Small City in Washington State Files Rare Bankruptcy Over Developer Dispute

(Bloomberg) – A small city in the state of Washington gave a rare municipal bankruptcy after not getting an agreement with a developer over a court decision of 26 million dollars.

Cle Elum, a 2,200 mile -east city of Seattle, said that he could not pay the debt to the developer City Heights Holdings Holdings Holdings and went bankrupt.

Although there are some high -profile municipal chapter 9 applications such as Detroit and Orange County, California, the relatively extraordinary and bankrupt local government was Chester, Pennsylvania in November 2022.

Last year, a referee decided in favor of Chh in a long -standing dispute with CLE Elum. The developer accused the city of making an agreement for a planned community of approximately 960 houses.

Cle Elum’s Mayor Matthew Lundh wrote that the city offers a payment plan to CHH at the June 24 court, but refused to resist the developer. He said that the bankruptcy lawyer proved that three mediation sessions were fruitless.

Lundh thinks that the city has made its best offer, considering the reluctance of the city, limited resources and city services to restrict the city services or to increase the residents and businesses to a level that will raise businesses out of the city, Lund he wrote.

According to a financial statements, Cle Elum has a budget of $ 4.5 million as of December 31, 2023 and a long -term bond debt of approximately $ 4 million. CLE Elum’s bankruptcy application has reported assets and obligations between 10 million and 50 million dollars.

As with any municipal bankruptcy, the court will have to determine whether the city is actually bankrupt. If so, it will enter the negotiations to adjust its debt.

The 2020 report from Pew Charitable Trust found that 31 generally local government has been applying for bankruptcy since 2001. The US has approximately 39,000 cities, towns, districts and villages.

In the language of the local Kittitas tribe, Cle Elum, which means “fast water ,, is on the Yakima River on the Cascade Mountains.

CASE RE: Cle Elum City Number 25-01128, US bankruptcy court, Washington Eastern Region.

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