Settlement negotiations drag on

Resolution of Town’s $42 million debt still far from decided

“I’m stuck in Folsom Prison, and time keeps draggin’ on.” -Johnny Cash

Mammoth town officials, as well as the local community, could very well feel that they are in a prison similar to the one the Man in Black so famously sang of years ago. At this time last year, Mammoth was still digesting the news that the Court of Appeals of the State of California, Third Appellate District had denied the Town of Mammoth Lakes’ appeal in the Hot Creek litigation case. The announcement was delivered on Dec. 30, 2010. By mid-March 2011, the California Supreme Court had also denied the Town’s petition for appeal.

At the time of the Supreme Court’s decision, the Town’s Interim Town Manager, (now its Financial Consultant), Marianna Marysheva Martinez stated, “Unfortunately this was the last and highest level of appeal available, which means we have to deal with the judgment.” Marysheva-Martinez was confident that the Town would formulate a plan on how to deal with the judgment and the costs that accompany it.

“It is frustrating for all those involved, but we are going to deal with it,” she said.

Today, it’s still frustrating, especially for the community that is left in the dark on negotiations but ultimately has to deal with the consequences of the outcome.

This week, the Town Council met in closed session to continue to discuss yet another counter back to Mammoth Lakes Land Acquisition, LLC. Negotiations began last fall after MLLA had reviewed all of the Town’s finances. MLLA sent in the first settlement offer, which the Town promptly countered. Since then, counters have gone back and forth between the two entities.

Town Manager Dave Wilbrecht confirmed on Thursday morning that Marysheva Martinez was drafting the latest counter offer back to MLLA following Council’s Wednesday closed session discussions.

Town Councilman John Eastman told The Sheet on Wednesday before heading into closed session that while he would still categorize negotiations as friendly, it did not seem like they were getting any closer to settling. “We still seem far apart in my opinion,” Eastman said.

“For the Town it comes down to what we need to preserve to be a resort community,” Wilbrecht said. “MLLA believes that we have the capacity to cut a lot of services to finance the settlement, and they have every legal right to say that. We lost the judgment, there’s no debating that. We are, however, a resort town with specific needs and Council is trying to preserve those needs.”

Wilbrecht said that the top three items on the preservation list are safety, recreation and tourism.

“Tourism is our primary generator,” he added. “If that comes and goes then the town goes, too.”

Mark Rosenthal, a representative of Raleigh Enterprises, one of MLLA’s partners had “no comment” on the current state of negotiations.

Wilbrecht was unable to spell out the process for each potential outcome [settlement, mediation or bankruptcy] of the negotiations, but he did firmly state that filing for bankruptcy was not “throwing in the towel.”

“Bankruptcy is expensive,” he said. “And we would have to prove that the Town is insolvent to even be eligible. Bankruptcy would affect

all of the Town’s contracts, not just MLLA.”

On the other side of the coin, some community members have wondered whether or not Town staff that was present at the time of the Hot Creek breach of contract that led to the lawsuit in the first place would ever be held accountable. According to Wilbrecht and Town Attorney Andrew Morris, it’s doubtful.

“It would have to be criminal, which it’s not,” Morris said. “It’s not worth looking at even with the community’s frustrations of how we ended up where we are.”

Both Wilbrecht and Morris said that if the employee was acting in good faith (which Morris admitted is a subjetive determination) and made a mistake, the Town would defend them.

“If an employee was responsible for installing new playground equipment and they followed all the protocol to the best of their ability, but someone got injured at the playground, we wouldn’t prosecute the employee,” Wilbrecht said. “No one would want to work in government if they were going to be prosecuted for every mistake they made.”

Both men pointed to the situation in the City of Bell, Calif., as the only instance they were aware of where city employees were prosecuted for a wrongdoing. According to reports, the wrongdoings of that city’s employees and Council were clearly criminal.

In the immediate future, the Town will soon begin budget talks for the 2012/13 fiscal year. According to Wilbrecht, property taxes are down and the lack of snow this season means lower TOT, at least from the first part of the winter season. Coupled with the fact that the Town’s reserve is low means Council may be looking at budget cuts again this year.

“It probably won’t be as bad as last year [when the Town realized a more than $2 million shortfall], but we are pretty thin,” Wilbrecht said.

He expected budget discussions to begin in February.

The only silver lining in all of this, according to Wilbrecht is that at least negotiations with MLLA hadn’t started in the fall of 2010 before Town staff and Council knew they had the large budget shortfall.

“Can you imagine if we had been working on the settlement based on bad budget numbers?” he said.