Cle Elum’s Costly Mistake: A Cautionary Tale for Cities Under Pressure to Grow
Cle Elum, Washington. (Source: Google Maps.)
Elected officials across the country are feeling pressure to grow their communities. In the pursuit of growth, they often focus on large-scale projects that promise economic transformation but come with hidden risks. The sheer size of these projects can blind decision-makers to the financial and legal vulnerabilities they introduce, making it easy to overlook warning signs.
These risks are real, but they are often obscured by the excitement of potential growth and the pressure to demonstrate progress. Public officials may feel trapped — pushed to approve ambitious projects for fear of being seen as anti-progress, anti-growth, or anti-jobs. But in doing so, they are making high-stakes financial commitments with taxpayer money, often without fully understanding the long-term consequences. As one city in Washington state has learned, when those risks are miscalculated, the impact can be devastating.
Cle Elum, a small city in Central Washington, is now considering bankruptcy after an arbitrator ruled that it owes $22 million to a developer over a failed housing project. The city signed a 25-year development agreement in 2011, expecting to manage growth while securing long-term benefits. Instead, the agreement led to years of legal disputes, ultimately placing Cle Elum on the brink of financial collapse.
The $22 million judgment is more than five times greater than the city’s general fund, said Mayor Matthew Lundh. "It far exceeds our ability to pay."
The experience of Cle Elum highlights a critical lesson for cities: Massive, lcong-term development agreements can carry risks that small municipalities simply cannot afford. When cities take on projects beyond their financial capacity, they place their budgets, residents and essential services in jeopardy. Large-scale projects are often pitched as transformative, but their risks are frequently hidden beneath optimistic projections, making it difficult for cities to fully grasp the financial and legal consequences until it's too late.
Strong Towns offers an alternative. Rather than taking on enormous, high-risk projects, cities should focus on incremental, small-scale improvements that allow for organic, low-risk growth. The 4-step process for public investment provides a clear path forward, helping cities make steady progress without the risks that come with major development deals.
If you’re an elected official navigating development pressures, don’t be backed into risky, oversized projects. Take the Strong Towns 101 course and start to understand how these risks impact your city’s financial future. Check out the 4-step process to learn how to make meaningful progress without putting your city’s stability on the line.
