appointment -- just steps from where a man was recently killed in a drive-by shooting outside an upscale restaurant. It's in the city's historic shopping district known as the "Miracle Mile."
Stockton Police Detective Joe Silva grew up in the city.
Joe Silva: These last few years, seeing the rise in violence, it is alarming as an officer and also as a citizen that lives here in this community.
Last year, Stockton had a record 58 homicides, up from 25 four years ago. Some of those are a result of gang shoot-outs in the middle of the afternoon. Silva says criminals know the police force is down more than 100 officers. That leaves about 320.
But 16-year-old Destiny Gordon says that's not enough. The single mom is working on her high school diploma while raising her 14-month-old son Trenton. She's taking him on a walk near the city's inland sea port and says she doesn't go out at night.
Destiny Gordon: Yeah, the gangs and the drugs and you know, you can't really take your kid to a park downtown because it's so filled with drugs and stuff.
Sound of children playing
Across the street, a group of first-graders is enjoying recess at a city park. Larissa Poree is there with her daughter Shay.
Larissa Poree: I feel safe.
Like many others during the city's housing boom, she moved to Stockton from the San Francisco Bay Area.
Poree: I don't feel any less safe living in Stockton than I did when I grew up in the suburbs of San Francisco.
Stockton's about 90 minutes from San Francisco, smack dab in the middle of some of the richest farmland and waterways in the country. It's famous for its annual asparagus festival. But its residents are struggling with one of the biggest housing boom hangovers in the country.
Ann Johnston: I'm Ann Johnston, mayor of Stockton, Calif.
Johnston's had to chop tens of millions of dollars from the budget. Police, fire, libraries, parks, you name it. But, she says, there's still at least a $20-million deficit. Johnston says during the boom, city leaders spent money as if it would keep pouring in -- but of course, it didn't.
Johnston: We became mortgaged into the future, much like the average home owner who's upside-down in their home, the city of Stockton is upside-down.
Sound of balloons being blown
Johnston's not just the mayor. She's also owned a balloon and party supply shop for 31 years. She says business has been down about 30 percent for the past three years, but things are starting to look up.
Johnston: We're beginning to see a rise in sales, we're beginning to see more activity, so I'm hopeful that this is a sign that slowly but surely this economy is going to turn around here.
It's moving day for Tom and Sharon Kellogg. They're retiring in Tampa, but Sharon says Stockton's housing market has made it difficult to unload their nine-year-old home.
Sharon Kellogg: With the prices depressed like they are now, we're not going to sell it.
Tom says they've decided to rent it out instead -- but it'll cost them.
Tom Kellogg: We probably take about a $600 or $700 loss per month.
Sharon says she chose to leave, but Stockton doesn't deserve its tarnished reputation.
Sharon: No, it doesn't because there's too many good people here.
There's a grit -- a pride -- among the people of Stockton. Last year when Forbes magazine named the city the most miserable in America again, residents put on a "Stockton is Magnificent" festival. Local photographer Arnold Chin took a giant picture of hundreds of happy locals and shipped it off to Forbes.
Arnold Chin: We're not going to sit back and say, "Yeah, we're miserable, that's fine. No, we're going to say, "This is not acceptable and how dare you call us that because we are so much more."
But, Chin, too, is thinking about moving with his wife and two-year-old daughter.
Chin: We've been burglarized. My car has been broken into. We've been the victim of graffiti and so on. So it's not like we've really been assaulted, compared to some other people in this town. But for us, that's not the quality of life that we want.
Chin's father started the photography studio on the Miracle Mile nearly 40 years ago. Arnold Chin heads up the Improvement District, and say his business will stay put. But he is concerned that if more people move out of town, Stockton might eventually become a rental community and that could seriously hurt his bottom line.
Alex Toccoli: This is a great town to live in -- the core.
Alex Toccoli's family has been in the construction business for 70 years. The industry in Stockton was decimated by the housing bust, so Toccoli has branched out, taking on jobs in San Diego and Nevada. But he says Stockton is some place special.
Toccoli: We have San Francisco an hour-and-a-half away, the mountains -- you know, you can ski and surf in the same day. We have Yosemite two-and-a-half hours away, three hours away. We've got 1,000 miles of waterways. It's a great place to be.
But moments after praising his hometown, Toccoli says he is also looking to move. Why? Too many burglaries in his neighborhood.
In Stockton, Calif., I'm Marianne Russ for Marketplace.