The country’s dire financial straits extend beyond homeowners, as one Virginia city’s officials are learning. In the go-go days of 2004 and 2005, the city of Buena Vista in the Shenandoah Valley borrowed $9 million to build and refinance a city golf course. On the refinance application, they offered up two public buildings as collateral: the Buena Vista city hall and its police station.
Now, the bills are coming due and the city can’t afford to make payments, making it quite possible that the financier, ACA Financial Guaranty Corp., will exercise its right to seize the buildings.
“They put up City Hall to finance the golf course,” says Bonnie France, a lawyer for ACA. “It’s collateral, so they could lose it. I’ve worked in public finance for 30 years and never seen this happen.”
Buena Vista isn’t alone. Harrisburg, the state capital of Pennsylvania, is considering filing for bankruptcy, and Central Falls, R.I. turned its finances over to a receiver when it couldn’t repay its obligations.