This paper analyzes processes of state restructuring at the scale of the local state and the city, exploring the social and political relationships generated through processes of reconstruction specifically in Elsies River, a formerly segregated 'coloured' neighborhood in Cape Town. While the relationship between Elsies River residents and the local state has been characterized by an obsessive focus on housing debt, I examine the ways in which antagonism over housing problems overlie a broader relational disjuncture between neighborhood and state political and social networks. The specificity of this case provides a lena onto the ways in which processes of state restructuring both contest and reinforce racial, economic, and place-based inequalities in South African cities. The paper concludes by using the complexities of local state-neighborhood relationships in the South African case to reflect on geographical theories of state-society relations on a conceptual level. Keywords: class, crime, housing, race, South Africa, state restructuring, urban transformation.