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article imageCalifornia city, known for Olympic training, faces bankruptcy

article:322972:10::0
By Yukio Strachan     Apr 14, 2012 in Business
Crippled by a staggering legal judgment, a California town and resort area, a popular training destination for Olympic athletes, faces bankruptcy throwing the town's future into question.
"We have a major judgment against us," Assistant Town Manager Marianna Marysheva-Martinez said Thursday, to the Associated Press. "With the magnitude, it's almost unimaginable for us how we're going to deal with this judgment."
According to the New York Times, The Sierra Nevada ski resort town of Mammoth Lakes, which sits five hours north of L.A., lost a breach-of-contract lawsuit after it had tried to back out of a 1997 agreement with Mammoth Lakes Land Acquisition that gave a developer the right to develop a hotel and buy land in return for improving the local airport.
But the town backed out of the deal after the Federal Aviation Administration, which provided Mammoth Lakes with grants to improve the airport, objected to development nearby.
In turn, the developer sued in 2006 for breach of contract and was eventually awarded a $30 million judgment. The town fought that judgment but lost its final appeal to the California Supreme Court.
As a result of interest and legal fees, the tab has grown to $43 million — a figure more than twice the town's annual budget of $17 million, the Associated Press reported.
After entering a mediation process under a new California law, the Times writes, 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.
Mammoth Lakes, a town of about 8,200 residents, isn't the only local government in California taking advantage of the new state law that requires local governments to hire a third-party mediator to negotiate with creditors before declaring bankruptcy.
Stockton entered the mediation process in February from years of too much borrowing to finance a sports arena and other revitalization projects.
“Our leaders were dazzled by rosy projections and their desire to jump-start downtown revitalization projects,” said David Renison, president of the San Joaquin County Taxpayer’s Association, writes the Toronto Star. “We’re going to be paying the price for a long time.”
article:322972:10::0
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