The owner of the West Richland Municipal Golf Course is being sued by the city in federal bankruptcy court.
Michelle Marcum has liabilities totaling nearly $1.9 million, according to court documents. Estimates of what she owes West Richland range from $1.27 million to $1.36 million, plus legal fees.
She filed for Chapter 11 bankruptcy protection in June before the city could sue her for failing to make a balloon payment, after seven extensions, West Richland Mayor Brent Gerry said. Gerry declined further comment on the case because of the city’s lawsuit.
“Unfortunately, it’s in the hands of the bankruptcy court in Spokane,” he said.
Marcum, who has managed the course since 1989, agreed to buy it from West Richland in 2006, when the city was looking to privatize it.
A $1.4 million promissory note was set aside, which originally was supposed to be paid by Jan. 1, 2010, Jessica Platt, the city’s finance director, said in a statement sent to the Herald. The city agreed to give Marcum a two-year extension because of the economic downturn, and has agreed to six more extensions since 2012.
The city and Marcum agreed to a memorandum of understanding and then a memorandum of intent in 2014. The documents outlined conditions Marcum had to complete before the city would agree to any more extensions or modifications, Platt said.
Marcum has not cooperated fully with either agreement, which means she has defaulted on the note, Platt said.
“The city has cooperated and extended the agreement with Ms. Marcum for over five years,” the statement said. “The city has no showing from Ms. Marcum of her satisfaction of prior promises to the city.”
Marcum didn’t pay the seventh addendum to the agreement, which had a maturity date of May 19, 2015, Platt said. The city learned June 4 that she had filed for bankruptcy.
Marcum told the Herald that she hasn’t missed a payment to the city.
Her attorney, James Hurley of Yakima, said she was told the city would renegotiate financing with her.
“When the current note came due, they didn’t do that,” he said.
The reorganization under Chapter 11 could take several forms, including refinancing, reorganizing her debt or selling a part of the non-golf portion of the 86-acre property for commercial development, Hurley said.
“I suspect it will be a combination of things we can put together to get the city repaid,” he said.
Key for Marcum will be having assets, mainly the golf course, nearly equal in value to her liabilities, Hurley said.
Marcum will file a formal plan of reorganization with the court unless a settlement can be reached with West Richland, Hurley said.
The parties discussed the reasons for the bankruptcy in a July hearing. Marcum has had problems with bookkeeping in the past and tax returns need to be completed for 2013 and 2014, according to court documents.
The golf course remains open for business in the meantime, Marcum said.
“We’ve been open the entire time, no problem,” she said.
The course has seen setbacks over the years, with holes flooded by the nearby Yakima River several times and a December 2008 fire that destroyed the old clubhouse.
Marcum was featured in a cover story in the national magazine Golf Business in 2009. It detailed her overcoming the 1999 death of her husband, Rod; waging a legal battle with the city to retain the lease on the property after his death, then buying the property from the city and, finally, the fire.
It appears rebuilding after the fire took its toll on Marcum’s finances. She has nearly $59,000 in credit card debt and also owes thousand dollars to Bruce Heating and Air and Brashear Electric, among other creditors, according to court documents.
Marcum’s situation is similar to what presidential candidate Donald Trump did when he declared bankruptcy four times on different projects, Hurley said. Trump emphasized that he has never personally been bankrupt.
“While Michelle is not going to run for president, she is going to use the bankruptcy laws to get her affairs in order and continue business for the time being,” Hurley said.