Wells Fargo & Co., the fourth-largest U.S. bank by assets, sued Stockton for failure to make payments on $32.8 million in bonds for parking garages. The city missed a $779,935 payment due Feb. 25 on the revenue bonds issued in 2004, the bank said in documents filed March 7 in San Joaquin County Superior Court.
"One has to assume that the fathers of Stockton thought they could borrow to create infrastructure which in turn would attract more people," John Ellwood, a public policy professor at the University of California, Berkeley, said in a telephone interview. "And that would lead to more building, which would lead to more revenues, which would lead to a richer, better community."
"All of this presumed that the value of real estate would go up and up," Ellwood said. "And they were wrong."