Author Topic: Mammoth Lake faces bankruptcy  (Read 2764 times)

Fredb

  • Guest
Mammoth Lake faces bankruptcy
« on: June 02, 2012, 10:00:42 AM »
Mammoth Lakes, Calif., Faces Bankruptcy Jennifer Emerling for The New York Times
A development deal involving the Mammoth Yosemite Airport in Mammoth Lakes, Calif., fell through, resulting in a costly legal judgment that might force the city to declare bankruptcy.
By NORIMITSU ONISHI
Published: April 13, 2012

 
MAMMOTH LAKES, Calif. — It was a seemingly perfect day at this ski resort town high in the Sierra Nevada this week, one that could have redeemed the season’s poor snowfall under brighter circumstances. Families here on spring break were enjoying the slopes or shopping at the luxury outlet mall. Some stocked up at the Vons supermarket for dinner, while others braved the half-hour waits at the town’s popular restaurants.

 Jennifer Emerling for The New York Times
Jo Bacon, the mayor of Mammoth Lakes, Calif., has prioritized keeping services up for tourists as the prospect of bankruptcy looms.
 The New York Times
But despite the appearance of prosperity, the government of Mammoth Lakes is considering bankruptcy because of its inability to pay a $43 million legal judgment in a development dispute dating back to 1997. After entering a mediation process under a new California law, the town now faces a 90-day deadline to reach an agreement with its creditors, raising doubts about the future of this longtime getaway for residents of San Francisco and Los Angeles.

Town officials say they hope that mediation will allow them to avoid filing for bankruptcy. But so far, the developer that won the lawsuit, Mammoth Lakes Land Acquisition, has refused to participate in the mediation process.

Now, amid rising anxiety and recriminations, this resort town, like other more modest municipalities across the nation, is facing sharp budget cuts. They could affect not only services to full-time residents, but also ones like free bus shuttles that cater to tourists.

“We’re afraid if the services drop too low, people will choose not to come, and then it becomes a downward spiral,” Jo Bacon, the mayor, said in an interview at the Java Joint, a cafe in a 1970s shopping mall that also houses the local government.

Mammoth Lakes, a town of about 8,200 residents and a budget of $17 million, has become the second municipality after Stockton to use a new state law that requires local governments to hire a third-party mediator to negotiate with creditors before declaring Chapter 9. The union-backed law made it harder for local governments to file for bankruptcy and was intended to protect public employees in cities with large work forces, like Stockton, which entered the mediation process in February.

In Mammoth Lakes’s case, its problems are rooted in the 1997 deal with Mammoth Lakes Land Acquisition. The town gave the developer the rights to build a hotel, residential and retail project near the local airport in exchange for making airport improvements. But the town backed out of the deal after the Federal Aviation Administration, which provided Mammoth Lakes with grants to improve the airport, objected to development nearby.

The developer sued in 2006 for breach of contract and was eventually awarded a $30 million judgment. The town exhausted its legal appeals last year, and the amount has grown to $43 million.

Meanwhile, in the past decade, other development projects here have met with mixed success. Many “condo-hotels,” in which a company manages a hotel with individually owned units, were left unsold or uncompleted. With growth plans unrealized, the town’s work force was cut to 70 from a peak of 130 about five years ago.

Like all ski resort towns, Mammoth also remained dependent on the weather: two winters of good snowfall — the ski season lasted until the Fourth of July last year — were followed by scant snow this winter.

Town officials declined to discuss details of the lawsuit. But residents blamed past officials and legal advisers, saying they failed to properly negotiate in 1997 in the first place.

John Walter, a leader of Advocates for Mammoth, a private organization focusing on planning, said the town did not “read the fine print” in signing a deal with the developer and mistakenly believed it was insured against the kind of problems that arose with the airport.

“A lot of people are bitter,” Mr. Walter said.

John Lemay, a Los Angeles resident who has owned a home here for 10 years, said, “It sounds like they didn’t cross their t’s and dot their i’s. They made a stupid mistake that’s now become a tragic mistake.”

“Someone is taking advantage of them who has the right to take advantage of them,” Mr. Lemay said of the developer. “It may be seen as greedy, but it’s turned into an incredible windfall for the developer.”

Most residents believe that given the fate of other projects here in the past decade, Mammoth Lakes Land Acquisition could end up making more money through this lawsuit than if it had been able to go through with the original project.

In a March 23 letter to the town from the developer’s lawyers, the company declined to negotiate as part of the new mediation procedure.

Mark Rosenthal, a manager at Mammoth Lakes Land Acquisition, said the company believed that the town had no alternative to filing for bankruptcy. “We just think that mediation will delay the inevitable,” he said in an interview.

The letter also reiterated the developer’s last offer to the town: an initial payment of $2 million, followed by annual payments of $2 million over 30 years. The developer, which released the letter to the local news media, said it was making it public to “open the process to all the constituents in the town.”

Matthew Lehman, a councilman, said that all negotiations had been behind closed doors until the letter’s publication. “My guess is they’re trying to use the press as a tool to create animosity and frustration within the community,” he said.

Mr. Rosenthal denied the accusation, saying that the letter did not violate any confidentiality agreement.

With the apparent deadlock in the mediation, residents are bracing themselves for cutbacks in services.

“I have a couple of young kids, and I’m worried about the schools,” said Dave Leonard, 44, the owner of a bookstore, the Booky Joint.

Dave Wilbrecht, the town manager, said big projects would most likely be delayed, including improvements to a new ice rink.

“The town would love to put a roof on that ice rink, and I think it will take some time before I think we can afford those kinds of things,” he said, adding that the town would try to avoid cuts to tourism-related services.

Still, a possible bankruptcy worried longtime visitors, including Alex Sexton, 20, who has been coming here from San Diego since he was 5 years old.

“It’s sad to hear it may go bankrupt,” he said in the middle of a break from skiing. “My dad’s had a time share here for 30 years, and one day I was hoping to inherit it.”


retired96

  • Eastern Sierra Legend
  • *****
  • Posts: 1020
    • View Profile
Re: Mammoth Lake faces bankruptcy
« Reply #1 on: June 02, 2012, 11:10:53 AM »
And if the 43 million debt isn't enough  Mammoth is being sued by the DWP for the water rights to Mammoth Creek. I have followed this case for a long time and all I can say is that the town had some idiots for leaders....mammoth will never get out of the hole over this huge judgement against them...

flyGirl

  • Guest
Re: Mammoth Lake faces bankruptcy
« Reply #2 on: June 02, 2012, 03:39:37 PM »
Hope they chased out the officials that let this happen.

beldingi

  • Rock Creek Guide
  • *****
  • Posts: 759
    • View Profile
    • Mateo Lab

retired96

  • Eastern Sierra Legend
  • *****
  • Posts: 1020
    • View Profile
Re: Mammoth Lake faces bankruptcy
« Reply #4 on: July 02, 2012, 04:28:54 PM »
One of the things I always thought was a huge mistake by Mammoth Lakes leaders,,, They pay their bear whisperer fellow 75,000 a year plus benefits to chase bears away from the community..
To me that is gross stupidity to pay someone that kind of money when the bear problem isn't a year around problem...Heck there a policeman in this state that don't make that much in a year.

Because of the poor leadership the residents will have to face some serious cutbacks in town service... The police dept has already been forced to lay off one officer and their overtime budget has almost been cut in half... But Mammoth Lakes can pay a town manager over 250,000 a year... No way can you justify that kind of money for a podunk town of about 5,000 residents..

Trev Dog

  • Rock Creek Local
  • ****
  • Posts: 449
    • View Profile
Re: Mammoth Lake faces bankruptcy
« Reply #5 on: July 02, 2012, 08:01:43 PM »
As usual Retired when it comes to common sense you hit the nail on the head. Our country has rellied too much on speculation and now we are paying for it. Beautiful sleepy town  try's to go big time and crashes. Hopefully our children will get it as our generation didn't.
GREED is short term prosperity not long term growth. The locals will somehow survive because they love their environment and greed and the people it brought will disappear in time. The good people in Mammoth and June lake will figure out how to get through this because this is where they choose to live.