Many of you wonder how the Town created that little old $48.5 million problem down at Mammoth-Yosemite Airport. Well, if it takes a Village to raise a child, it takes more than one Village Idiot to breach a development agreement. The following article ran in our April 21 issue.
As Thursday (April 19) marked the 4th anniversary of that fateful day in Bridgeport when the Town of Mammoth Lakes lost the Hot Creek (airport litigation) case – and Jay Becker was seen later that night whooping it up at the Rhino in Bridgeport – perhaps it’s time to revisit the case and tell you what I know.
Or at least, tell you what some of the key players have told me.
As I contemplate where to start, I do think it’s important to make a few prefacing remarks.
1.) Context is critical. As former Mayor Kathy Cage recalled, “At that time [the Development Agreement with Hot Creek was negotiated] there was a story a week in the Fifty Center about the next, new fabulous thing. Big planes. Major airlines. Trader Joe’s.” In fact, she recalled a big reception at Terry Ballas’s hangar at the airport which was supposed to herald the arrival of Trader Joe’s.
So there was … some momentum, some pressure on Council to make things happen.
2.) We all recognize that memory is a trickster, and that folks tend to remember things in such a way as to place themselves in a favorable light. So I do believe it’s important to judge for yourself the credibility of each witness, and what they might have to lose or gain.
In 1997, Mammoth Lakes Town Council was comprised of Cage, John Eastman, Kirk Stapp, Byng Hunt and David Watson.
The Town had acquired the Mammoth Airport from the County a few years before. Then-Councilman Stapp said there was actually a ballot referendum on whether or not the Town should buy the Airport from the County. The referendum passed narrowly. The Town bought. At the time, Stapp recalls he and Eastman opposed the acquisition.
“It was a service the County should have provided the Town,” he said.
Stapp also vividly recalls one detail of the transaction – a photograph of the Mono County Board of Supervisors celebrating the transaction, Andrea Mead Lawrence grinning broadly while holding a bottle of champagne.
“They were happy to get rid of it,” sighed Stapp.
The airport was a money-loser, so when Terry Ballas, who’d had some experience as a Fixed-Based Operator in Santa Monica, came calling, Mammoth was all too eager to listen.
The issue, however, was that the Town flatly didn’t know what it was doing. As former Mayor and current Councilman Rick Wood said, “The first mistake was that we didn’t have a lawyer [at the time] who’d ever drafted a Development Agreement. We didn’t have a depth of experience in our legal counsel.”
As Stapp added, longtime Town Attorney Peter Tracy was famous for saying, “This isn’t my purview.”
“Then again, nothing’s his purview,” added Stapp.
Cage said the Town chose Councilmember Watson to negotiate the Development Agreement with Ballas because he was “a businessman.”
But every concern expressed by fellow Councilmembers about the D.A. would be dismissed by Watson as a “deal killer.”
And no one wanted to be the deal killer.
“Every time a new version of the D.A. came out, it wasn’t red-lined,” recalled Cage. “It was always just the new version. And then Kirk and I would go through it line by line to try and figure out what changes had been made.”
As Stapp recalled, Airport Manager Bill Manning was the only staff oversight on the contract. The only financial analysis done on the project was provided by Ballas himself, Stapp added.
Again, says Cage, one has to consider the times. “The big deal in the ‘90s was public/private partnerships. That you were supposed to run government like a business. Our role was to cooperate and work with Ballas. His success was our success. Unfortunately, the partnership mentality overwhelmed the regulatory mentality.”
Once the D.A. was signed, Ballas began assembling his plans. Former Town Manager Steve Julian, who served from 1999-2003, said he found Ballas to be “pretty straightforward.”
While Julian observed that some areas of the D.A. weren’t clear, “I didn’t think the D.A. was incompatible with commercial air service. We weren’t talking about building LAX for godsakes.”
“While I had a guy in planning (Bill Taylor) who had concerns about the hangar setbacks … we had tacit approval from the San Francisco office of the Federal Aviation Administration for commercial service. Then a new group came in [at the San Francisco office] with a different outlook.”
However, it wasn’t differences with the FAA which led to Julian’s ouster.
It was his differences with Mammoth Mountain Ski Area.
One difference, said Julian, was his insistence that the Town needed some sort of financial backing or guarantee from MMSA to support required investments and upgrades, particularly a terminal facility.
“They [MMSA] were pissed we wouldn’t pay for the whole thing,” said Julian.
“I enjoyed my time there,” Julian said of his stint in Mammoth. “I thought we were going along pretty good. That I got crossways with Mammoth Mountain had a lot to do with it [Julian’s ouster] … Everybody’s dependent on Mammoth Mountain [in that town]. Everyone wants to be on good terms [with MMSA]. It’s a company town.”
Julian added that he was just following orders. “If you ask me to take a hard position, don’t expect me to deliver soft. A lot of times, Council expected miracles. There’s only one miracle worker I know, and we just celebrated his resurrection.”
Sheet: Did Rusty Gregory pull strings to get you fired?
Julian: Yeah. It was clear the Mountain wanted to take over the deal.
When asked what he thought about the Town’s defeat in the airport litigation, Julian simply said, “I feel strongly that if you make an agreement, live up to it, and if you’re not gonna live up to it, renegotiate.”
“I’m the one who got Steve Julian fired,” said Tony Barrett (Mammoth Councilman from 2002-2006).
As Barrett explained, when he was first seated on Council, he thought Julian was a strong manager. But then, Julian bought a ranch out in Hammill Valley and Barrett felt he became disengaged, began telecommuting more. “The undercurrent from staff was that they were dissatisfied and Steve was weak,” said Barrett.
At the time, Julian was working with Ballas and Manning on the airport, and Barrett said the perception was that Julian wanted to throw over the FAA and work with Ballas.
“Rusty Gregory wanted Steve Julian fired … and tasked me with it [the job]. He knew my doubts about Julian and fed on that. Wood’s [Rick] thing was, ‘Well, if we get rid of Julian, who do we install in his place?’”
Barrett said Gregory gave him Charlie Long’s business card. Barrett then passed the card onto Wood, not telling Wood exactly how he had acquired the card, and leaving it to Wood to call Long so as to make it Wood’s idea if Long was ultimately hired.
Approximately ten days later, Barrett maintains that a closed session was convened at Dan Wright’s office at the Summit Condominiums and that was the end of Julian.
When asked about the Julian firing, Rick Wood claimed responsibility (working with Kirk Stapp).
“He [Julian] had become buried in the minutiae of FAA demands,” said Wood. “He wasn’t at the office. He wasn’t responsive.”
Stapp described Julian as playing community development negotiator working with Ballas to cut a deal. “What deal we didn’t know. He was leading us around by the nose.”
“I had no idea what deal Steve and Terry were working on,” concurred Wood. “That just died after Steve’s firing. We’ll never know.”
“Obviously, Bill Manning was in the loop and knew of these negotiations,” said Stapp, “but he never told Council afterwards what the status of those negotiations was.”
Sheet: Did Bill Manning work for Town Council or Terry Ballas?
“Bill Manning was extremely forthcoming with everything I asked. If he didn’t know, he’d tell me he didn’t know. He was one of the more consistent players.”
One more anecdote. Stapp says a contributing factor to Julian losing his job was a sense that he didn’t always tell the truth. “There was a basketball hoop at the airport and every Councilmember had seen Manning shooting hoops down there. When asked about it, Julian denied it. As Rick said to me afterwards, ‘Why would he lie about something so petty?’”
Kathy Cage traces back the origins of the D.A. deal to a tangential figure to the story, a man named Dana Severy. Severy was the one who initially pitched the condo/hotel concept, which is how Juniper Springs Lodge was sold.
Wood agreed. “Ballas saw a development opportunity and took it. The selling point was T.O.T. [room tax].”
Barrett claims he, Gordon Alper and Gary Thompson went before Council in ‘97 to urge Council not to sign the D.A.
Barrett said his opposition was fueled by his knowledge of a similar situation in Huntington Beach, where a private airport got shut down by neighbors who didn’t like the noise and traffic.
Barrett said that once the FAA began to have second thoughts about Ballas’s proposed residential project at the airport, Wood and Gregory’s goal was to convince the FAA that timeshare condos are the same as a hotel. “The FAA never bought it,” said Barrett.
When Charlie Long took the reins, he was famous for saying, “What do you want to get done?” Barrett described him as a “fix-it” guy, and by being that guy, Long knew he would also assume a lot of the blame.
Long was interviewed for this story but declined to make any statements for the record.
According to Stapp, “Rusty and Charlie wanted to use the FAA as a hammer to eviscerate the D.A.”
“Long was out to get him [Ballas],” said Stapp. “Rusty was out to get him. And I was out of the loop being fed b.s.”
The irony, maintains Stapp, is that Ballas didn’t perform on the D.A. and if the Town hadn’t granted him various extensions, the D.A. could have been voided.
Rick Wood disputes this. Ballas performed, he said. “There were no breachable issues.”
During a closed session of Council during 2004, Long unveiled his plan to get rid of Ballas. His exact words were “Get rid of Hot Creek.”
“I was stunned,” said Stapp. “The rest of Council was, too. Rusty was mentioned as being supportive of this plan.”
Gregory acknowledges that the story is true. Long did tell Council to get rid of Hot Creek. But the original mandate didn’t come from Gregory; it came from the FAA’s Kate Lang. According to Gregory, he passed on what she said to Long, and Long in turn passed it onto Council.
Stapp said he objected. “We have a D.A. What are you doing?”
“At that moment, I decided Long had to go,” Stapp said. “I went to Rick’s office a few days later and said as much.”
Sheet: What was Rick Wood’s culpability, if any, in this saga?
Stapp: I think Rick was being played. I think we were all being played.
Sheet: Characterize Rick’s relationship with Rusty.
Stapp: I think they have a love/hate relationship, but it’s more on the love side.
Councilman John Eastman said the issue wasn’t so much Long’s determination to get rid of Hot Creek as the belligerence he displayed in doing so. In essence, Long’s belligerence short-circuited due process and exposed the Town.
By the time Skip Harvey took his seat on Council, it was 2004. As Barrett said, by that time, “we just pressed forward with the FAA.” The Town’s outside law firm based in San Francisco, Morrison and Foerster, assured the Town it held a strong legal position. “We always deferred to the experts. We’re not attorneys. We relied on what they said,” said Barrett.
Meanwhile, the Town’s own legal counsel sounded no alarms. According to Harvey, Peter Tracy continually reinforced that Hot Creek had not lived up to the terms of the D.A.
Sheet: Was Peter Tracy a voice of caution?
Harvey: Not at all.
It was also Harvey’s impression that Rick Wood was not pulling the strings. “It was my impression that Rusty was the ‘unblocker’ when things hit a snag in San Francisco with the FAA.”
Rusty Gregory would agree. “Rick Wood was not the driver behind this,” he said. “I’m not sure what decisions, if any, he could have made.”
In Harvey’s mind, “The whole thing started with the 757s. If we’d just looked at what we were and accepted it, we wouldn’t be in this position.”
He recalled one episode which occurred back in the spring of 2005. He and Gregory were out on the hill together for a morning ski and they’d ski a little ways, and stop, and Rusty would extol the virtues of the big planes, and Skip would tell him to bring in smaller planes, and then they’d ski a little bit more, big planes, little planes, more turns, lift.
As one person with intimate knowledge of the case explained, “There was nothing wrong with the D.A. It’s just that eight years later they decided they didn’t like it.”
Again, think context. 1996 was not a boom period in pre-Intrawest Mammoth. Council had had to make some budget cuts, there had been some staff layoffs and the airport just seemed like a giant, money-sucking albatross.
So Council was desperate to achieve a “net zero” solution. It didn’t care if it made any money on the deal; it was just sick of losing it. And remember, two Councilmen (Stapp and Eastman) were lukewarm at best about it. After all, they never wanted any part of the airport to begin with.
Meanwhile, Stapp characterized then-Town manager Tracy Fuller as in survival mode, Rusty as distracted at MMSA, and the Town gadflies as oblivious.
Ultimately, the Town and Mountain believed that the D.A. agreement was compatible with commercial air service. And as Rick Wood said, “Rusty gave his blessing to the deal. No doubt about it.”
And the infamous letter from the FAA sent nine days before the D.A. was signed? The letter, which pointed out various problems with the D.A., was sent to Manning. As Stapp said, “Council never saw it, and Manning’s explanation was that he gave it to Fuller.”
The Sheet tracked down former Town Manager Tracy Fuller this week and asked her whether or not Manning ever gave her the FAA letter.
“The first I found out about it was in reading The Sheet’s coverage of the trial back in 2008,” she said.
“I believe he [Manning] kept it from me because he knew I’d use it to stop the thing [D.A.].
That was an act of gross insubordination,” she concluded.
There were attempts to rectify the situation. Cage said that after she left Council, she urged every single Councilmember that the Town just needed to buy Ballas out. “They would not consider buying out something that we’d given away for free. It was an ego decision versus a business decision.” Cage mentioned Gordon Alper and Jeff Modoc as others who shared her view.
Barrett said he suggested moving Ballas’s development rights to the Bell Parcel in 2005 to resolve the situation.
Humorous aside: Barrett also said he was confronted by Ballas prior to one Council meeting about the airport situation. “Ballas looks an awful lot like Jim Vanko,” he recalled. “I couldn’t for the life of me figure out why Jim Vanko was talking to me about the airport.”
What some don’t realize is that Mammoth Mountain was alsop sued by Hot Creek at the same time the Town was being sued.
The charge? Tortious interference.
The definition Kirkner found from legal-dictionary.thefreedictionary.com:
Tortious interference. Encouraging a breach, infringing on another’s agreement, interfering with contract, interfering with contractual commitments, etc.
The charge was dismissed, or at least tabled, with the Mountain reaching a “tolling agreement” with Hot Creelk pending the outcome of the case against the Town.
A tolling agreement essentially “freezes the clock” so a plaintiff has the option of bringing a case at a future date.