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Mammoth Lakes declares bankruptcy

post #1 of 8
Thread Starter 

Only a week after Mammoth Mtn Ski Area announced that it was not going to operate June Mtn this coming season, the Town of Mammoth Lakes is declaring bankruptcy. I have heard some nasty rumors about whether Bear Valley will be operating this coming season, as well! Any Mammoth locals have anything to say about this?

 

http://www.grindtv.com/outdoor/blog/34047/mammoth+lakes+famous+california+ski+town+files+for+bankruptcy/

 

"Mammoth Lakes, famous California ski town, files for bankruptcy By: Pete Thomas, GrindTV.com Mammoth Lakes is known for its world-class skiing and snowboarding, as well as the majestic Sierra Nevada wilderness that surrounds the remote California town. On Monday, however, Mammoth Lakes also became known for having filed for bankruptcy in the face of a $43-million breach-of-contract judgment brought against the town by a developer. "I wish this hadn't happened," Mammoth Lakes Mayor Matthew Lehman told the Mammoth Times. "But it's not the way the cards fell for us." Town officials stated in a news release that bankruptcy "is the only option that the Town is left with" because negotiations to mediate payment terms with Mammoth Lakes Land Acquisition failed before a court-mandated June 30 deadline. The Los Angeles Times reports that the town plans to ask the bankruptcy court to approve a 10-year payment plan of about $500,000 a year. That way it can assure operating with enough services to assure the safety of residents and tourists. (Mammoth Hospital and the Mammoth Community Water District are separate from the town and not affected.) Mammoth Lakes already was struggling economically. It had cut services and asked employees to endure pay reductions. Mammoth Mountain Ski Area in the spring laid off 75 full-time employees. Two weeks ago, Mammoth Mountain Ski Area announced it was closing June Mountain, a sister resort about 30 miles to the north, for economic reasons. The bankruptcy, however, stems from the breach-of-contract judgment. Mammoth Lakes in 1997 signed an agreement with Mammoth Lakes Land Acquisition that required the developer to make substantial improvements to Mammoth-Yosemite Airport's fixed-base operations. The developer, in turn, earned rights to develop a $400-million hotel project on 25 acres of airport land, with an option to purchase the property. The court agreed, however, that Mammoth Lakes did not keep its end of the agreement after discovering that the hotel project would interfere with Federal Aviation Administration policy and essentially disallow the expansion of the airport runway to accommodate large passenger jets. Mammoth Lakes, because of its remote Eastern Sierra location, has expanded airline service considerably over the last decade. The town is located in Mono County off U.S. 395, about 320 miles north of Los Angeles. It has 7,700 permanent residents. Mammoth Lakes will remain open for business and hopefully the famous ski area, which suffered largely because of a paltry snow season in 2011-12, will rebound with a big winter in 2012-13." -- Top image showing a snowboarder at Mammoth Mountain is courtesy of Peter Morning. Second image shows town of Mammoth Lakes

post #2 of 8

What were they thinking?   

 

Let's breach this contract, because we're going to get 757's full of people from the east coast, to come to our remote airport and we'll make a killing?

post #3 of 8

"The bankruptcy, however, stems from the breach-of-contract judgment. Mammoth Lakes in 1997 signed an agreement with Mammoth Lakes Land Acquisition that required the developer to make substantial improvements to Mammoth-Yosemite Airport's fixed-base operations. The developer, in turn, earned rights to develop a $400-million hotel project on 25 acres of airport land, with an option to purchase the property. The court agreed, however, that Mammoth Lakes did not keep its end of the agreement after discovering that the hotel project would interfere with Federal Aviation Administration policy and essentially disallow the expansion of the airport runway to accommodate large passenger jets"

 

 

Shred- . IMHO, niether side did their due-diligence. the result was that Mamouth was screwed either way.  Build the project and the big jets can't land, so the tourist dollars don't come in.  Don't build and get sued for a huge chunk of cash and hopefully the big jets come in and reap the tourists dollars.  The judgement amount was too much to swallow. the developer should have negotiated a settlement; now, more than likely they won't like this one if granted.  $500K per year is peanuts.... good move by Mammouth.

post #4 of 8

This has been looming for a while.  IIRC there was a thread about it last summer when they discussed filing bankruptcy  over a law suit and/or breach of contract.  

post #5 of 8
Quote:
Originally Posted by Finndog View Post

"The bankruptcy, however, stems from the breach-of-contract judgment. Mammoth Lakes in 1997 signed an agreement with Mammoth Lakes Land Acquisition that required the developer to make substantial improvements to Mammoth-Yosemite Airport's fixed-base operations. The developer, in turn, earned rights to develop a $400-million hotel project on 25 acres of airport land, with an option to purchase the property. The court agreed, however, that Mammoth Lakes did not keep its end of the agreement after discovering that the hotel project would interfere with Federal Aviation Administration policy and essentially disallow the expansion of the airport runway to accommodate large passenger jets"

 

 

Shred- . IMHO, niether side did their due-diligence. the result was that Mamouth was screwed either way.  Build the project and the big jets can't land, so the tourist dollars don't come in.  Don't build and get sued for a huge chunk of cash and hopefully the big jets come in and reap the tourists dollars.  The judgement amount was too much to swallow. the developer should have negotiated a settlement; now, more than likely they won't like this one if granted.  $500K per year is peanuts.... good move by Mammouth.

 

They were never going to get big jets, period!  It was a stupid idea and now the tax payers are on the hook.

post #6 of 8

gotcha!  so who made the money here other than the attorneys?

post #7 of 8
Quote:
Originally Posted by Finndog View Post

gotcha!  so who made the money here other than the attorneys?

 

The therapists who have clients that are guilt-ridden attorneys in the midst of an existential crisis.  .

post #8 of 8
Quote:
Originally Posted by Finndog View Post

gotcha!  so who made the money here other than the attorneys?

 

I suspect that lots of local businesses have made money they wouldn't have otherwise.  Larger planes land, more folk came to Mammoth than otherwise would've.  The folk who got the rotten end of the deal were the developers who funded the airport expansion.  The city didn't live up to their end of the bargain; hence the judgment against them.  I do wonder when all the folk became aware of the flawed assumptions in the deal -- did the city fail to inform the developers that they wouldn't be able to construct the hotel and lead them down the primrose path?  In any case, it's a mess.  It'll be interesting to see what the bankruptcy court decides.

 

The citizens of ML ought to be irritated with their officials.

 

Mike

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