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Mammoth's legal "burn rate" was $1 million a month

September 28, 2012

Councilman Michael Raimondo opposed the settlement agreement. Photo/George Shirk

For Mammoth to have continued its legal fight with lawyers representing both Mammoth Lakes Land Acquisition and Terry Ballas, the town was subject to a "burn rate" of $1 million a month in legal costs, Town Manager Dave Wilbrecht said.

Speaking to a crowd at the Council Chambers on Thursday night, Welbrecht asserted that the legal costs in terms of attorneys fees and the costs of paperwork were so daunting that the town had little choice but to settle.

"We've talked about the cost for legal services," Wilbrecht said. "We talked about how expensive it is.

"There's a term I've learned since I've been part of this process—the 'burn rate.'

"I always thought it was a NASA term when they're going through fuel. But apparently it has to do with how much it costs per month to through bankruptcy. We are spending at the rate of about $1 million a month to get to where we are.

"We couldn't afford to do that very long. To sustain that, we've gone through nearly every resource, every reserve that we possibly could have gone through.

"That also includes early on, during mediation in the springtime. Our employees went through a mediation process. There was a reduction of about 10 percent to their salaries based upon their participation in various benefit packages.

"It has meant laying off employees. We laid off two this spring as a result of just looking at the numbers and deciding that we can't sustain this burn rate, both in terms of costs of attorney fees but also the cost of business."

Even so, councilman Michael Raimondo held fast to the strategy of pushing the Mammoth Lakes into bankruptcy court, regardless of the current burn rate

"I was a strong supporter to settle at a much lower number," he said in a letter that was read into the record at the meeting, "one that would be financially sound and in the community’s best interest.

"If the court had rebuked that plan, we should have sought a plan that pays them very little each year and a term that is much longer with little or no interest.

"Two things are for certain now, one, we will never know what the outcome of bankruptcy proceedings would have resulted in and secondly, we are in for very rough times in the delivery of city services for the foreseeable future."

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