MMM new Town Manager, Council forgives $900,000 loan
Upon conclusion of a closed session item immediately following Mammoth Lakes Town Council meeting Wednesday evening, Mayor Matthew Lehman announced that lawmakers “accepted the resignation of Town Manager Dave Wilbrecht, effective Feb. 13.”
Council then appointed current Assistant Town Manager Marianna Marysheva-Martinez (MMM) as the new Town Manager, effective the same day.
MMM will serve as the Town Manager under the same employment contract she currently has as the Assistant Town Manager. That contract is valid until July 2014.
Lehman said he could not disclose the motivation behind the resignation, due to the confidential nature of personnel issues, but sources confirm that Wilbrecht would receive a severance, reportedly $150,000.
According to the Town, Wilbrecht, who took over as Town Manager in April 2011 after the departure of Rob Clark, has been on “leave,” but the Town could not say what kind of leave it is, or when or indeed if he is expected back. Lehman added that during the discussions, MMM said she was agreeable and ready to take on the position.
A loan that really wasn’t
Council also voted to forgive a $900,000 “loan” to Mammoth Lakes Housing, though MLH Director Pam Hennarty said all along she didn’t consider the funds a “loan.” The money was originally Transient Occupancy Tax-generated Measure A dollars, which are dedicated to housing, and were used to first finance Meridian Court and later reinvested in Aspen Village.
“Why would we consider writing off a loan, given our financial shape?” Councilmember Michael Raimondo queried.
Hennarty replied that in 2006, the then Council adopted Resolution 06-38, which allowed the Town Manager to convert the loan to a grant. She has further wondered why that action wasn’t taken initially, since as she put it, “The loan, quite frankly, was never intended to be repaid.” According to Hennarty, the funds were set up under the guise of a loan to circumvent federal prevailing wage conditions for such construction, and attract more contractors who could pay even higher wages that were the standard, especially in Mammoth Lakes, at that time, during the height of the building boom.
“We used the [money] as equity, got a loan and built the units,” Hennarty explained. “The plan was to keep reinvesting, but Aspen Village got retooled a couple of times, and we finally got started selling them in 2008, about 15 minutes before the housing market crashed.” After that, she noted, the resulting decrease in value and drop in prices plagued the project and left MLH managing a deficit.
Lehman was unconvinced, as was Raimondo, pointing out that the Town is a co-signer of other loans, and not in the business of forgiving all of them. Council has, however, previously written off a $3 million dollar loan to the airport, taken from the Reserve for Economic Uncertainty.
Councilmember Rick Wood also cited the ’06 resolution, and insisted that the subsidy money is not coming from the General Fund. “The ‘loan’ is nothing more than a fiction, made at a time [the height of the building boom] when actual wages were higher than the federal prevailing wage,” he said. MLH is, he added, funded by the Town with Measure A dollars, and repaying a “loan” doesn’t make sense, unless the Council’s idea is to route that money into the General Fund, which is technically not an allowed use of Measure A funds.
Wood made it clear that Council has, “in its infinite wisdom,” previously diverted some Measure A funds to repay other, non-housing related loans. “If, however, it’s to be used for future housing, I say we should leave it where it is,” he stated.
According to the Town Finance Department’s Cyndi Myrold, since it was enacted 2002, Measure A has taken in $8.6 million including $800,000 in the current budget year. MLH receives about $325,000 in Measure A funding annually. The rest is put towards other housing-related expenses, such as third-party oversight on completed projects, staff time spent on housing and roughly $290,000 in debt service on land owned by MLH.
Once those debts are paid, sometime this year or by 2014, discussions have taken place as to looking at diverting that amount into the General Fund for other uses as well.
Lehman suggested selling some of MLH’s assets, but Wood illustrated the circular nature of the funds, saying that MLH’s assets were purchased with housing funding, again not using General Fund subsidies.
Councilmember Jo Bacon was satisfied with the explanation, pleased that the Town got two projects for the $900,000. Another $800,000 in two loans to be repaid to the state for downpayment assistance is to be fronted by the Town, and separate from the $900,000 in question. Council split the vote 3-2, with Lehman and Raimondo dissenting.