Can a city go bust? Just ask mother of two Sherri Lewis who literally felt the bottom fall out of her hometown of Harrisburg, Pennsylvania.
Sherri and her children were forced to leave their home after leaking pipes and sandy soil ripped a 50-feet long and eight feet deep sinkhole that swallowed the entire street.
The City of Harrisburg couldn't afford to repair the damage - nor to the state capital's 40 other sinkholes. The city was shut out of municipal money markets used by American cities to fund the building and repair of roads, schools...well, almost everything.
Swallowing streets
Harrisburg politicians and officials had borrowed heavily to upgrade existing large plants, such as a waste incinerator. Bankers and lawyers enjoyed huge fees for setting up these earlier loans. But Harrisburg's taxpayers couldn't afford to repay. And the sinkholes kept swallowing the city's streets.
Worse still, the city couldn't pay its employees. Talk of short-term bridging loans followed. A Receiver took control of finances. Bankruptcy was averted by the City borrowing $4 million from its own waste and sewer revenues.
Of course, money to repair the pipes and sinkholes still needed to be found. Contractors became wary of taking on work from a city with no cash. And willing lenders emerged but offering 10 per cent plus interest.
Fresh heartbreak
Sherri Lewis returned with her children from their temporary accommodation to fresh heartbreak. Their home had been burgled. Thieves stole her late mother's jewellery and her son's computer.
And, apparently, the human damage of municipal financial failure extends to other cities in other US states.
Paul Coleman, London Intelligence, February 2013
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