The resolution of the Town of Mammoth Lakes $41 million debt continues to unfold under the radar. Officials have made little comment.
When asked about the Mammoth Lakes Land Acquisition talks, Mammoth Mayor Jo Bacon said, “There’s not much we can speak to. It’s all in closed session.” Asked about the big picture, Bacon said the Town is still sharing information with MLLA officials. “There are no significant developments,” said the Mayor. She said the Town has given MLLA all of the information they’v asked for and they are “digesting it.”
The Mayor referred us to Marianna Marysheva-Marinez, the former Interim Town Manager who has continued to be retained at $4,000 per week as a consultant to work on the debt issue and some other financial matters. She was not available for comment this week. One of the options open to the Town is municipal bankruptcy although officials have repeatedly said they do not want to go that route and neither does MLLA.
When earlier asked about the potential impacts that municipal bankruptcy might cause if Mammoth chooses that route, Martinez did provide Sierra Wave with an article from The Public Law Journal, written by David S. Kupetz of the law firm Sulmeyer Kupetz, which represents Mammoth Lakes. The article says that a municipality must be insolvent to be eligible for Chapter 9 relief. A Town would have to be willing to come up with a plan to adjust its debts. The debtor must negotiate with creditors in good faith, according to Kupetz.
The article says that the success of a Chapter 9 municipal bankruptcy relies on the debtor’s desire to effect a plan to adjust its debts and willingness to work with its creditors to achieve this goal. Kupetz writes that the risks imposed by code in municipal bankruptcy are minimal, but he does say, “The real dangers facing a municipality entering Chapter 9 are potential damage to reputation, bond ratings and public confidence.”
Meanwhile, in Sacramento a bill that would make it more difficult for local governments to file for bankruptcy has been put on hold. Employee unions have pushed this bill, fearful that local governments can change employment contracts and possibly even pension benefits as part of bankruptcy proceedings. The bill is currently stalled.