Now that Detroit has filed for Chapter 9 bankruptcy protection, the question must be asked: Who is next? In order to answer that question, I did some digging and found an article by Daniel Fisher in Forbes written in January of 2011 that predicts the cities most in danger of bankruptcy. Not surprisingly, Detroit is high on the list:
“Cities on the Brink” (in no particular ranking)
1. Bridgeport, CT
2. Chicago, IL
3. Cleveland, OH
4. Detroit, MI
5. New Orleans, LA
6. New York, NY
7. Philadelphia, PA
8. San Francisco, CA
Although the article insists that “most of these cities aren’t in imminent danger of bankruptcy or default,” the recent failure in Detroit makes me believe that given the still slumping economy, perhaps many of the cities on the list are closer to repeating the actions of Detroit than many realize.
Of the eight cities listed above, Cleveland, OH and Philadelphia, PA are the the most likely to file for Chapter 9 in the near future. Like Detroit, Cleveland has a lot of debt, $727 million as of 2011, and a shrinking population that continues to be in decline. In 1960, Cleveland’s population was set at 2,825,417. In 2012, after 52 years of growth in United States that has witnessed the national population increase by 75 percent, the population of Cleveland was 2,866,186, showing virtually no growth at all.
Further, the population has been steadily declining in Cleveland in recent years. From 2000-2010, the population shrunk by 2.8 percent. In 2011, the population again declined by roughly .5 percent and then again by .38 percent in 2012. In 2012, Cayahoga County, home to Cleveland, lost more residents than every other county in nation with the exception of (yup, you guessed it) Wayne County in Michigan, home to Detroit. As the population in Cleveland continues to shrink, the debt continues to rise, and people move out to surrounding counties like Franklin County and Delaware County, both of which gained in population in 2012, the likelihood of bankruptcy in Cleveland will continue to grow higher.
Philadelphia, PA is also in horrific shape. The total debt in 2011 equaled 28 percent of the property value in the city. Amazingly, Detroit’s debt in the same year equaled only 20 percent. Additionally, 25 percent of the population is beneath the poverty line. With all of that bad news, Philadelphia may be saved by the fact that, after several years of population decline in the early-mid 2000s, the population has boomed since 2010, increasing by 1.3 percent from 2010 to 2012.
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