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Income inequality is surging, and there are few countries where it is rising faster than the United States. The distance between rich and poor is greater in America than nearly all other developed countries, making the US a leader in a trend that economists warn has dire consequences. GlobalPost sets out on a reporting journey to get at the ‘ground truth’ of inequality through the lenses of education, race, immigration, health care, government, labor and natural resources. The hope is to hold a mirror up to the US to see how it compares to countries around the world.

After the housing boom, opportunity dries up in Fernley, Nevada

Once among the country's fastest-growing places, a town near the end of the Truckee River hit with economic drought.

Comparing the Divide: Fernley, Nevada and New Delhi, India struggle with distribution of resources. In both of these places, water access and quality are matters of life and death. Fernley and India also share a close Gini coefficient: 0.370 (Fernley) and 0.368 (India).

FERNLEY, Nevada — Evidence of the crash is everywhere in this high desert town.

It’s there on barren cul-de-sacs that jut off from the main commercial strip, a sharp contrast to a newly remodeled Starbucks, a highly prized Walmart and a sushi restaurant. And it’s there in the “Property Available” signs that litter a forlorn landscape. The glaring words “BANK OWNED” are stamped on many of the signs, a kind of scarlet letter of unpaid debts. In the worst-hit part of town, broken fences guard empty lots where nobody could afford to even start to build.

It began while most of the town was sleeping on an early Saturday morning in January 2008. A century-old irrigation levee gave way, unleashing flood waters that left hundreds of recently built homes in low-lying areas under several feet of water. The local Naval Air Base had to scramble helicopters to rescue stranded homeowners.

This is ‘big sky’ country, a historically dry plain ringed by mountains about 35 miles east of Reno. The residents here say the levee break marked the beginning of the end of a housing boom that had enticed thousands of eager buyers buoyed by historically low mortgage rates. Then before flood-damaged subdivisions could be fully repaired, Wall Street buckled under the weight of the national housing bubble and Fernley’s homeowners found themselves under water once again. Soon it had the highest foreclosure rate in America as lenders seized a full 25 percent of the town’s homes.

“That’s our constant battle. Water in Nevada, it’s gold.”
~Kate Rutan

Water was what brought the promise of new prosperity to Fernley, and it was what helped wash it all away. After the flood, this town of 20,000 was left with a deep divide between those who have managed to hang on and a new, desperate underclass that has started to move in. It is a scene straight out of Steinbeck, and it has made Fernley a metropolitan area with a Gini coefficient, the metric for income inequality, that is comparable to India — Fernley at .370 and India at .368. In both of these places, the element of water very often defines the quality of life and ends up being a force that parts the rich from the poor.

“Nature did what it was going to do,” said Jim Dees, 54, a truck driver turned day trader who moved to Fernley in the 1990s and owns higher-elevation property that was untouched by the flood.

“You can’t stop water,” he added.

Fernley’s extreme dependence on the Truckee River for agriculture, industry, sanitation and drinking water is a familiar story in the deserts of the American West. Because water from the Truckee, which originates with the picturesque Lake Tahoe, must be divided up among several big upstream users including the city of Reno, residents here — many with a libertarian skepticism of both Democrats and Republicans — keep a sharp eye on the complex economic and political ecosystem of water.

A fallen home auction sign near an unfinished housing development in Fernley, Nevada. The area flooded in 2008 after an irrigation levee broke.
(Kevin Grant/GlobalPost)

“We’re at the end of the road here, the end of the stream,” said Kate Rutan, office manager at the Truckee-Carson Irrigation District, which is responsible for maintaining the region’s irrigation system and was the target of multiple class-action lawsuits filed by flooded-out residents. “That’s our constant battle. Water in Nevada, it’s gold.”

Nevadans are a resilient bunch, quick to praise self-made success. But the housing boom briefly opened an express route to a better life for thousands of lower and middle class people, only to close it down just as many thought they’d arrived.

Jim and Diane Broullet, sipping drinks and playing electronic slot machines at Mary and Moe’s Wigwam Restaurant & Casino on a Friday night, know well the disappointment that accompanied the evaporation of their desert dream.

“We moved here when everything was high,” said Diane, her silver hair adorned with a Native American feather. “Now our house is worth half of what we paid. And we can’t leave because we own the house in full.”

The couple moved to Nevada six years ago from Arkansas, choosing Fernley because they couldn’t afford a home in Sparks, just east of Reno. In a place known for its legalized gambling, the Broullets’ real estate bet cost them big, including much of their retirement fund.