NY Times: Mammoth Lakes, Calif., Faces Bankruptcy

[alp227]

It was a seemingly perfect day at this ski resort town high in the Sierra Nevada this week, one that could have redeemed the season’s poor snowfall under brighter circumstances. Families here on spring break were enjoying the slopes or shopping at the luxury outlet mall. Some stocked up at the Vons supermarket for dinner, while others braved the half-hour waits at the town’s popular restaurants.

But despite the appearance of prosperity, the government of Mammoth Lakes is considering bankruptcy because of its inability to pay a $43 million legal judgment in a development dispute dating back to 1997. After entering a mediation process under a new California law, the town now faces a 90-day deadline to reach an agreement with its creditors, raising doubts about the future of this longtime getaway for residents of San Francisco and Los Angeles.

Town officials say they hope that mediation will allow them to avoid filing for bankruptcy. But so far, the developer that won the lawsuit, Mammoth Lakes Land Acquisition, has refused to participate in the mediation process.

Now, amid rising anxiety and recriminations, this resort town, like other more modest municipalities across the nation, is facing sharp budget cuts. They could affect not only services to full-time residents, but also ones like free bus shuttles that cater to tourists.

full: http://www.nytimes.com/2012/04/14/us/mammoth-lakes-calif-faces-bankruptcy.html?pagewanted=all

[KamaAina]

1. Similar situation in Half Moon Bay

on the San Mateo coast south of SF. A developer wanted to build a subdivision on wetlands, and the town blocked him. So the developer went to court -- and won.

They have actually considered disincorporating and reverting to being part of unincorporated San Mateo County. Perhaps this new law might be a better solution.

http://fixpacifica.blogspot.com/2010/08/end-of-half-moon-bay.html

Between budget losses and lawsuit payments, Half Moon Bay's financials have become so dire that if a local sales tax measure doesn't pass this November, officials say they may have to disincorporate. ...

Dissolving Half Moon Bay -- handing the city's budget, operations and services to San Mateo County -- would be an absolute last resort, but the city may not have many other options left, City Councilman John Muller said....

City Manager Michael Dolder admits disincorporation is one of the options on the table now. The City Council already cut $900,000 from the current budget -- including half its employees -- and imposed furloughs on those who remain. Some of the cuts were needed to pay for the Beachwood lawsuit settlement, a $15 million burden the city will shoulder in bond payments for the next 20 years. Despite those efforts, the city will finish the current fiscal year with a deficit north of $500,000. And tourist dollars, the city's economic mainstay, aren't likely to flow in anytime soon.

This is the sort of thing that happens when developers' interests are placed ahead of those of the public.

[ProgressiveProfessor]

2. Disincorporating won't help

The county supervisors would then form an assessment district with the same boundaries as the former incorporated city and assess fees/taxes on the residents. Muncipal entities can not simply disband to avoid debts.

What can happen is property owners move to unincorporated areas of the county, lowering further the tax base.