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Belfield, N.D., Fights Bankruptcy

When oil prices dropped, the city was left with new roads leading to empty lots and heavy debt. OIL-BUST BLUES

THE cheeseburgers are still as juicy at the combination cafe and bowling alley downtown. The local hardware and auto-parts stores along Main Street do a pretty good business. But something is wrong here in Belfield.

Empty storefronts line the business district. The city itself is in danger of going bankrupt. Belfield is a striking example of what happens when an economic boom goes bust.

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``We are waiting for something to happen - and I know what it is,'' says Bob Shypkoski, president of the Belfield Area Community Development Corporation. ``It's the oil. People are waiting for it to boom again.''

Ever since the oil industry collapsed in western North Dakota six years ago, Belfield has sunk deeper and deeper into debt. It owes just over $1 million in bonds, floated during the heady days of expansion. Now, Belfield is contracting. And it can't possibly pay its debts.

``It's pretty dismal,'' says LaRoy Baird, a Bismarck, N.D., lawyer retained by the city. Belfield would like to settle with its many bondholders. But so far it hasn't convinced enough of them to accept 40 cents for every dollar of debt still owed.

More state aid is probably on the way. But ``Belfield is not going to get enough money from the state to bail it out,'' says Gov. George Sinner (D) in an interview.

The city's financial condition has affected the community's spirit.

``We need some optimism,'' says Tom Franklin, principal of the public elementary school.

People here still support specific short-term goals. They donate time and money for school events, Mr. Franklin says. This summer, the city reopened its pool for the first time in four years because two park board members sparked a fund-raising drive that attracted $40,000 in donations and government money.

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No one has yet sparked that kind of enthusiasm for the city itself. ``Nobody commits themselves,'' says Georgette Dorval, secretary of the Belfield Area Chamber of Commerce. Only a handful of people volunteer to support events, such as the annual Harvest Hoedown held in August, she says. But ``the day of the hoedown, we have got help crawling out of the woodwork.''

City leaders offer various reasons for the lack of volunteers: Belfield has a lot of senior citizens, who may be less active in the community; people don't see a future for their city; or they are waiting for something from the outside to come to their rescue.

``They look at it historically,'' says C.C. Thompson, who owns the local hardware store. Belfield boomed in the early 20th century, when homesteaders followed the railroad out to western North Dakota. By 1919, the boom was gone and the city didn't flourish again until 1978, when high oil prices brought oil drilling and related construction to the area. The city was swamped with newcomers.

``We had people living in tents because there was no housing,'' recalls City Auditor Tammy Schroeder. But after Belfield passed four bond issues to finance new sewer and water lines, paved roads, curbs, and gutters in the early 1980s, the bubble burst. People, businesses, and developers left town; the new roads led to nothing except empty lots and a few houses.

Even special tax assessments couldn't cover the debt. After March 1987, Belfield's funds were so low that it stopped paying its bondholders and considered filing for bankruptcy.

This would have been an unusual measure. Despite the well-publicized woes of New York City and Cleveland in the 1970s, municipal bankruptcy is actually very rare in the United States, says James Spiotto, a Chicago attorney and bankruptcy specialist. Since 1981, only six municipalities have filed for bankruptcy and most of those were dismissed or settled out of court, he says.

There are some hopeful signs in Belfield. All three houses on an otherwise empty development are occupied for the first time. There's even a shortage of rental housing, says Helen Lindbo of the area Chamber of Commerce.

``This is the village that could make stone soup,'' says Rosemary Demamiow, an artist who has set up shop in one of the empty storefronts downtown. She refers to a children's story in which villagers make great soup as each donates a carrot or potato.

Adds Tom Hallowell, the new pastor at the Belfield Lutheran Church: ``We don't necessarily have to have ... so many financial successes. I think that if we have a spirit of hope, that can transcend the difficult situation.''

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