RECKONING AT MAMMOTH LAKES
PART I: THE DREAM
In July 2012, Mammoth Lakes, California declared bankruptcy.
After disputing with a developer for nearly a dozen years, the town faced a judgment nearly three times its annual budget. The mood of the ski resort, a town of 8,000 tucked in an isolated patch of the Eastern Sierra, was darkened and anxious as reality set in; jobs would be lost, services would be cut. People questioned if the Town would be able to continue to function, or if the Mammoth dream would soon die.
But for a dream to die it must first be born. The genesis of Mammoth Lakes started in the early 1940s with a man named Dave McCoy.
His dream, the story of Mammoth, begins here.
PART II: THE MISTAKES
As Dave McCoy and his family diminished their role in Mammoth, developers filled the void. Intrawest, a resort developer known for shaping a number of North American ski resorts, bought a stake in Mammoth Mountain, and additionally acquired all of the available real estate in the area. A publicly traded company, Intrawest wanted to transform the town into a lucrative and sustainable tourist destination.
Intrawest’s most ambitious project was “The Village at Mammoth”, a downtown promenade similar in design to other established resorts. It included high-end hotels, gourmet restaurants and clothing boutiques. The plans upended Mammoth’s sleepy, sprawling layout in hopes of ushering in a more profitable era.
The town placed its faith in development to ensure its financial fortunes. But there was a missing link to the grand design: a destination resort needed a modern airport.
PART III: THE FALL
In December 2000, the Federal Aviation Administration approved the airport layout plan. To the small group of people who negotiated the Development Agreement, this seemed to absolve any potential mistakes made while drafting the contract.
But not everyone liked the FAA’s decision. Conservationists grew concerned. An expanded airport meant potentially tens of thousands of additional visitors to the Eastern Sierra, which would leave an unknown tread on the environment.
The conservationist organizations, along with the state of California, sued the US Department of Transportation “including the FAA” for approving the project. They argued that the environmental impact on the Town was never fully considered.
The judge sided with the state and conservationists. He blocked the plan, saying it would move forward only if the airport performed an additional environmental examination.
Terry Ballas’ hotel portion of the development agreement, known as “Hot Creek”,ù would likely play a role in any new environmental assessment. Ballas transferred the rights of the Hot Creek project to a new company called Mammoth Lakes Land Acquisition (MLLA). His motivation, and the identity of the company’s shareholders, is not publicly disclosed.
But when the Town hired a new interim town manager, Charlie Long, who was openly hostile to the Hot Creek project, Ballas probably felt he would need more legal and financial support.
He most likely sensed conflict was inevitable.
PART IV: THE RECKONING
The verdict struck a nerve with residents. Some felt the jury, culled from outside of Mammoth Lakes, sought to punish the posh ski town with its verdict. Others blamed the Town’s legal defense team for not calling the proper witnesses.
The Town appealed the decision to the California Court of Appeal. In June of 2010, the court affirmed the verdict.
The Town pushed all the way to California’s Supreme Court. In March 2011, the Town was told its appeal was denied. More troubling, interest had been accruing on the Town’s judgment, and now exceeded $42 million.
The Town and Ballas made unsuccessful attempts to negotiate a settlement, while each side pointed fingers at the other.
By the summer of 2012, the Town Council had run out of options.