One California city has already defaulted on a bond payment this year. A few hours away, a second city is in the final throes of a fight against bankruptcy.Mammoth Lakes has appealed to the California Supreme Court to overturn a ruling that the ski town owes $30 million to a local developer, according to The Bond Buyer. The Superior Court ruling was upheld by an appelate court on Dec. 30.
So how did the 7,500-person town run up this kind of bill?
Mammoth Lakes gave a contract to a local developer in 1997 to improve the local airport and develop a adjacent $400-million hotel. This was during the Dot Com boom, when nothing in California could lose. In 2007, the town delayed the hotel project, citing changes in FAA policy. (LA Times has more details.)
Mammoth Lakes bonds carry a BB rating from Standard & Poor’s, with a developing outlook.
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