It was the municipal equivalent of an extreme home makeover.
Over a little more than a decade, the tiny city of Manassas Park — population 15,000 — replaced, refurbished or added onto nearly every public building in its 2.5-square-mile confines. It built a fire station, police station and community center. It expanded all of its schools. And it paid for the nearly $130 million tab with borrowed money.
Shrinking revenue for Manassas Park
But even before the last brick was laid, the housing market in Manassas Park crashed, sending one in four homeowners into foreclosure and leaving many others underwater on their mortgages. Median home prices tumbled as much as 60 percent. Property tax revenue fell off a cliff. By the time the $20 million community center was finished in 2010, the city was in a position familiar to millions of Americans: digging its way out of debt.
“To say the housing market had an impact on us is an understatement,” said Michael D. Wine, chairman of the Manassas Park School Board. “We’re a small city. Being so small, even the little things are bigger for us.”
Cities across the country are in similar straits, mired in the long tail of a historic housing meltdown and recession. Many will be coping with the financial fallout of the bust for years to come even as the housing market recovers, said Michael Pagano, a municipal finance expert at the University of Illinois at Chicago.
The pain is most evident in California, where three cities have declared bankruptcy this year: Mammoth Lakes, Stockton and San Bernardino.
By comparison, municipalities in the Washington region have weathered the downturn with less long-term damage to their bottom lines.
Manassas Park, or “The Park,” as locals call it, is in a tougher spot than most. The plunge in its property tax revenue has been compounded by its debt, at $131 million.
Paying down that debt is eating up a growing share of the city’s budget. In the past year, $6.5 million, or almost 19 percent of city spending, went toward debt service, city officials said. By 2016, those payments are scheduled to reach $10 million — a prospect that alarms some local fiscal watchdogs.
Without deep spending cuts or new sources of revenue, “I don’t see a path out,” said Greg Letiecq, 58, a conservative who blogs about Prince William County, Manassas and Manassas Park and often rails against tax increases, government spending and illegal immigration. “There’s arithmetic that doesn’t seem to work.”
The boom years
On a map, Manassas Park, about 30 miles southwest of Washington, looks like a small key tucked inside Prince William. First incorporated as a town in 1957 and later as a city in 1975, Manassas Park is big-city exurb-meets-Mayberry: It is large enough to support its own police force and school system yet small enough to have a mayor and a School Board chairman who were Cub Scouts together.
Along with the city of Manassas and surrounding Prince William County, Manassas Park had some of the region’s sharpest swings in home prices and highest foreclosure rates.
Between 2005 and 2007, the city’s tax base increased by 60 percent. Manassas Park officials seized the opportunity to make improvements to its makeshift collection of public buildings. For years, the fire and police departments shared a metal building. City Hall was a converted house. The community center was little more than a gym and some classrooms that hardly anyone used. And the school system was running out of space because of an influx of students. Since 2000, the city’s population has increased by 50 percent, census data show.
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