**SEO Title:** Cle Elum, Washington, Files for Rare Municipal Bankruptcy
**Meta Description:** Cle Elum, a small city in Washington, has declared bankruptcy after failing to settle a $26 million debt with a developer, marking a rare municipal filing.
**URL Slug:** cle-elum-washington-municipal-bankruptcy
**Headline:** Cle Elum, Washington, Declares Bankruptcy Amid Developer Dispute
Cle Elum, a small city in Washington State with a population of 2,200, has filed for municipal bankruptcy, a rare occurrence, after failing to negotiate a settlement with developer City Heights Holdings LLC over a $26 million court judgment. Located approximately 80 miles east of Seattle, Cle Elum has declared itself insolvent, stating it cannot afford to pay the debt owed to the developer.
While high-profile municipal bankruptcies, such as those of Detroit and Orange County, California, have garnered significant attention, such filings remain uncommon. The last local government to declare bankruptcy was Chester, Pennsylvania, in November 2022. The dispute with City Heights Holdings arose from a long-standing disagreement regarding a housing development project, where the developer accused Cle Elum of breaching an agreement for a planned community of around 960 homes.
In a court filing dated June 24, Cle Elum’s Mayor Matthew Lundh indicated that the city had proposed a payment plan to City Heights Holdings, which the developer declined to counter. Despite three mediation sessions involving a bankruptcy attorney, no resolution was reached. Mayor Lundh emphasized that the city had made its best offer, considering its limited financial resources and the need to avoid imposing burdens on residents through service cuts or tax increases.
As of December 31, 2023, Cle Elum’s budget stands at $4.5 million, with approximately $4 million in long-term bond debt. The bankruptcy filing indicates that the city’s assets and liabilities fall within the range of $10 million to $50 million. The court will need to assess the city’s insolvency status, and if confirmed, negotiations will commence to restructure its debt.
According to a 2020 report by the Pew Charitable Trust, since 2001, 31 general-purpose local governments have filed for bankruptcy in the United States, which is home to nearly 39,000 cities, towns, counties, and villages. Cle Elum, whose name translates to “swift water” in the language of the local Kittitas tribe, is situated along the Yakima River in the Cascade Mountains.
**FAQ Section:**
**Q: What led to Cle Elum’s bankruptcy filing?**
A: Cle Elum filed for bankruptcy after failing to reach a settlement with City Heights Holdings LLC over a $26 million court judgment related to a housing development dispute.
