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By NORIMITSU ONISHI

Published: January 27, 2007

\n \nThe place has gone bankrupt, as has its owner, this city on the northern island of Hokkaido. \nNo visitor could be seen the other day walking up the road, past the\nrobot museum, the building with stuffed animals, the one dedicated to\nfossils, the one on life in the 1950s — "We were poor but happy in\nthose days" — or the coal mine museum. During Japan's economic\nboom, Tokyo showered enormous subsidies on Yubari to build these huge\nthough poorly thought-out tourist attractions, which drew few visitors,\nran large deficits and saddled this city of 12,828 inhabitants with\nmore than $500 million in debt. At first it was a convenient\narrangement: the hinterlands prospered, politically connected\ncontractors had plenty of work and the government cemented the loyalty\nof rural voters. But the good times ended in the 1990s, and the\ngovernment slowly closed the financial spigots, leaving Yubari and\nother rural cities increasingly desperate. Yubari's plight has\ndrawn nationwide attention, in part because it has become a\nprecedent-setting test of wills between the city and the national\ngovernment. How closely will Tokyo — which has always bailed out\ncommunities and companies — hew to its new policy of weaning rural\nJapan from the central government? The evidence of growing\nhardship is hard to miss. Museums with little to exhibit, roads that\nlead nowhere and other white elephants litter the rural landscape, even\nas their upkeep drains local communities' shrinking resources. In fact,\nmunicipal finance experts say, other localities are in even worse\nfinancial shape than Yubari, but the day of reckoning has come here\nfirst.",1] ); //-->

Despite attractions like an amusement park built when Japan was booming and subsidies plentiful, Yubari has had little success at tourism.

The New York Times

The place has gone bankrupt, as has its owner, this city on the northern island of Hokkaido.

No visitor could be seen the other day walking up the road, past the robot museum, the building with stuffed animals, the one dedicated to fossils, the one on life in the 1950s — "We were poor but happy in those days" — or the coal mine museum.

During Japan's economic boom, Tokyo showered enormous subsidies on Yubari to build these huge though poorly thought-out tourist attractions, which drew few visitors, ran large deficits and saddled this city of 12,828 inhabitants with more than $500 million in debt.

At first it was a convenient arrangement: the hinterlands prospered, politically connected contractors had plenty of work and the government cemented the loyalty of rural voters. But the good times ended in the 1990s, and the government slowly closed the financial spigots, leaving Yubari and other rural cities increasingly desperate.

Yubari's plight has drawn nationwide attention, in part because it has become a precedent-setting test of wills between the city and the national government. How closely will Tokyo — which has always bailed out communities and companies — hew to its new policy of weaning rural Japan from the central government?

The evidence of growing hardship is hard to miss. Museums with little to exhibit, roads that lead nowhere and other white elephants litter the rural landscape, even as their upkeep drains local communities' shrinking resources. In fact, municipal finance experts say, other localities are in even worse financial shape than Yubari, but the day of reckoning has come here first.

As part of its plan to file for bankruptcy, place itself in the hands of Tokyo and repay its debts over 20 years, Yubari has put History Village and about 20 other tourist attractions up for sale. About half of the 300 municipal workers are leaving, and those who stay face salary cuts ranging from 30 percent to 70 percent.

The city's 11 schools will be consolidated into three or four; its hospital will become a clinic; its library, city hall branches and public baths will be shuttered. City bus discounts for the elderly will be reduced. Local taxes will rise. Already, snowfalls now have to total six inches, rather than four, before they are cleared.

No cost-cutting measure has been deemed too small. The toilet at the Yubari train station has been closed, forcing travelers to sneak into the adjoining hotel.

The imminent drop in the quality of life has led to recriminations and finger-pointing: at local politicians for their lack of foresight, at Tokyo for feeding the rural addiction to public works. So far the government has not budged at reports that Yubari's little old ladies will not be able to afford to ride the bus any longer. It has said it shares no "responsibility" for Yubari's troubles, and the internal affairs minister, Yoshihide Suga, has pressed for even deeper cuts.

Yubari's mayor, Kenji Goto, said, "There are many local governments besides Yubari that are in dire financial straits, so I guess Tokyo has to take a hard stance against us."

Tokyo's attitude has led to anger here that the central government is singling out Yubari as a warning to the countless other Yubaris across Japan. If the Yubaris can no longer count on the government to rescue them, the reasoning goes, they will start cutting costs on their own.

"It's Tokyo that handed us all this money, without saying a word, and now they're saying it was wrong," said Kazuko Kudo, 77, a longtime resident. "No one expected that all of a sudden they'd make an example out of us."

Once a prosperous coal mining town with a population that peaked at 120,000 in the 1960s, Yubari extends for 20 miles up a single road, flanked by mountains. To advertise a local film festival, the city has put billboards of classic movies, like "Gone With the Wind," on buildings throughout the city, adding color to the city's general grayness.

Yubari began trying to transform itself into a tourism destination in the 1980s as the mines closed. It received generous subsidies from Tokyo for years; its former six-term mayor, Tetsuji Nakata, was famous for winning projects from the central government.

Some tourists came during Japan's economic heyday in the 1980s, and the city also became famous for its expensive melons. Yubari continued building tourist sites even after the collapse of Japan's economic bubble, as the nation tried to spend its way to recovery during the 1990s.

But the tourist attractions drew few repeat visitors, and the city was falling into the red — even though city officials fudged accounting figures to mask budget deficits.

"I thought that was fishy," said Mie Kosugi, 60, who was shopping at a supermarket. "Whenever I'd pass by the tourist sites, I never felt there were that many visitors, and the maintenance costs alone amounted to a lot of money. So I wasn't surprised when they announced the truth, but I was shocked at the amount."

The reality was indeed dire: Yubari had $296 million in debts and $224 million in outstanding local government bonds. Its biggest employer was the municipal government, and 40 percent of the population was 65 or older. History Village, especially the robot museum, was now the object of widespread ridicule.

Mitsuo Okazaki, the city council leader now in his fourth term in office, said Yubari would have already become a ghost town had it not tried its hand at tourism.

"When we switched from coal mines to tourism, Tokyo kept coming at us with money to invest," Mr. Okazaki said. "So what we did was to accept their offer, and we kept building public works projects. But we were left with debts."

"I don't have any regrets, though we have to look back and reflect," he said. "Maybe we could have done things a little differently. For example, we could have built only the coal mine museum and made sure it attracted repeat visitors."

Mr. Okazaki said the biggest reason Yubari could no longer make its debt payments was simply that subsidies from Tokyo had fallen. As part of its plans to decentralize and cut waste, the Japanese government in recent years has given greater tax collecting authority to local governments and reduced subsidies.

For Japan, the most indebted government in the developed world, decentralization means lessening a financial burden it can no longer bear. But critics say it will merely widen the gap between thriving urban centers, like Tokyo and Nagoya, and a rural Japan with an increasing number of elderly residents and an outflow of young taxpayers.

Indeed, many in Yubari worry that the situation has become so grim that it will continue to drive away residents, especially the young.

Misao Yamamoto, 32, who was shopping at a convenience store with her 2-year-old son, said her neighbors had packed up and left, even though they had built a house recently. Her family is thinking of doing the same, since her husband has been laid off from History Village.

"My third-grade son watches TV and says he's fed up with how this place is about deficit this, deficit that," Mrs. Yamamoto said, adding that the older boy wanted to move to a neighboring city. "He says he's just fed up with Yubari."