Residents worry after city files for $25 million bankruptcy . . .

Photo above - A google search for "Cle Elum, Washington State" returned this picture. But in fact, it's a screen shot from "Winter's Bone", Jennifer Lawrence's first film. You should watch it.

Should a 4 square mile hamlet of,000 people even HAVE a city government? How small is too small, when it comes to adding another layer of politicians and taxes? The hamlet of Cle Elum is a tiny parcel stolen from the Yakima Indians in 1855. It had a river and salmon, but not much else. In any case, Cle Elum is about to change hands again. It’s bankrupt, with a capital B. $25 million worth of trouble (see link below).

This $25 million money pit is the result of a complicated real estate deal. The corporation involved might in fact be evil, but both arbitrators and the courts have ruled that Cle Elum created this mess. They refused to honor a development deal they signed, after they got the money. Essentially, this was a get rich quick scheme which went south, and proved local politicians were in waaaaay over their heads. Still, I’m not shedding any tears for City Heights Holdings.

The real problem is that Cle Elum has been fighting this thing for 15 years now. Multiple court appearances, arbitrators appointed, you name it. The villain is NOT the current mayor, Matthew Lundh, although he is manifestly unqualified to fix this mess. Mayor Lundh a marketing consultant who ran for office on the strength of his cub scout and rotary club connections. Not an attorney, not an accountant, and not a real estate Poindexter. He simply inherited the seeds of this mess which sprouted in 2011. I blame the voters, actually, who kept buying the line from local politicians that “this will all be over soon, and we’ll all be rich. Or at least we won’t be sued to death”.

So after multiple court judgements, Cle Elum is now bankrupt (chapter 9), and owes City Heights Holdings tens of millions in damages. The government of Cle Elummwould LIKE to keep going back to court, but now no one will lend them the money for attorney's fees. They mayor's final gambit is to use bankruptcy court to reduce the staggering $25 million judgement. If you’ve ever been to bankruptcy court you already know that anything can happen, and relying on the court's good intentions is a coin flip. It's entirely possible that this bankruptcy judge could turn out to be an investor in City Heights Holdings, or have a grandmother who lives in Cle Elum, Yakima County, Washington State.

My mother’s hometown had a similar brush with death, about 10 years ago. The city council hired a contractor to build a reservoir. Long story short, locals who hadn't been paying close attention became alarmed at the amount of earth being displaced for the reservoir and squawked about it. City officials made defamatory statements unjustly maligning the contractor and tried to weasel out of the contract. A $25 million verdict against the city was the result. That amount which was later reduced in bankruptcy court. They mayor and city council of course had zero experience with reservoirs, land hydraulics, or reinforced earth embankments. They simply wanted cheap water, and to get re-elected. After losing in court, citizens there now pay some of the highest water and sewer rates in the state.

Simply turning to the state or country, and saying “we’re out of our depth, please decide this for us” is probably the right answer in most situations like this. But it calls into question why a village of 2,000 even has a mayor and 7 city council persons, plus a full time paid city manager, and city police force, and a city attorney. Voters might decide they can go through life as an unincorporated community and avoid the extra tax and regulatory nuisance. Just rely on the county government. Which they probably could.

I’m just sayin’ . . .

Residents worried after city files for bankruptcy