Their attorney told them a bad contract started the whole problem in 1997, the Bankruptcy mediator said the Town now has a good deal to resolve its debt and Mammoth officials talked about deep cuts in the police department and other Town departments and closure of Whitmore Pool to come up with the money for payments demanded by a settlement with the Mammoth Lakes Land Acquisition – a settlement in which Mammoth has to pay $2 million per year for 23 years.
A packed room at last night’s Town Council meeting mostly listened. Bankruptcy attorneys Michael Tuchin and Ken Klee explained the legal points of the somewhat complex deal that frees the Town from its troublesome development agreement but will change the face of government as the community lives up to its $2 million per year debt payments.
And it wasn’t cheap getting to this point. Assistant Town Manager Marianna Marysheva-Martinez said that since 2008 unti lthe present, Mammoth has spent 8.5 million on legal fees.
Perhaps the most dramatic presentation last night came via video-phone conference from Bankruptcy Judge Elizabeth Perris.
She was the appointed mediator for Mammoth and MLLA. The Judge spoke via a large screen behind town staff and lawyers. She told those in the room that the deal struck in mediation would save Mammoth Lakes “a lot of money. Bankruptcy is expensive,” she said. Judge Perris revealed that in the mediation process she finally made a recommendation for a fair settlement and both sides accepted it.
Judge Perris said she thinks the deal makes sense for Mammoth. Said the Judge, “It’s a 30% discount on a $43 million judgment.” Judge Perris also made it clear that bankruptcy is risky and that uncertainty will be eliminated. “There’s no reason,” she said, “to stay in bankruptcy.”
Reality hit home when Assistant Town Manager Martinez laid out the government restructuring plan to save enough money to pay $2 million a year to MLLA and other costs. She said the plan would cut 13 employees – 7 of those out of the Mammoth Lakes Police Department. She said there would be no cuts to Tourism, Housing and Transit. No money would be taken from any of the voter-approved tax measures. Martinez said there would be discussions with employee groups on proposed reductions. She described a phased process of public meetings and decisions, with the first cuts taking place January 1, 2013.
Deiter Fiebigger, long time Mammoth resident, stood up to complain about the cut of seven police officers. “It’s a reduction of 47%,” he said. Many wondered how the police could function with such a small force. Assistant Town Manager Martinez spoke of volunteers helping.
Martinez said other cuts would include employees in parks and road maintenance. The plan also calls for closure of Whitmore Pool and Park. Outsourcing of IT services and other services will be considered. Martinez said other options include re-zoning of the Bell-Shaped parcel for possible development.
Council members talked about not liking the deal, but wanting to move forward and to concentrate on the positive. At one point Tim Flynn of Mammoth asked about personal responsibility for the horrible debt. Town Attorney Andy Morris said that the Hot Creek Development Agreement was problematic. “This development agreement did not have language in it that is common and typical of DA’s that wold have protected the Town. It would have taken a couple of sentences or a paragraph,” he said. Morris said the agreement should have said “The Town is not liable for monetary damages. That is a mistake that was made when the dA was drafted.”