On December 30th, the judges of the Third District Court of Appeals ruled against Mammoth Lakes in the Hot Creek Development Case. The court’s 62-page decision describes a series of events in which Mammoth officials failed to live up to their word, neglected the law, breached the development agreement and used the FAA grant fund rules to try to get out of their deal with Hot Creek. The court unanimously found against Mammoth and upheld the $30 million judgment, plus $2.36 million in attorneys’ fees for the plaintiffs. In so many words, the Appeals Court judges said that the Town chose to go after FAA funding of millions instead of to live up to its agreement with Hot Creek.
The judges painted a picture of Town of Mammoth officials as people who courted and made a deal with Hot Creek for airport improvements and a hotel/condo then decided in the next five years, as the economy rose, that they wanted to expand the airport with FAA money. The FAA objected to the hotel and the Town, the judges said, breached their contract with Hot Creek.
The court took fewer than ten days to decide after oral arguments on the appeal December 20th. Even though Town lawyers felt somewhat more optimistic in this re-argument of the appeal, their hopes were misplaced. The judges stated flatly that none of Mammoth’s arguments had merit. The court decision says the Town changed its priorities after signing the development agreement in 1997 from hotel development to expanded air service at the airport with use of FAA grant funds. Town officials had said that FAA grant rules objected to aspects of the Hot Creek project. The court said the Town didn’t have to take FAA funds. The judges portrayed Mammoth as a Town that no longer wanted the Hot Creek project and wanted millions in FAA grants instead.
The decision says plainly, “The Town sought help from the FAA to eliminate the developer’s ability to build the hotel/ condominium project.” The court decision says that Hot Creek had delivered its part of the development agreement, including more than $15 million in airport improvements, and that the Town failed to live up to its side of the deal and even tried to use the FAA to help them get rid of the Hot Creek hotel/ condo project.
The court cited emails from previous Deputy Town Attorney Charles Long to the FAA and from current Town Manager Rob Clark to the FAA and to Town staff. The court said the emails discussed ways of getting rid of Hot Creek while on the outside the Town continued to lead Hot Creek developers along.
The judges said before the Town signed the Development Agreement, Airport Manager Bill Manning had learned that the FAA had concerns about the hotel/condo project. The court decision quoted Manning as saying he believed the faxed notes from the FAA were a “ridiculous” form of communication, unlike normal correspondence, and he didn’t respond. The Town, according to the judges, did not inform developer Terry Ballas of any FAA concerns about his project.
Town Manager Clark’s 2005 emails to staff were quoted by the Court as saying Clark wanted the staff to look for “alternatives to eliminate the Hot Creek option.” The decision also says that in 2006, Clark and the Town Council engaged in many closed sessions on the Hot Creek issues.
Town of Mammoth officials have not yet commented on this development. Earlier discussions pointed to possibilities of going to the Supreme Court or to acceptance of the $30 million judgment which could mean municipal bankruptcy. Read the entire decision at http://www.courtinfo.ca.gov/cgi-bin/opinions.cgi?Courts=C.