City Of Cle Elum Officially Files For Chapter 9 Bankruptcy

The City of Cle Elum has officially filed for bankruptcy.

The Ellensburg Daily Record says the Kittitas County town with a population of just over 2,200 filed for Chapter 9 protections Tuesday in U.S. Bankruptcy Court for the Eastern District of Washington in Spokane.

The filing comes after the City was unable to reach a settlement agreement with an Issaquah land developer who's owed millions by the City.

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The developer, City Heights Holdings, was awarded $22 million by an arbitrator after it was found that the City of Cle Elum reneged on an agreement for the company to build 962 homes on a 358-acre site within the city limits.

The decision was upheld last November by a King County judge, who ordered the City to pay over $26 million to City Heights, which included the original amount plus penalties and interest.

Several members of the Cle Elum City Council say they felt the City made every effort to appease City Heights and come to a resolution which would have avoided the bankruptcy filing, but after six months of negotiations, it was left with no choice but to seek the protections.

Chapter 9 filings allow municipalities to reorganize and restructure their debts and other financial obligations.