Cle Elum files for bankruptcy after dispute with home developer
The city of Cle Elum on Tuesday filed for Chapter 9 bankruptcy.
The decision comes after a messy dispute with developer City Heights Holdings LLC and its registered agent, Issaquah-based Trailside Homes, which is developing a 358-acre community called Ederra just north of downtown in the small Kittitas County city. An arbitrator in November ruled in favor of City Heights and awarded $22.2 million in damages, but that number has increased to $25.9 million, according to the city.
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Cle Elum and Trailside first entered a development agreement in 2011, but Trailside didn't contact the city until 2019 about starting construction, according to the city. By then, the city's attitude toward the project had soured, as officials felt the deal was outdated and too favorable to the developer. But the ruling, from retired judge Paris K. Kallas, noted there was a 25-year project buildout in the agreement, and the city had tried to delay the project through the permitting application process.
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The city said it tried to negotiate with City Heights during the three-month mediation process, but City Heights rejected the city's final offer. Cle Elum also said in the release City Heights initiated garnishments to seize the city's bank accounts before the last mediation session, which forced the bankruptcy route after City Heights rejected a June 16 offer. The bankruptcy filing allows Cle Elum to work toward a resolution while continuing to pay for essential city services over the next 20 years, according to a release.
https://www.bizjournals.com/seattle/news/2025/06/25/cle-elum-ederra-trailside-homes-city-heights.html