SEATTLE – The city of Cle Elum, Washington, filed for bankruptcy Tuesday after failing to reach a deal with a developer over a $26 million debt stemming from a legal dispute over a long-delayed housing project.
In a declaration with the U.S. Bankruptcy Court for the Eastern District of Washington, Cle Elum Mayor Matthew Lundh wrote that the city is “insolvent” under the bankruptcy code, citing the debt owed to the developer, City Heights Holdings.
The city had “negotiated in good faith” and made its “best offer given limited resources” but ultimately could not reach a deal to repay the debt, Lundh wrote. Meanwhile, the developer’s lender recently filed garnishments to seize funds in city bank…