The signs of better times are easy to spot downtown: the picturesque marina on the San Joaquin Delta, the gleaming waterfront sports arena, and the handsome high-rise that was meant to house a new city hall. But those symbols are now bitter reminders of how bad things are here today: on Tuesday this city of almost 300,000 moved a step closer to becoming the nation’s largest city to declare bankruptcy.
During a contentious meeting that stretched late into the night, the City Council decided, nearly unanimously, to begin mediation with public employee unions and major bond creditors in what is widely seen as the city’s last-ditch attempt to restructure its finances outside of bankruptcy.
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The city has already drastically cut back municipal staff, including the Police and Fire Departments. With nearly 100 fewer police officers than there were just four years ago, many residents fret about rising crime rates; there were 58 murders last year, an all-time high for the city.
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Stockton, about an 80-mile drive east of San Francisco, boomed a decade ago, as eager buyers from Silicon Valley bought up homes in the area. But in the past several years, housing values have plummeted, and the city has steadily had one of the highest foreclosure rates in the country.
During the boom times, the city eagerly began development projects to improve the area, transforming the waterfront and refurbishing several buildings that had fallen into disrepair. City officials lured a Sacramento restaurateur to open an upscale bistro, in part by offering space in a historic downtown building rent-free for five years. But the restaurant struggled and closed after just two years, and the space has sat empty and shuttered for the past year.
In 2007, after Washington Mutual shut down operations in an eight-story building here, the city bought the space for $35 million, reasoning that the price was a bargain, less than the cost of construction. Officials planned to move out of the crumbling old City Hall building and into the Washington Mutual building, but it soon became clear that the city did not have the money for the move. 
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