Population Decline

As any left-behind community or shrinking city can tell you, population decline is terrible. People leave, population levels fall below the limit to support essential services (doctors offices, grocery stores), quality of life falls for those who remain, inducing more to leave. 

 But people often miss the financial half of this--when people leave, the debt doesn't. (And every municipality is loaded with debt, because city infrastructure is a massive capital investment that can't be funded through equity).  So when people leave, that debt burdens fewer people. So tax rates go up, so more people leave. And in desperation, the city start preying on those who remain for revenue--fees and fines. 

Stage three is abandonment--when you've got more houses than households, and more shops than businesses. That's when's truly go to bits, because that kind of blight attracts crime. Squatters and arson at best, and at worst, a malignant criminal underworld that exists as a society apart, sheltered among the downtrodden and wretched.