Updated: Town of Mammoth files for Chapter 9 bankruptcy
Updated July 2, 12:36 p.m. Sheet reporter, Andy Geisel, attended the Special Town Council Meeting on July 2, and reported the following:
Prior to voting, Council opened the floor to public comment, but there were no takers for time at the podium.
“You can try and lead a horse to water, but there’s not much you can do if they just don’t want to drink,” noted Mayor Matthew Lehman. He went on to add that the resolution to authorize Chapter 9 was an “unfortunate, but the necessary first step to getting [the judgment] settled and done.”
Mammoth newest Town Councilmember Michael Raimondo said he thought the Chapter 9 vote was “a year overdue,” but agreed that it was a big, essential first step towards getting the judgment resolved and keeping the Town moving forward.
Now the heavy lifting falls to the Town Manager’s office, requiring Manager Dave Wilbrecht and Assistant Town Manager Marianna Marysheva-Martinez, who shepherded much of the mediation and budget balancing during the past several months, to prepare the petition, schedules, lists and any other papers required by the U.S. Bankruptcy Court/Eastern California District in Sacramento to consider.
Filing a Chapter 9 petition doesn’t necessarily guarantee that it will be accepted or approved by the court. Attorneys from the legal firm of Fulbright and Jaworski, which represented the Town’s interests during parts of the MLLA lawsuit and judgment, and the subsequent mediation process, indicated their confidence that the Town is “qualified under state and federal Chapter 9 requirements.”
Timing of the Chapter 9 petition filing is interesting, in that Mammoth Lakes joins the City of Stockton, Calif., as the second state municipality to file such a petition in the last two weeks. Last week, Stockton also authorized its city management to file for Chapter 9 protection, the largest U.S. municipality to do so, though its circumstances are somewhat different. According to a Wall Street Journal report, a three-month confidential mediation with creditors and unions ended in failure. Stockton’s unions opposed benefit changes deemed necessary, and creditors stood fast against giving up what they are due. –Geisel
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FOR IMMEDIATE RELEASE
TOWN OF MAMMOTH LAKES FILES FOR CHAPTER 9 BANKRUPTCY PROTECTION
Town of Mammoth Lakes, California, July 2, 2012 – At a special meeting on Monday, July 2, 2012, the Mammoth Lakes Town Council voted unanimously to authorize the filing of a petition for relief under Chapter 9 of the Bankruptcy Code in U.S. federal court. Bankruptcy, unfortunately, is the only option that the Town is left with, after its largest creditor, Mammoth Lakes Land Acquisition (MLLA) repeatedly refused to mediate its $43 million judgment against the Town, and obtained a State court order requiring payment of the full judgment by June 30, 2012.
In the past few months, Mammoth Lakes has struggled with two problems:
One – a lack of sufficient revenue to pay its current and anticipated obligations, as evidenced by a $2.7 million initial shortfall in its 2011-2012 fiscal year budget, balanced through painful measures in June 2011, an additional unanticipated shortfall of $0.9 million in the same 2011-2012 fiscal year that forced the Town to reduce its already low available cash, and a projected $2.8 million budget shortfall in its 2012-2013 fiscal year.
Two – a Writ of Mandate issued by a State Court ordering the Town pay a $43 million judgment owed to MLLA by June 30, 2012.
The Town has attempted to deal with both of these problems in a responsible fashion, cutting many services and asking its employees and the majority of its creditors and other parties in interest to take substantial cuts in payment. These negotiations took place in the context of the neutral evaluation process established by the California Government Code (the AB 506 mediation), and concluded on June 29, 2012. The neutral evaluation was conducted by the Hon. David Coar (Ret.), a very experienced and respected former Bankruptcy and U.S. District Court Judge selected by the participants.
The Town has already implemented the cuts it proposed during mediation, in effect breaching many existing contracts. However, based on agreements reached with many of its creditors, these contract breaches will be cured in new agreements, contingent upon either (a) a settlement with MLLA or (b) a Chapter 9 plan confirmation. The Town’s creditors and employees were willing to make their concessions as part of a global resolution of the Town’s financial challenges; their agreements were not made without reservations, their concessions are part of a global resolution that would allow the Town to move forward in a fiscally responsible manner.
As the Town acts in keeping with these agreements and as they are ultimately consummated, the Town will be able not only to overcome its structural fiscal issues, reflected in the annual budget shortfall, but also free up approximately $500,000 a year that can be used to pay its creditors, including MLLA, over the next 10 years, or to obtain a bond supported by that same payment stream, the proceeds of which will be paid to creditors, including MLLA.
Although invited on multiple occasions, MLLA refused to participate in the AB 506 mediation to discuss settlement or demonstrate to the mediator and the participating creditors that the Town can afford to pay more. As a result, a mediation that might have succeeded in avoiding a Chapter 9 case failed because a crucial party simply refused even to attend and discuss any issues it might have.
The Town will ask the bankruptcy court to process its Chapter 9 case efficiently and quickly. The Town has limited financial resources and cannot afford a long drawn-out case. If the case lasts too long, it will significantly reduce the Town’s available funds, necessarily reducing recoveries to the Town’s unsecured creditors.
While the Town proceeds with its Chapter 9 bankruptcy case, it will remain open for business as expected, with the support from other governmental agencies:
The Police and Fire Departments, along with other safety partners such as paramedics and Sheriff’s office, will provide high levels of response and care;
Road, parks, and airport maintenance services will continue as scheduled;
Town Office business hours and service deliver will continue as usual without interruption of services;
Community services and providers such as Mammoth Hospital, Mammoth Community Water District, and Mono County are separate from the Town and are not impacted. –Press release
The appeals court basically said that the Town committed fraud i.e. Town entered into a developer agreement that promised development at the airport, when at the same time the town had an agreement (probably recorded that ran with the land) with the FAA that said they could not deliver even though the developer put in between 17 and 19 million in improvements. Don’t be suprised if the judgment creditor objets to the Town’s Bankruptcy discharge of the debt and wins that as well! Then what? More of the council’s Mammoth Vision! Too bad the town did not sue their attorneys within one year of the decision. It’s too late now
Spot On Grant!
Why haven’t we seen or heard a peep from any of the town’s people ranting about fiscal irresponsibility regarding the Mammoth Lakes Police Chief and his current insane $300K plus per year salary??
Why hasn’t anyone in the TOML come forward at any of the past years Town Council Meetings and ask Skip and his band of Town Leaders, the same question?
The town is terminating people left and right, including two of Watson’s Officers, yet he retains his incredibly outlandish salary. Why haven’t any of you folks demanded an explanation for this and the many other totally inept waste of your money?
It is you the people here in Mammoth Lakes that do not question the obvious irresponsible fiscal decisions that have been made for the past ten or so years, that has allowed YOUR town to go down this road. You are to blame. No one else.
Unfortunately, it is probably too late in this madness to do anything. I agree with Grant, the Bankruptcy Court is going to see things for what they are and say no to Chapt 11. The feces will definitely hit the fan of insanity then.
Wake up Mammoth Lakes!
The law enforcement budget in mono county would be the highest percentage of local budgets for any mountain town budget in United States. The work they do is a fraud for the costs. Its really a absurd cost for a group of workers that do not even have college degrees.
300K for the chief, I think I will email him and ask how he sleeps at night. I am so sick of struggling only to here about payrolls like this… #crew the TOML.
I sent the following email to the whole town council:
“Members of the Mammoth Town Council will spend part of their Fourth of July in a special meeting to decide if they should vote to spend Measure U, or Utility Users tax in Mammoth to subsidize air service this fall from Los Angeles to Mammoth Lakes by Alaska Airlines. The Town would spend $400,000 of those tax funds.” sierrawave.net
Not one more dime of my tax money for the airport.
The airport is not mobility. It is a charter service for MMSA.
Your sneaky meeting and agenda is appalling. Are you people completely mad?
Ken Warner
Mammoth Lakes, CA 93546
Let them know how you feel.
Mayor
Matthew Lehman
matthew.lehman@verizon.net
Mayor Pro Tem
Rick Wood
rick@mammothlakeslaw.com
Michael Raimondo
oldnewyorkdeli@gmail.com
John Eastman
eastmanhs@uneedspeed.net
Jo Bacon
jbacon@ci.mammoth-lakes.ca.us
So Ken Warner:
Please do tell us all what this town would exist on if both MMSA and the Airport go away?
Where would the TOT and 90% of the revenue required to pay the bills for it function, come from?
Please do tell us.
The town has tried every spending plan possible, including spending $3+ million on a summer bike path, from Obama’s 2009 American Recovery and Reinvestment Act. I am sure that taxpayers from 49 other states are glad Federal Funds went to something so infrastructure-fruity!
In fact, the same thing happened in my area of Reno. If you drive up Mountain Rose Highway (431) up to the top of the pass between Truckee Meadows (valley containing Reno) and Lake Tahoe, right at the summit is a neat campground. Nothing much seemed wrong with the existing campground. But for two years it was closed as it was redeveloped by, you guessed it, ARRA 2009 Obama funds. This 8,900 foot elevation campground is only open three months/year.
Another infrastructure-fruity concoction!
Real infrastructure involves things like making I-99 in California more than bottle-neck two lanes per direction. Or putting a real I-70 across the Sierras, which would give Mammoth Lakes/Bishop and Fresno a real, permanent and inherently good infrastructure investment that pays good dividends 24/7 and 365/year.
But no, the liberals need to spend Federal borrowed dollars on campgrounds and bikeways at high elevations (Reno’s pass @ 8,900? and Mammoth Lakes above 8,000?) where snow covers everything and makes the recreation-only investment dormant half of each year! Brilliant!
This Spring, Mammoth Lakes was trying to fund a track facility?
Waiting for a Mammoth, Volcanic: Liberal Awakening
By Robert Winkler Burke
Book #9 of In That Day Teachings
http://www.inthatdayteachings.com
Liberal paradise – Bankrupt,
Mammoth egos can’t be stopped,
Volcanic pride must erupt,
Unending spending has flopped.
Mammoth Lakes,
First in line for Obama’s ARRA stimulus bikeway!
On the takes, (What’s three million if others: willin’?)
Forty-nine other states pay for summer hike way!
But what now is this?
Town of Mammoth Lakes can’t pay?
Bankruptcy bliss?
How can liberal spenders say nay?
Poor liberal town of High Sierra Mammoth Lakes,
Not big enough to hide (or really grub) like corrupt L.A.!
It must pay (oh, the rub!) dearly for its mistakes,
But will liberals ever learn? Will they? Who can say?
Maybe they’ll learn this time,
I really do not know!
But God can mystery-rhyme,
With active volcano.
More Tea Bagger inflammatory and incorrect rhetoric. Pin a liberal label on a bike path and then go off on a spittle punctuated rant.
In fact, the bike path’s final approval came during a Republican Presidency and a Republican Governorship. But don’t let facts get in the way of your conservadogma based reasoning.
http://www.mltpa.org/download/documents/file/179/Lake Mary Road Bike Path FAQ.pdf
Why is the Town of Mammoth Lakes doing this project?
These facilities are needed to provide non-motorized circulation and access to commercial, residential and recreational areas within and around the Town for both commuting and recreational purposes. Lake Mary Road was identified in the Mammoth Lakes Trail System Plan, adopted in May 1991, and in the General Bikeway Plan as an on-street bike route. Implementation of the General Bikeway Plan and the Mammoth Lakes Trail System Plan is also a recommendation of the 1994 Mono County Regional Transportation Plan.
Project History and Process
Preliminary engineering for the bike path started in 1998 with a Project Study Report that formed the basis for a funding request to the State Transportation Improvement Program. Funding was approved and subsequent environmental studies were started in 1999 and 2000 with a Draft Forest Service Environmental Assessment published in January of 2001. Public comment was incorporated into a Final Environmental Assessment published in September of 2001. A lengthy TOML and Forest Service review and approval process led to approval from the Federal Highway Administration of the Environmental Assessment in March of 2003. Detailed engineering drawings were started, however, the State budget crises in 2004 led to several years of funding delays. Construction funding was finally approved on February 1, 2007.