Choices in Mammoth’s prelude to possible bankruptcy

mammothtownofficesUnder a new law that deals with municipal bankruptcy, the Town of Mammoth Lakes could declare a state of fiscal emergency and go directly to bankruptcy proceedings.  Mammoth has chosen the other alternative in that law – neutral evaluation and mediation with creditors.

Asked about the choice the Town of Mammoth has made, Assistant Town Manager Marianna Marysheva-Martinez said that Assembly Bill 506 says neutral evaluation of finances is a required precursor of bankruptcy.  She said, “It allows us to review financial issues and creditors.”

Martinez indicated that declaration of a fiscal emergency is premature.  She said that this kind of declaration would be appropriate if the Town were eager to declare bankruptcy.  She said the Town “wants to deal with creditors and mainly with MLLA.”

Martinez also said that even with the writ issued by the court demanding full payment to MLLA, the Town still has time – until June 30th to “hopefully reach a settlement with MLLA.”

AB506 says that declaration of a fiscal emergency would require findings that “the financial state of the local public entity jeopardizes the health, safety or well-being of the residents of the local public entity’s jurisdiction or service area absent bankruptcy protections.”

Asked if the Town of Mammoth would qualify for fiscal emergency status, Martinez said the $42 million outstanding debt would quality the Town if it has to be paid immediately.  This would be a threat to everyone, she said.  She called it a “possible hypothetical.”  The Assistant Town Manager said, “This is real but we hope MLLA will return to the table and settle on something we can pay.”

 

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13 Responses to Choices in Mammoth’s prelude to possible bankruptcy

  1. Observer April 14, 2012 at 10:17 am #

    Judging by the quotes from MMM, TOML continues to operate with the mindset that MLLA should be sympathetic and reasonable, and be a team player in accepting, as MMM is quoted as saying, “something we can pay.” That perspective should have faded away months ago, when MLLA went public with its demands and filed for the writ of mandate to be paid in full.

    Not only is MMM out of step with what MLLA wants, expects, and will eventually receive, she has the additional burden of trying to persuade employees to take less with the argument of mutual sacrifice from all parties, including MLLA. There are really two classes of creditors to be satisfied, MLLA (the “Class 1 creditor”) and the employees/retirees (the “Class 2 creditor”). As long as the second class waits for the first class “to blink”, progress is nothing but problematic.

    About six weeks ago it was being reported that TOML owed employees a 4.5% pay raise next year, which it was suggested needed to be accommodated in a settlement with MLLA. A week or two later it was reported that employees were being asked to accept a 10% pay cut. More recently, the talk was of a 13% shared sacrifice. Now we are being reminded that employees are due that 4.5% pay raise. I suspect employees are fixated on the idea that when MLLA accepts significantly less, there will be money available for salaries and benefits. It’s not only a mess, it’s a stalemate.

    What is to be done? IMHO, TOML needs to settle first with MLLA, so that the separate matter of the town’s structural financial crisis can be analyzed, debated, and resolved in a public forum, without the perceived option that MLLA will take less money, leaving TOML and its employees with more money. (Note: MLLA did not create the financial crisis, and they will not resolve it, either.) As I suggested in a post a several days ago, and will elaborate on here, to finance a settlement with MLLA the Town Council should immediately adopt a 5% amusement tax, which would put the burden on (mostly) out-of-town skiers, through the lift ticket surcharge, to pay off MLLA over 30 years. (And if there are any obstacles to imposing the tax on lift tickets, such as a need to annex the mountain into the town limits, or enter into a binding agreement with MMSA, get on it and get it done.) AFTER THAT, release the financial structural reform plan to the public and get TOML living within its means.

     
    • Ken Warner April 15, 2012 at 8:45 am #

      Thoughtful post but your ideas are probably not possible to implement. For example, the annexing of MMSA into the town. That sounds to me (what do I know) immensely complicated given that the land is public land held in (supposedly) public trust.

      As for the lift ticket surcharge (or tax) — here’s an excerpt from a 2008 Sheet article which is about the best description of the background of the causes of the suit —

      ————————-

      http://thesheetnews.com/wp-content/uploads/2011/03/April12.pdf

      But at the finish line, just as Ballas was getting ready to formally submit his second application in late 2003, [Community Development Director] Mike Vance left for Whistler and soon thereafter, Town Manager Steve Julian was fired.
      “We were at the one-foot line,” said Ballas.

      Ballas said a worried Bill Manning called because he was fearful he would be next. According to Ballas, Manning told him Julian was fired because “he locked horns with Rusty Gregory.”

      Manning thought part of it had to do with Julian’s support of a [lift] ticket tax.

      ——————–

      So, according to this article, part of the genesis of the law suit was the idea of a lift ticket tax in the first place.

      Disclaimer: I don’t have any answers and I’m not arguing with the poster I’m replying to.

       
      • Observer April 15, 2012 at 12:15 pm #

        Ken, thanks for your feedback.

        Observer’s parenthetical point wasn’t that annexation was necessarily required, but that the Town needs to move forward with whatever action is needed to institute an amusement tax that encompasses lift tickets. (No other serious source of cash comes immediately to mind.)

        As to your implied suggestion that Rusty is an obstacle to a lift ticket tax, Benett reported the following in a story posted 2/28/2012: “As for talk about a new lift ticket tax to help the Town, Gregory said there does need to be an income stream of some type to pay off the cash the Town will have to borrow to pay MLLA. Gregory called a possible lift tax ‘part of a portfolio’ to pay what is owed.”

        It is certainly in MMSA’s best interest to have a thriving town at the base of the mountain, and that will be more likely going forward with an influx of revenue, earmarked specifically to pay off the judgement. Obviously we don’t know what it would take to add an amusement tax/surcharge to lift tickets. Hopefully the TOML is pursuing this question, and working on implementing it ASAP.

         
        • Ken Warner April 15, 2012 at 4:29 pm #

          Creating yet another tax is a really hard sell. Trying to craft a tax that only targets “visitors” seems next to impossible. It would take some clever thinking and I don’t see a lot of clever lately.

          Here’s an idea that just now popped into my brain so take it for what it’s worth — what if MMSA (Starwood and Fortress) just bought MLLA? And then figured out how to recoup the money with their own lift ticket and package increase? I bet if they offered $15 million straight away, MLLA would jump at it like a dog for bacon.

          Disclaimer: I’m only sayin’….

           
        • F.Y.I. April 16, 2012 at 8:13 am #

          If all business interest were reporting their accurate sales and payroll taxes, there wouldn’t be a need for a recreation tax. It’s greedy and shortsighted to tax others to always pay our way.

          Tourist and second home owners already $upport this town, enough of soaking the very people we depend on to make our livings. Expecting them to also pay for the towns corrupted business practices is ludicrous.

          The town’s people need to consider a vote to dissolve the town government. An option the article doesn’t mention.

          If the town,airport,airlines, ski area and business interest can’t make it on their own merit$ with out taxpayers subsidies, they should be allowed to fail.

          This corporate socialism for the sake of business profits will never deliver a town that puts its people before profits! The current mentality is a recipe for disaster and is the very reason we are in this quandary

          We need to take control of our futures or nothing will ever change. The current movers and shakers are content with the current town structure as it insures their profits are the priority, even at the expense of its people quality of life. Take a look around, are we better off than before the carpetbaggers arrived?

          I see no way to make the needed changes other than eliminating the very structure of government that thrives under the current corrupt system as the best solution of all choices available.

          MLLA should get nothing, the town leaders / politicians are the ones who need to be unemployed to eliminate any future liability.

          The people need to insist on a government by the people and for the people. What we have is government that is all about the money and we will never satisfy those currently in charge need for greed!

           
          • Ken Warner April 16, 2012 at 9:56 am #

            I agree with your sentiments — mostly. We have a government by the people — but it is focused on business. It’s like an extension of the Chamber of Commerce. You make a giant leap from the current business oriented government to a community focused government (which I like) without telling us your idea of how to get there.

            And how to get there is where I fail to find a solution also. Money is a powerful influence in politics at all levels and how do we eliminate that influence? Ordinary people don’t have influence equivalent to the big money players in town like MMSA, ChadMar, and other developers most of whom are faceless and nameless.

            How do we get there from here?

             
          • Harry April 16, 2012 at 10:22 am #

            Unfortunatly the people of the town keep voting for the same people.

             
  2. Good Reporting April 14, 2012 at 10:35 am #

    NICE JOB!

    Thanks for keeping the Town of Mammoth informed.

     
  3. Ruddy April 14, 2012 at 3:17 pm #

    The MLLA has nothing invested in Mammoth Lakes. They purchased a lawsuit for a undisclosed amount and ran with it. They should be looked at as criminals. A hotel at the airport, WTF. Crippling a town for these criminals should not be an option.
    The first jury in this case wasn’t smart enough to see greed or realize that Mono County feeds of each other.
    MLLA should be taken to criminal court for embezzlement. Judge Randall is a moron.

     
    • Rob April 16, 2012 at 9:35 am #

      MLLA are very savvy business people, not criminals.

      The criminals and greedy are all the businesses in TOML that hire illegals and pay them under the table.

      You’re paying for it through so you call it what ever you want. Just write the check.

       
      • Rob April 16, 2012 at 2:13 pm #

        I can seem to spell though without adding that darn r.

        Either way, I’d rather have MLLA managing my money then TOML.

         
  4. enoughalready April 14, 2012 at 6:55 pm #

    tick, tock, tick, tock……..

     

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