Mammoth Lakes officials this week scrambled to find a response to Mammoth Lakes Land Acquisition, which last Friday offered terms of a 30-year settlement of its $42.7 million against the town.
Town Manager Dave Wilbrecht said that by mid-morning Monday, neither he nor town financial consultant Marianna Marysheva-Martinez had spoken with MLLA attorneys, nor their own.
Even so, the Town Council met in closed session Thursday afternoon, March 29 to weigh the situation.
“We’re not ready to answer,” Wilbrecht said. “We have to examine what our options are. Obviously we are exploring our options, and obviously we’re still interested in mediation.”
Last Friday, MLLA offered terms of a settlement. The terms are $2 million down now, with a payment of about $2.8 million a year for the next 30 years. MLLA also won a court order from presiding Judge Roger D. Randall to pay up.
Attorneys for MLLA, who disseminated the settlement offer among news media outlets, indicated they were not particularly interested in mediation.
“Based upon this history, the principals of MLLA believe that the mediation process will â€¨simply be another step to delay the final resolution of this claim,” wrote attorney Eric Winston.
“Even more disturbing to us, recent statements to the media indicate that the Town of Mammoth Lakes sees mediation as a way to provide other parties the opportunity to ‘stare’ at MLLA as opposed to its intended purpose — determining how the Town of Mammoth Lakes can fairly treat its creditors. More importantly, we believe that after a decade and a half of trying to resolve this matter behind closed doors with the town council and town managers, it is time to open the process to all the constituents in the town.”
Last November, the Mammoth Lakes Town Council approved a fiscal year budget of about $17 million. If the council were to accept the settlement offer, the council would have to find a way to carve $2 .8 million a year out of a budget—about 16.5 percent per year—that already is strained.
Wilbrecht indicated that the town is left with few options. One of them would be to declare bankruptcy. Under a new California law that went into effect on Jan. 1, both sides are mandated to enter into mediation.
So far, the town has yet to declare bankruptcy.
The terms of the settlement were delivered to Zach A. Clement of Fulbright & Jaworski L.L.P in Houston, Texas—the firm that is advising the town in the case.
This does not mean, however, that MLLA is unwilling to continue to negotiate this matter, if it is done in good faith, MLLA said in the letter.
“In order to address times of economic distress occasioned by conditions such as an unusually low snowfall, MLLA would also be willing to negotiate a deferral mechanism for principal payments (and possibly interest) predicated upon negotiated minimum targeted revenues for the Town of Mammoth Lakes.
“Conversely, MLLA would seek to accelerate payments in the event the revenues for the town exceed a separate targeted amount.”
As for security, both sides would agree to a pledge of a specific income stream from transient occupancy taxes.
Moreover, MLLA would require the town to use “all reasonable efforts to create a debt structure with the attributes of a marketable municipal bond.”
Wilbrecht said he and other town officials were taken by surprise that the settlement offer went public.
He said the town would not offer its response publically until it had its ducks in a row, so to speak, on addressing the settlement.