Mammoth Lakes reaches agreement with creditor it owes $43 million
The financially battered High Sierra town of Mammoth Lakes has reached a tentative settlement with a developer on a $43-million breach-of-contract judgment, officials said.
In a statement, town officials said Tuesday the settlement will address "various contract breaches by the town" asserted by developer Mammoth Lakes Land Acquisition, which had won a state court order requiring full payment by June 30.
Facing a judgment nearly three times the size of its annual budget, the resort town filed for bankruptcy June 2.
The terms of the settlement agreement will remain confidential until it is fully documented and executed by U.S. Bankruptcy Judge Elizabeth Perris.
The judgment was upheld by a state appellate court in December 2010, which criticized the resort town of 7,700 people for trying to back out of the agreement it signed in 1997 with the developer.
That agreement required the developer to make improvements to nearby Mammoth Yosemite Airport's fixed-base operations. In return, Mammoth Lakes Land Acquisition would receive rights to develop a $400-million Hot Creek hotel project on 25 acres at the airport and an option to buy the land.
The developer filed a lawsuit against the town after it refused to proceed with the hotel project until the FAA policy issues were resolved. Later, the court found the town had not lived up to its end of the bargain.
The town said "public meetings will commence to discuss how to finance the settlement" when final documentation is filed for court approval, which is expected within weeks.
-- Louis Sahagun
Photo: The town of Mammoth Lakes filed for bankruptcy in June because it faced a legal judgment nearly three times the size of its annual budget. Credit: Los Angeles Times