In its first meeting since the enormity of its financial crisis was made public last month, the board of directors for the Fort Worden Public Development Authority appealed for patience from the public — and its support — as the organization attempts to stay alive.

At its previous meeting in late October, the board was told the Fort Worden PDA would run out of money by the end of the year unless $250,000 to $350,000 can be raised.

The PDA, according to Acting Associate Executive Director David Timmons, also needed Kitsap Bank to agree to refinance a loan and two lines of credit that total
$5.1 million.

Much of the organization’s problems come from shifting borrowed money from capital improvements, such as Makers Square and the “glamping” camping project, to fund the day-to-day operations of the agency. Timmons told the board approximately $400,000 was diverted from the Makers Square line of credit to pay for operations during the early days of the pandemic. Another $600,000 from the glamping project was diverted, along with $300,000 from an energy efficiency project loan, to pay for daily operations.

At the board’s meeting last week, members said they recognized the scope of the PDA’s debt issues that Timmons had earlier called “a house of cards.”

“Mistakes have been made,” said treasurer Jeffrey Jackson. 

But Jackson placed the blame on the impact of COVID-19 on the fort, and added that other hospitality-based businesses have also been waylaid by the pandemic. 

“Really, what I think is critical for this community to understand is the enormity of the situation that we face right now is completely about the impacts COVID has had on the operations.

“That is not an excuse. That is a grounded set of reality for anyone in this space,” he said. “It has impacted our financials dramatically; it’s impacted our people. We have many fewer of them.”

Jackson added that other businesses that center on travel and public gatherings were seeing similar impacts.

“The turnover has been extraordinary. And our ability to, frankly, survive,” Jackson said.

“Absent COVID … all of the issues we are confronting … all of them were solvable as normal business problems were it not for COVID,” he added.

NOT IN IT FOR GLORY

Jackson stressed that board members are not serving the fort for compensation, recognition or glory. 

“These are talented, ethical people. This community should be grateful for the people who are putting in this effort and the talents that they are providing,” Jackson said. “Regardless of the outcome and regardless of how you feel, we should all be grateful.”

He also asked for the community’s support.

“What we do need is, we need an understanding of the complexity and the difficulty of the situation before we can move forward. Most importantly, we need support. Anything we do without the support of this community and the various different constituencies that we serve, it just won’t succeed,” he said.

Representatives from the Washington State Auditor’s Office have launched an “accountability audit” of the PDA. Officials said the audit, which will cover 2018-19, will take between three to four months to finish.

FORT’S VIABILTY IS FOCUS

Board Co-Chair Norm Tonina said the board recognizes the depth of the problems the PDA is facing.

“As board members we serve in our official capacity as volunteer public servants. And we recognize the severity of the problems confronting the PDA right now,” Tonina said.

“We also feel that we owe it to the public and all those impacted by this current situation to do what we can to remedy what has happened and move forward to secure the longterm viability of the fort for the community at large,” he said. 

Tonina said state auditors will provide the board with an independent, thorough and transparent report that will be made public.

“Moving forward we and others need the facts so we can all understand from an independent source how this happened,” Tonina said. “That process is underway and we are working hard to partner with the state auditors and do what we can to expedite the audit.”

He also asked for the public’s patience, and vowed that the PDA will take the steps needed to preserve the fort’s future.

“Steps will have to be taken by us and David Timmons to ensure that this never happens again,” Tonina said.

“This is a critical time for the fort and we ask all concerned to allow the State Auditor’s Office to present their findings,” he added. “We commit to cooperate fully with any and all actions necessary to secure the future of the fort.”

Board Co-Chair Todd Hutton said it would take the fort and the community working together “to solve this enormous problem.”

“That old trite saying, ‘It takes a village,’” Hutton said. “In this case, it does take a village to address this.”

One line of credit from Kitsap Bank — $1.5 million for the Makers Square project — comes due in December. A second line of credit that was extended to the PDA —
$2 million for Fort Worden’s “glamping” project — is due during the first quarter of 2021.

Also adding to the fort’s financial woes: a loan taken out to pay for energy efficiency projects must also be refinanced.

At last week’s meeting, Timmons again noted that the reopening plan for the fort following the COVID shutdown was unsustainable; the PDA has a $250,000 deficit, which is growing by the month. 

Timmons has been looking for financial help in the past month, beyond getting a new financing arrangement with Kitsap Bank.

According to Timmons, Kitsap Bank is willing to defer payments due on the PDA’s line of credit.

Timmons has asked the city of Port Townsend to provide loan security for a $900,000 loan that the PDA would borrow to restore $400,000 in funds that were diverted to operations, and $500,000 to replace a grant that was not funded, according to a Nov. 22 email to Port Townsend Mayor Michelle Sandoval and City Manager John Mauro.

In the email, Timmons also said he had reached out to Centrum for assistance, but Centrum denied his initial request but was working on an alternative.

“I can’t disclose it quite yet since we only had one conversation and there is a need to follow up,” Timmons said in the email.

“But it offers a way forward for all of us and it looks very promising to me,” Timmons added in the email. “If we can lock an agreement into place in the next two weeks that would give everyone a perfect solution. But as you know, stuff happens and I need a backup plan. I am still looking at other options but we are running out of time.”

COUNTY GRANT EYED

Earlier, Timmons submitted a request to the county to repurpose a Public Infrastructure Fund grant for $150,000 that had originally been awarded to pay for employee housing at Fort Worden.

Timmons had hoped to use the grant to hire an outside consulting firm to create a new business model for the PDA.

The request found little support at last week’s meeting of the Public Infrastructure Fund Board.

“This is a real opportunity for us to move forward,” Timmons told the board. “The fort itself is too vital of a community asset and too important from an economic development perspective.”

The plan would be focused on the mechanics of making the PDA more resilient, Timmons said, “so that we don’t have this kind of economic collapse in the future repeat itself.”

“The vision is going to stay the same for Fort Worden. What we’re looking at is changing the structural arrangement and the management model of it to be much more sustainable and viable,” he explained.

County Administrator Philip Morley said the PDA’s proposal didn’t appear to comply with the county code and the definition of projects that are eligible for grants.

“Where we hit the shoals, I think, of compliance is on the definition of project,” Morley said.

The problem could be avoided, officials noted, if the grant was instead awarded to Jefferson County’s economic development council, with that organization guiding work on the business plan.

After other board members raised concerns about funding being used on a business plan, and not an infrastructure project, Timmons said he would come back with a revised proposal after talking with the economic development council.