WASHINGTON - More than a quarter of the nation's cities have experienced an increase in the costs and risks associated with bond issuance during the last year as a result of the ongoing subprime mortgage crisis, according to a survey released yesterday by the National League of Cities.
As the economic slowdown stemming from the housing crisis continues, 26% of the 211 survey respondents said they have had to assume more risk and pay more to complete bond deals and capital financing during the last year. The survey was released in conjunction with the NLC's Congressional City Conference here.
In addition to its findings on debt issuance, the survey showed that nearly two-thirds of cities, 62%, experienced an increase in foreclosures during the past 12 months. And partly due to the increasing amounts of foreclosures, one-third of cities, 33%, are reporting a decrease in actual or estimated city revenues.
"Mortgage foreclosures are causing havoc in many of our communities," Cynthia McCollum, the president of the NLC, said in a statement. "Cities are already seeing reductions in their revenues at the same time that more services are needed to address the many related problems caused by the foreclosures. Unfortunately, we also know that the problems will continue for many years before they get better. That's a tough situation for all of us."
Despite concerns that the increased foreclosures are creating more blight and homelessness, the cities surveyed said a lack of funds is their biggest current obstacle. When asked which conditions have the worst impact on their community, 62% of respondents said decreased funding for programs and projects, and 60% said declining city revenues and revenue estimates. Less than half, 42%, said increasing foreclosures were their biggest challenge.
The survey showed that nonprofit organizations are providing more assistance to cities in response to the housing crisis than the federal government. More than half of the survey's respondents, 59%, said they have been working most closely with nonprofit organizations, while only 26% found the federal government to be the biggest help.
During a webcast briefing on the poll yesterday, McCollum called on the federal government to step up its efforts to help cities face the housing crisis.
"Occasionally we get help from the federal government, but I said occasionally," she said. "The federal government has just abandoned us, I would say. That's very disheartening, but it's true in many, many ways."