The fallout: Restructuring plan will gut Police Department
On Thursday, the tsunami debris from the proposed airport litigation settlement with MLLA (Mammoth Lakes Land Acquisition) finally reached Mammoth’s shores, and 13 more Town employees now face elimination, including seven police officers (one lieutenant, two sergeants and four patrolmen).
But first, let’s back up. The Town announced its deal with MLLA last Friday, after both weekly newspapers had come out. The basic terms: $48.5 million to be paid over 23 years to MLLA, and another $3.4 million to be paid to Terry Ballas over the next 30 years to finally solve all possible lingering legal entanglements from the infamous 1997 Hot Creek Development Agreement.
At Thursday night’s Special Town Council meeting in Suite Z, Bankruptcy attorneys Ken Klee and Michael Tuchin and Mediating Judge Elizabeth Perris (appearing via videoconference) explained to a standing-room audience why they believed the settlement deal was a good one for the Town.
But before that, they made sure to spend a proper amount of time fawning over their employers (Council), the judge and themselves.
Some choice samples: “Fortune smiled on this town when Elizabeth Perris was appointed [as mediator].” -Ken Klee.
“This settlement itself is a fantastic solution for this town.” -again, Ken Klee, who just happened to negotiate said settlement.
Tuchin characterized the process as “exhausting” and “grueling,” which is how I would feel if I were making $1 million a month publishing this paper. Instead, I listen to this crap and wonder why I didn’t go to law school.
Even Judge Perris got in on the act. Her phrase was “Herculean task.” She also took credit for making the recommendation which ultimately broke the stalemate and led to a settlement.
Do I hear a faint cry from the bleachers? Per-ris! Per-ris!
Imagine, all these egos on display and Rick Wood hadn’t even spoken yet.
Okay, okay … back to telling it straight – or maybe trying to read between the lines, because now we’re onto the editorial page.
From Michael Tuchin’s testimony, it appears as though the Town’s lowball offer in its initial bankruptcy plan (offering about ten cents on the dollar, or approximately $550,000/year for ten years), was not going to play in front of Bankruptcy Judge Thomas Holman, a real stickler whom Tuchin described as “wedded to due process.”
In a separate interview Wednesday afternoon, Town Manager Dave Wilbrecht told The Sheet that “We couldn’t read the Judge [Holman] well enough to know how it would’ve gone.”
Wilbrecht also said that Judge Perris saw two fairly serious flaws in the Town’s plan: 1.) CalPERS. 2.) She felt the Town had the money to pay.
According to Wilbrecht, CalPERS isn’t letting anyone off the hook (Stockton, San Bernardino, et. al.) because it’s leery of a domino effect. Let one entity wriggle out of its pension obligations and you’ll see a mad rush for the door. Wilbrecht suggested MLLA would’ve pulled CalPERS into the fight and we would’ve been even more outgunned.
As it was, the Town’s “burn rate” since declaring Chapter 9 has been about $1 million monthly, and it would’ve cost the Town another $2 to $5 million just to find out whether or not it was bankruptcy-eligible if it hadn’t settled.
Overall, Assistant Town Manager MMMartinez said the Town has spent $8.5 million on lawyers and professionals since the initial judgment was made against it in Mono County Superior Court in April 2008. She estimated we’ve spent $4 million since March of this year.
Prompting Paul Rudder to turn to me and deadpan “If they [Klee and Tuchin] do anything more to save the town money, we really will be bankrupt.”
Before public comment, each Town Councilmember had a say, each say a reflection on their personality. Eastman pointed to all the instances where Mammoth has dug in and pitched in to make itself a better community. As far as he’s concerned, we’ve done it [rallied] before and we’ll do it again.
Wood said the elephant in the room was based on two questions: 1.) How did this happen? 2.) Who’s to blame.
He then went into a long disavowal of his connection to anything, particularly the connection of that long and winding six-foot trunk stuck to his face.
He did, however, make sure to link his name to Mayor Matthew Lehman’s at every opportunity.
Lunch aside: I agree with Wood in that blame does little good and doesn’t move us forward. But even a half-ass “I could’ve done a few things differently” might be nice. You’re about to see 13 more people lose their jobs and the community’s about to lose Whitmore Pool and Park – a contemplated casualty in the draft restructuring plan. If pinning that tail on some donkey (and it’s just an analogy. Don’t be so thin-skinned. I’m not calling you an ass) will make ‘em feel better, be that donkey.
And from Geisel’s desk …
Several points and questions were raised during public comment on the Restructuring proposals, one of which was could Ballas come back and sue the Town again? Klee responded that the slate would be clean, and Ballas could only sue if there was a breach in the payment plan going forward. However, he also said later that if there was a shortfall in a payment, for example if the Town were only able to pay $1 million of one of its scheduled $2 million payments, a provision in the deal would mean Ballas could take the payment and the balance due would accrue at 7% interest until paid off.
John Wentworth suggested Council might want to consider priorities, such as whether it wants to pay off the settlement in 7 years or go the entire 23-year distance. Lehman agreed with that idea, noting that the interest is front-loaded, and it might be worth exploring what it might take to get rid of that early, in four years perhaps, and then start knocking down the principal.
Joe Mueller said he is concerned about cuts to the Police Department, but added that, “If we want things, we have to budget for them.” He also said that with 13% [T.O.T.] tax rates, the Town has enough of those, and he doesn’t favor anymore borrowing and then having taxpayers enact more measures to pay for it. Councilmember Wood agreed, saying he’s been of the position that taxing isn’t realistic, calling it a hindrance and not something Council wants to pursue.
John Walter cited the conspicuous absence of one of the airport debacle’s players, MMSA CEO Rusty Gregory. He asked if MMSA was aware of the settlement agreement and planned to participate. Lehman replied that Gregory and MMSA have been briefed on the settlement, but were not privilege to any of the negotiations.
“They’re learning about it the same as [the public] is,” he said. “We had to keep them in the dark about it the same as we had to keep the public in the dark.” He added that MMSA is not in favor of any imposed tax on lift tickets and the like. “They didn’t take that too well,” Lehman related. He did say MMSA indicated it MIGHT support a voluntary tax if were temporary, but didn’t elaborate on what sort of tax might warrant any consideration.
One of the most pointed observations came from John Vereuck. He criticized the “restructuring” as being little more than “cost-cutting,” pointing out that earlier in the Town’s existence, it ran with just 50 staff before ballooning to 130 employees at its peak five or six years ago. He also cautioned Council against talking about passing a tax. “No one’s got the stomach for that,” he said, garnering some applause for suggesting term limits on Council seats.
Dieter Fiebiger was worried about the 47% cut to the Police Department, but even more worried that he’d be 103 by the time the settlement is paid off! Meanwhile, after the meeting, MLPD Chief Dan Watson said he’s going to be trying to get his head around being 24% of the budget, but taking 47% of the cuts, and trying to come up with more ways to shore up both his staff and line item.
Wood indicated the Chapter 9 filing was good at least as a maneuver, one of the few moves the Town’s made during the past few years that’s worked. “The value of Chapter 9 was that it brought MLLA to the table,” he said. He also said he hopes that the soon-to-be-nullified DA would soon be used to attract industry [to the airport property] that’s suitable to the FAA … “and NOT housing.”
Before adjourning, Lehman apologized to the citizenry for the actions of Councils and staffs past. “Every time I drive by the airport, I wonder how we as a Town ended up owing $30 million on property that’s been unchanged since the beginning of time … with no tangible improvements, no structures,” he said in Council remarks. “It leaves me angry and frustrated. It’s a tough pill to swallow. I wanted the number to be a lot closer to zero.”
He concluded by wondering, “Is this legal justice, or a victory of sheer greed?”
The Town is scheduled to appear in Bankruptcy Court on Oct. 19 to seek approval to begin the process under which it would execute the terms of the settlement. Next step from there would be petitioning the court to modify the Writ of Mandate down from the previous amount of $43 million to the settlement amount of $29.5 million. From there, the Town would go before Judge Thomas Holman to have the Chapter 9 filing dismissed, which would likely occur sometime in November.
Council is expected to approve a final list of employee cuts and reductions by its regular meeting on Dec. 5 in order to allow sufficient time to implement layoffs.