The town of Mammoth Lakes, Calif., is home to Mammoth Mountain Ski Area. (photo: Mammoth Mountain)

California Ski Town to File for Bankruptcy

Mammoth Lakes, CA – Facing a $43 million judgment, the California ski resort town of Mammoth Lakes will move forward with filing for bankruptcy.

Leaders of the town voted on Monday to seek Chapter 9 bankruptcy protection.

“Bankruptcy, unfortunately, is the only option that the Town is left with, after its largest creditor, Mammoth Lakes Land Acquisition (MLLA) repeatedly refused to mediate its $43 million judgment against the Town, and obtained a State court order requiring payment of the full judgment by June 30, 2012,” town officials said in a statement released on Monday.

The town of Mammoth Lakes, Calif., is home to Mammoth Mountain Ski Area. (photo: Mammoth Mountain)
The town of Mammoth Lakes, Calif., is home to Mammoth Mountain Ski Area. (photo: Mammoth Mountain)

The town’s financial woes began in 1997 when its leaders struck a deal with MLLA in which the town agreed to make improvements to the local airport  to accommodate increased destination traffic via larger airliners landing on a lengthened runway, in exchange for the development rights to a nearby property. Difficulties ensued when the FAA raised concerns about the town’s proposed improvements and the town subsequently abandoned airport expansion plans. The developer sued the municipality for breach of  contract and won a $30 million judgment, which with interest now stands at $43 million.

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Attorneys for MLLA indicate that they offered to allow the town to pay off the judgment over 30 years. Additionally, they say that the company will fight the town’s eligibility to file for bankruptcy protection.

The town’s statement accuses MLLA of failing to attend statutorily mandated mediation to resolve their dispute. MLLA’s attorneys, on the other hand, accuse the town of proposing mediation merely to meet the requirement while intending to file for bankruptcy protection all along.

Town officials indicate that services will continue to be provided as usual throughout the bankruptcy proceedings.

The bankruptcy is just the latest financial blow to this community of nearly 8,000 permanent residents on the Eastern Sierra. In the past six months, Mammoth Lakes has spent over $300,000 in attorney’s fees to fight a lawsuit brought by the Los Angeles Department of Water and Power (DWP) that alleges that Mammoth Lakes is illegally drawing water from Mammoth Creek to supply its own water district, in violation of water rights owned by the DWP since the early 1900s. In the midst of a lean snow year, Mammoth Mountain laid off over 70 employees this past winter, a troubling development in a county where the unemployment rate hovers above 12 percent. In the town of Mammoth Lakes, where 40 percent of the service-oriented population is defined as low income, a recent survey showed that the median home price has fallen 40 percent and the medium condominium price has fallen 52 percent in just the past five years. And just last month, Mammoth Mountain Ski Area (MMSA) announced that it would close June Mountain ski area in the nearby town of June Lake, after losing money on the facility annually since MMSA took ownership of June Mountain in the mid 1980s and grandiose plans to ultimately connect the two ski resorts never came to fruition.

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