MLLA wins court writ, makes public settlement offer

court

Attorneys for MLLA and Town of Mammoth Lakes spoke over phones in a Mammoth court room to argue over issuance of a writ to compel Mammoth to pay its debt.

In a startling turn of events, Mammoth Lakes Land Acquisition won a writ in court Friday to force the Town of Mammoth to pay its $42 million debt and then MLLA sent a letter to the Town with an offer of settlement. Jay Becker of MLLA emailed a copy of the letter to the Sierra Wave. (See entire letter below.)

The settlement would require the Town to make an initial payment of $2 million.  MLLA would then accept payment of the balance over 30 years with 4.25% interest if structured as a tax-free bond or 5.6% interest if taxable. The Town would have to pay roughly $2.8 million per year for 30 years.

MLLA would also consider a deferral mechanism for principal payments in times of unusually low snowfall.  Transient Occupancy Taxes would serve as security for the debt.  Read the entire letter on our website, www.sierrawave.net.

The letter is written between lawyers for the two sides.  The MLLA lawyer writes that the company declines to participate in mediation because the Town has “studiously avoided accepting any responsibility for its contractual obligations to MLLA.”  The lawyers says basically that mediation will just be another step to delay the end game.

MLLA expresses concern about including other parties in any mediation with them.  They also say it’s time to “open the process to all the constituents in the town. MLLA says they’re willing to negotiate if it is done in good faith.

The letter goes on to say that MLLA understands both that the Town can not pay nearly $43 million in cash nor annual payments that would cut off essential services to citizens.  However, MLLA’s lawyer does note that since the Town has a “very significant and undisputed obligation to MLLA, it is reasonable for MLLA to expect the town to do two things.”  Those two things are to make a good faith effort to establish base-line expenses for essential services and to explore ways to develop new sources of revenues.

The year-long effort to do this, MLLA says, shows that the Town has “substantial undisputed discretionary spending.”  The letter says that the Town has taken no substantive steps to satisfy the judgment.  The MLLA lawyer does admit that poor snow conditions this year hurt the Town’s financial condition.  Even so, MLLA sees discretionary spending and revenue and ways to secure a bond to pay off the debt.

Then the lawyer lays out a settlement offer.  The current total debt, he says, equals $42,746,754.70.  The settlement agreement would have to be finalized by April 30th. The details are as we stated above – $2 million down and the rest paid out over 30 years at around $2.8 million per year.

The deal includes other terms, including agreement that the settlement  will not render the Town insolvent or unable to meet its obligations.

We have a call into Town Manager Dave Wilbrecht and await his response.  Before Jay Becker of MLLA sent us a copy of the settlement, we spoke to Wilbrecht and Marianna Marysheva-Martinez about the court issuance of the writ. At that time they both said Mammoth would pursue mediation.

LETTER FROM MLLA LAWYER TO TOWN OF MAMMOTH LAWYER:

March 23, 2012 
VIA E-MAIL AND FIRST CLASS MAIL 
Zack A. Clement 
Fuibright & Jaworski L.L.P. 
Fulbright Tower 
1301 McKinney 
Suite 5100 
Houston, TX 77010-3095 
zclement(fulbright.com

Re: Mammoth Lakes Land Acquisition, LLC v. Town of Mammoth Lakes

Dear Zack:

We have considered your proposal for mediation of the amounts owed to MLLA by the Town of 
Mammoth Lakes (“TOML”). Under the circumstances, we must decline to participate. For over 
15 years, as exhaustively enumerated in the appellate opinion affirming MLLA’s judgment, 
TOME has studiously avoided accepting any responsibility for its contractual obligations to 
MLLA. Based upon this history, the principals of MLLA believe that the mediation process will 
simply be another step to delay the final resolution of this claim.

Even more disturbing to us, recent statements to the media indicate that TOML sees mediation as a way to provide other parties the opportunity to “stare” at MLLA as opposed to its intended purpose — determining how the TOML 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.

This does not mean, however, that MLLA is unwilling to continue to negotiate this matter, if it is done in good faith.

MLLA understands both that TOML does not have the wherewithal to pay nearly $43,000,000 in cash nor can it commit to annual payments that will likely render it unable to provide essential services to its citizens. However, as TOME has a very significant and undisputed obligation to MLLA, it is reasonable for MLLA to expect the town to do two things: 1) make a good faith determination as to its base-line expenses to provide essential services to its citizens, and 2) diligently explore opportunities to develop new sources of revenues. These two factors will allow a determination, based on annual revenues, as to how much may be available to satisfy its debt to MLLA.

Indeed, the principals of MLLA have spent the past year working with the current town managers to jointly determine both the base-line expenses needed provide essential services and ascertain what additional sources of revenue may be reasonably available to TOML. That effort demonstrated that TOML had substantial undisputed discretionary spending. Unfortunately, TOML has completely disavowed this entire effort in its recent communications, Furthermore, despite numerous requests, neither TOML nor you have provided any evidence of substantive steps taken toward the goal of satisfying our judgment in any manner.

Clearly, the poor snow conditions during December 2011 have adversely affected TOML’s financial condition, but a review of historical financials makes it clear to us, based on the analysis performed, that under normal circumstance, TOML both incurs significant discretionary expenses beyond that necessary to provide essential services (even broadly defined) and that there are numerous avenues by which it might generate significant incremental revenue to fund either a bond that would be used to pay off our obligation or enter into a structured settlement agreement directly with MLLA. We find it telling that the town has studiously avoided even making the request of Judge Randall to allow this judgment to be paid over time as permitted by statute (and as proposed by MLLA). It is as if the town prefers to have the shock value of posturing that it cannot possibly pay because the judgment is “twice the entire annual budget of the Town.”

Although MLLA is skeptical that the Chapter 9 filing of the town is anything but inevitable (whether or not it qualifies), as a final effort to resume direct negotiations, I can advise you that MLLA is prepared to proceed with a settlement of the judgment on the terms set forth in this Letter of Intent (“LOI”). Please note that this LOI is for discussion purposes only, and neither party will be bound to any agreement regarding the resolution of the judgment in this matter until mutual execution of a fully negotiated and documented settlement agreement.

As of April 30, 2012, we calculate that the full amount of our judgment will be no less than $42,746,754.70, including the amount of the original jury verdict, fees, costs and interest. It may be paid as follows:

Effective Date: A written settlement agreement would be finalized no later than April 30, 2012 (the “Effective Date”).

Initial Payment: On the Effective Date, TOML will make an Initial Payment in the amount of Two Million Dollars ($2,000,000.00) to MLLA.

Balance Payment: MLLA will accept payment of the balance amortized over thirty years with interest at 4.25% if structured as a tax-free bond and 5.6% if taxable. There will be no interest accrual (except in the event of default) between the Effective Date and May 1, 2013 and monthly payments on the debt will commence on May 1, 2013. Under this structure, TOML will be required to make total annual payments of approximately $2.8MM per year on a taxable instrument or approximately $2.4MM on a tax-free bond issued to MLLA.

Deferral: In order to address times of economic distress occasioned by force majeure 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 TOML. Conversely, MLLA would seek to accelerate payments in the event the revenues for TOML exceed a separate targeted amount.

Security: Pledge of a specific income stream from TOT.

Marketability: TOML will use all reasonable efforts to create a debt structure with the attributes of a marketable municipal bond.

Upon the Effective Date and assuming MLLA’s judgment is satisfied pursuant to the terms set forth above, MLLA will convey to TOML its rights in the Hotel/Condo Lease, the purchase option at issue in this action, and the associated rights in the Development Agreement. Such conveyance will not include any other leases incorporated into the Development Agreement nor any rights in the Development Agreement associated with those other leases.

By executing this LOl, TOML represents and warrants that you and its Town Manager each have 
actual authority to enter into the LOl and related settlement agreement on behalf of TOML. 
TOML agrees that it will not assert in any proceeding the position that either you or its Town 
Manager lacked such authority.

By executing this LOl, TOML also represents and warrants that agreement to the terms set forth above will not render TOML insolvent or otherwise unable to meet its obligations as they come due. TOML agrees that it will not assert in any proceeding that such terms render TOML insolvent or unable to meet its obligations as they come due.

TOML understands and agrees that a settlement agreement memorializing the terms set forth above must include additional representations and warranties subject to approval by MLLA relating to the solvency and/or financial condition of TOML.

Very truly yours, 
Eric Winston 
Attorney for Mammoth Lakes Land Acquisition, LLC 
Accepted and Agreed to as of_____________ 2012:

By: _____________________ 
David Wilbrecht 
Town Manager for the Town of 
Mammoth Lakes

By: 
Attorney for the Town of Mammoth Lakes

cc: Dan Brockett (via e-mail) 
Mark Rosenthal (via e-mail) 
Jay Becker (via e-mail) 
Terrence Ballas (via e-mail)

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Draft and ordinance against corruption
Draft and ordinance against corruption
10 years ago

There are several types of political corruption that occur in local government. Some are more common than others, and some are more prevalent to local governments than to larger segments of government. Local governments may be more susceptible to corruption because interactions between private individuals and officials happen at greater… Read more »

A non-corrupt government
A non-corrupt government
10 years ago

Why doesn’t attorney Rick Wood draft a town ordinance making it 100% illegal for an elected official to accept one thin dime from a developer’s project?
Seems to me it would be a simple task to eliminate corruption in town once and for all.

Jay Wheaton
Jay Wheaton
10 years ago

How many of you complaining voted for anyone on the town council? If you did, go look in the mirror the person you see shares the blame. Give credit where it’s due.

fed up
fed up
10 years ago
Reply to  Jay Wheaton

Just because we voted for them does not mean it is our fault. These incumbents lie to us. The follow the lead of staff and town attorneys. We complain and complain and nothing happens. Some thought that Harvey and Bacon would stop the madness, NOT. We have no leverage on… Read more »

STEVEN
STEVEN
10 years ago
Reply to  fed up

I know! I know! Because gas is cheaper in Bishop?

Big Rick O'Brien
Big Rick O'Brien
10 years ago
Reply to  fed up

I don’t know about Bishop, but Mono County deputies have “take home” vehicles. They don’t have to go to a daily roll-call or briefing and sometimes have to respond to calls from their homes in the middle of the night. THAT’S why.

fed up
fed up
10 years ago

I don’t think that those issues of responding to calls and daily roll call apply. The MLPD’s jurisdiction is the town, airport and other annexed areas. I doubt they respond to calls on the way to work.

Rob
Rob
10 years ago
Reply to  fed up

I always have to laugh when someone says they have money budgeted for one thing or another, and when you get right down to it they’re so broke they don’t have a pot to piss in or a window to throw it out.

Reality Bites
Reality Bites
10 years ago
Reply to  fed up

Fed Up; Are you sure they are MLPD cars in Bishop? Not, CHP, BPD or Mono SD?

Marked Units?

STEVEN
STEVEN
10 years ago

Does anyone know where TOML has come up with the money for new police cars and paint jobs for what was acceptable looking Police cars. Are these people still spending our money like drunken sailors?

Dan Watson
Dan Watson
10 years ago
Reply to  STEVEN

Steven – The money for the new vehicles comes for a vehicle replacement fund created specifically for replacing unserviceable vehicles. When new vehicles are purchased, money is budgeted each year over several years to replace that vehicle when the time comes. That way money is being saved in a separate… Read more »

STEVEN
STEVEN
10 years ago
Reply to  Dan Watson

Yes it did answer my question. That makes good sense. They look nice and sparkly by the way. Have a nice day Chief.

Tourbillon
Tourbillon
10 years ago
Reply to  Dan Watson

From elsewhere on this site: “Also on Thursday, separate from the MLLA issue, the Council will look at borrowing $4.7 million from the Town’s vehicle replacement fund.” I think you’re about to discover just how fungible money is Chief, regardless of what account it’s in or what it has been… Read more »

fed up
fed up
10 years ago
Reply to  STEVEN

I think what is going on is depleting the bank. This way there is no money to go to MLLA.
I don’t think it is gonna work.

MJA
MJA
10 years ago

Rather than giving MLLA a dime I would tell them to go jump in the Mammoth/ (DWP?) Creek! What if anything can the court do to Mammoth anyway, fine it more, charge it with contempt and throw the town in jail, make Mammoth do community service, make license plates, the… Read more »

F.Y.I.
F.Y.I.
10 years ago

Dissolving Cities Michelle Wilde Anderson University of California, Berkeley School of Law Yale Law Journal, Vol. 121, p. 1364, 2012 UC Berkeley Public Law Research Paper No. 1919768 Abstract: During the twentieth century, 3,000 new cities took shape across America. Stucco subdivisions sprawled and law followed, enabling suburbs to adopt… Read more »

Big AL
Big AL
10 years ago
Reply to  F.Y.I.

He Trouble did you read this.

Trouble
Trouble
10 years ago
Reply to  Big AL

Big Al- you seem to enjoy egging me on. That’s o.k.. Anyway, in response to F.Y.I. ‘s comments above, my answer is mumbo jumbo hog wash. We called future Yale students Yuppies in my day. Now they call them President .

Big AL
Big AL
10 years ago
Reply to  Trouble

LOL Trouble .. that made me laugh .. yeah i hear ya

Trouble
Trouble
10 years ago
Reply to  Big AL

Big Al- I’m going to see if I can find a older subject to respond to you on. Have a great 4th.

Jon
Jon
10 years ago

The first question is: Does TOML even qualify for bankrupcy? It owns land (the Bell Parcel, Shady Rest) that can be sold to satisfy the judgement; it has the ability to ask its citizens to raise taxes to pay off a 20 or 30-year bond to satisfy the judgement (this… Read more »

Trouble
Trouble
10 years ago
Reply to  Jon

Jon-I don’t like to hear what you had to say, but sadly I think you are correct.

johndoeml
johndoeml
10 years ago
Reply to  Jon

At this point I’d prefer a judge running the town.

Why not?
Why not?
10 years ago

How about a $1.50 a lift ticket tax on those one-and-a-half million skiers MMSA likes to brag about every year — that is, until this year. With a little tweaking of the terms, such a tax would pay off the bond MLLA has proposed. And it would fall within MLLA’s… Read more »

Trouble
Trouble
10 years ago

I’ll support MLLA for 10%.

John
John
10 years ago

Does MLLA really expect any support by bringing their case out public? They represent everything wrong with this country.

Reality Bites
Reality Bites
10 years ago
Reply to  John

MLLA bought the lawsuit. They are not the victims of anything.

Tourbillon
Tourbillon
10 years ago
Reply to  Reality Bites

You’re correct, MLLA won in court. The real victims are the kids and grandkids who had nothing to do with this fiasco but will be paying for it in higher taxes and/or fewer government services for decades. This is why this is no conventional contract suit. You breach a private… Read more »

Jay Wheaton
Jay Wheaton
10 years ago

Only an idiot would not have seen this coming, opps! I think I just identified the town council. I moved last year because of the stupid decisions made by the voters of Mammoth.

Trouble
Trouble
10 years ago

2.8 million times 30 years. So now their willing to settle for 84 million over 30 years.The price just doubled. What a deal !

Reality Bites
Reality Bites
10 years ago

MLLA’s easy payment plan will only cost the town 86 million dollars. Such a deal!

Bill D
Bill D
10 years ago

Ms. Kessler’s use of the phrase “In a startling turn of events” is interesting. I would like to know what is so startling about a court ordering the loser of a civil case to finally take care of their legal obligation after years of trying to avoid it?

Benett Kessler
Benett Kessler
10 years ago
Reply to  Bill D

It was startling that MLLA immediately sent a letter, addressed to the Town, to local media offering a settlement. Benett Kessler

Jake
Jake
10 years ago

Thanks to Both the MLLA and the TOML for ruining are lives… I hope you all enjoy the money you greed mongers.

MLLA = Karma is going to get all of you. Trust me your all done

Time to pack up and leave!

Tourbillon
Tourbillon
10 years ago

Simple question. Can anyone answer?

Would a Chapter 9 bankruptcy wipe this debt out? Or would it simply force the Town into a drawn-out payment plan similar to what MLLA is proposing? Because if it’s the former, the decision should be a no-brainer.

Benett Kessler
Benett Kessler
10 years ago
Reply to  Tourbillon

It’s my understanding it would not wipe it out, but perhaps reduce the payback and elongate the time. I’ll be asking some of these questions of the Town manager next week. If there’s anything else anyone wants to know, let me know and I’ll ask. Benett Kessler

grover
grover
10 years ago
Reply to  Benett Kessler

I’d like to know what the incentive would be at this point not file Chapter 9? What services would be lost, and during the period how hand tied would the Town be for securing grants etc… What latitude would they have on financial decisions or would they have to go… Read more »

Wayne Deja
Wayne Deja
10 years ago
Reply to  Benett Kessler

Benett….Let us know when the first bus tours to the ghost town of Mammoth Lakes is going to take place.An abandoned “village” will be an intresting area to see…..

Reality Bites
Reality Bites
10 years ago
Reply to  Wayne Deja

Wayne, why do you hate the people in Mammoth so much?

Bill
Bill
10 years ago
Reply to  Reality Bites

Yeah I am SO SICK of hearing your drivel, Wayne. Dude, seriously it’s pretty lame. Stay in Lone Pine or wherever you live. Wasn’t there a stabbing there… better move it’s dangerous!!

Wayne Deja
Wayne Deja
10 years ago
Reply to  Wayne Deja

And I wonder if they will leave merchandise in the windows and on the racks like they did in Bodie when everyone up and left.

fed up
fed up
10 years ago
Reply to  Wayne Deja

Last one out turns out:the lights.!

Hee Hee……….

observer
observer
10 years ago
Reply to  Benett Kessler

Benett: I think you should ask Wilbrecht if it is MLLA’s offer to carry paper (and the terms attached thereto), or funded and unfunded mandates (the TOML’s employees, including perhaps Wilbrecht himself) which are the sticking point in resolving this matter. If it is the latter, then is the bankruptcy… Read more »

fed up
fed up
10 years ago
Reply to  Tourbillon

To your question on drawn-down. The term seems to be called Cram Down as per the Chapter 9 bankruptcy site on the Us bankruptcy website. The Q&A on the site claims the court does not have the power to demand cram down tactics. Meaning the Judgement cannot be reduced by… Read more »

truthbtold
truthbtold
10 years ago

Nice going Mr. Wood. Maybe you should “stare” into a mirror…

Ag
Ag
10 years ago
Reply to  truthbtold

Why is it that developers always have to screw up a good thing ? I live in Venice beach . Those developers are always screwing thing up for a profit. They do not live in Mammoth or Venice. They have no idea what it does to traffic or simply waiting… Read more »

Business as usual
Business as usual
10 years ago
Reply to  Ag

Developers must develop. Until every inch of available land is gone. Start worrying when developers find their way unto local government. One vote can turn a pristine parcel into another condo project. Until its illegal (and punishable) to do this, it won’t be long before Mammoth Lakes looks like any… Read more »