As Whistlerites scurried to pay their property taxes by Tuesday's deadline, grateful that for the average Whistler property owner(!?) rates hadn't increased for the first time in five years, a few noted a grim flashback to 30 years ago.
The flashback came with news out of California this week, where the High Sierra town of Mammoth Lakes filed for bankruptcy. According to the Los Angeles Times (http://latimesblogs.latimes.com/lanow/2012/07/mammoth-lakes-bankruptcy.html), the filing came about because the town can't pay a $43 million breach-of-contract judgment brought against it by a developer.
The judgment is three times the town's annual operating budget. Mammoth Lakes, a town of about 8,000 permanent residents, already faced a $2.8 million shortfall in its 2012-13 budget and had asked employees to take reductions in pay.
Like many lawsuits, it was a long time coming. It stemmed from a 1997 agreement between the town of Mammoth Lakes and the developer Mammoth Lakes Land Acquisition. According to the Times, "The agreement required the developer to make improvements to nearby Mammoth Yosemite Airport's fixed-base operations. In return, it 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."
Ten years later it was determined the development project would interfere with Federal Aviation Administration policy and, consequently, quash the town's plans to extend the runway to accommodate Boeing 757 passenger jets.
By this time Mammoth Lakes Land Acquisition had invested in some improvements at the airport. The company filed a breach of contract lawsuit against the town and won. Negotiations with the developer broke down and on Monday the town said: "bankruptcy, unfortunately, is the only option left." Full payment of the $43-million judgment was due June 30.
Significant details of the Mammoth conflict can probably be debated. And Mammoth isn't the only California town to declare bankruptcy in the midst of a state budget crisis and the lingering housing bust. Stockton declared bankruptcy last week. In 2008 Vallejo sought bankruptcy protection.
Thirty years ago, the fledgling ski town of Whistler was very close to bankruptcy. Construction of the first few buildings in the new Whistler Village had been completed but the recession had killed investors' appetites for more. Several foundations had been poured and then abandoned. Rebar lined what is now Village Stroll between Village Square and Mountain Square. Investors, developers and the Resort Municipality of Whistler itself were slowly bleeding to death.
The municipally-owned Whistler Village Land Company had $20 million in liabilities. Its only assets were parcels of land in the village that no one wanted to buy. And just as has been the case in Mammoth Lakes, all municipal employees took a pay cut, 2.5 per cent for Whistler employees. They were also asked to work three days of the year without pay.
Only 60 per cent of Whistler municipal taxes were paid by July 2, 1982. Under provincial law at the time municipalities were not allowed to charge more than 10 per cent interest on late payments. But the prime rate was already well above 10 per cent — and climbing — so property owners could make money by leaving their tax payment in the bank.
The RMOW's cost of borrowing money to make up for the late payments was estimated at up to $70,000.
As most people know, the provincial government finally stepped in and bailed out Whistler, although the municipality never was bankrupt. The province formed the Whistler Land Company to take over WVLC's assets and liabilities and finish the Arnold Palmer golf course and the conference centre. The province, under the direction of the often-controversial Chester Johnson, kept the village plan in place and sold off the remaining parcels in the original village as the market slowly rebounded in the mid-80s. The big payoff for the provincial government came in the 1990s, when Whistler and the economy were booming, with the sale of Village North parcels.
There are substantial differences between the situation Mammoth Lakes faces today and Whistler faced in 1982, as there are with American and Canadian systems of municipal government and bankruptcy protection. In Whistler's case, the province stepped in to stabilize the situation until the recession ended and then the town essentially built its way out of debt. It's a tempting solution today, in the post-Olympic, ongoing economic malaise we find ourselves in.
But in 1982 and again in 2012 Whistler has wisely chosen to stick to its own development plans. In 1982 there were calls to scrap the restrictive design for the village and turn the real estate over to private developers to do with as they wished. The Concerned Citizens of Whistler pushed for a casino to solve the municipality's financial woes and attract investment. This year, Whistler U was offered up as the panacea. It has been politely but firmly refused, at least for now.
Education may well become part of the economic and social tapestry of Whistler, but if it does it should be Whistler that determines how it fits into the community.
It's difficult to know what the solution will be for Mammoth Lakes. But for Whistler, time and history have shown that following its own path, as it did with the original village plan and as it is doing now with the task force looking into education, is better long-term solution than adopting a specific development proposal.
Something to think about as we grumble over property taxes.
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