The City of Cle Elum may return to considering bankruptcy, claiming mediation talks with a Seattle-based developer have broken down.
The city, population of about 2,200, has been on the hook for $22.3 million — five times its annual general-fund budget — after an arbitrator ruled in November that the city violated a 2011 contract by causing delays in the development of Ederra. a new community of 1,000 houses.
The city entered mediation with developer Sean Northrop and his LLC City Heights Holdings in March in hopes of a deal in lieu of paying the judgment, which would have forced municipal bankruptcy, something done by only one Washington city in the past 35 years.
However, city officials now say in a written statement that if no resolution is made at their next mediation session on Monday, they will have “no alternative” but to proceed with Chapter 9 bankruptcy.
They also claim that City Heights issued three separate filings with King County Superior Court, which have tied up a combined $696,000 in Cle Elum’s bank accounts, impacting payment to creditors.
Northrop has not yet responded to email requests for comment.
