Under 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.”