Fort Worden is in big trouble. The public development authority that runs the commercial operations at the state park is teetering on the brink of financial collapse. This should not have come as a surprise to the people charged with the fiduciary duty of overseeing Fort Worden’s operations.
Back in 2017 the State Auditor issued findings of deficiencies in internal financial controls of the Fort Worden Public Development Authority (FWPDA). That is the entity that runs all of Fort Worden except for the camping areas and trails, which remain under the control of the State Parks Department. The deficiencies identified by the State Auditor undermined the ability of the FWPDA to produce reliable and accurate financial statements, or to account accurately for how it was spending money. As reported by the Port Townsend Leader:
Despite that enhanced oversight and the monthly meetings, the State Auditor in a report released this year again found material failures in FWPDA’s financial statements for a two-year period, including 2017, when the enhanced oversight was supposed to be detecting, correcting and preventing deficiencies in internal controls and reporting. As reported by the Peninsula Daily News, “Diane Moody, the PDA’s chief financial officer, and Executive Director Dave Robison issued a memo to the board last week that said the PDA is forming a finance and audit committee as a result.”
The question arises: what happened to the executive committee that was supposed to have been meeting since March 2017 to scrutinize financial affairs?
Now the State Auditor is taking an even more critical look in the wake of revelations that FWPDA’s financial condition is a “house of cards” ready to topple in weeks and facing long term shortfalls in the millions of dollars. The Leader’s front-page story quotes acting CEO David Timmons at length about numerous discoveries of malfeasance, irresponsibility and recklessness.
Timmons stepped in after Dave Robison, CEO for 9 years, retired in September. Timmons has discovered that the FWPDA had been using 19 credit cards, and run up a balance of $60,000 on one card. With millions of dollars in lines of credit, the FWPDA was using credit cards with 29% interest rates to make purchases and cover expenses. Loan proceeds designated for capital projects were being used to cover operating costs. Like the Cherry Street Project, costs were vastly underestimated and funds are not available to pay contractors and finish construction projects.
The numbers are so huge, the shortfalls so staggering, FWPDA may collapse early next year when its multi-million dollar lines of credit expire and other major loans come due.
How could this have happened?
I submit this is another manifestation of the Cherry Street Project Disease. This affliction plagues local ambitious public undertakings and is caused by a political insularity and monoculture that admits no dissension or critical thinking. The afflicted project develops symptoms of irresponsible grandiosity and detachment from hard realities.
Just as the Cherry Street Project got no hard look from a City Council that shamed dissent and critical thinking, the FWPDA has succumbed to the same malady. It was created out of the same closed circles that comprise the city’s elite. Early questioning and criticism from those outside the circles of Mayor-for-Life Michelle Sandoval were brushed aside, ridiculed and ignored. Group think prevailed. The self-serving dream of large, generous infusions of taxpayer money, to be delivered by political allies, made it possible to suppress doubts and obviate the necessity for just a little healthy skepticism and vigilance.
Former FWPDA CEO Robison worked in City Hall from 1990 to 1996. When it was discovered he had misrepresented his qualifications to get his job, he seamlessly landed on his feet at the Northwest Maritime Center. After that, he became CEO of the FWPDA in 2010.
Unlike the amateurish group behind the failed $2.3 million-and-counting Cherry Street Project, the FWPDA Board should have known better. Its Board members are highly experienced people with backgrounds in business and finance. Norm Tonina, its co-chair and a founder, is a Director of First Federal Savings & Loan. He was supposed to be a member of the enhanced oversight group created in March 2017, but needing resurrection this year. Treasurer Jeffrey Jackson is managing director of a venture capital firm, and for 13 years was chief financial officer of a $3 billion corporation.
The FWPDA Board says it is stunned by what Timmons has discovered.
The consequences of a collapse of the FWPDA will be a lot more devastating for Port Townsend than the demise of the Cherry Street Project. It is past time for the elites and decision-makers to welcome to the table a few people from outside their circles who are unafraid to ask hard questions, and push courageously for uncomfortable answers. Steel sharpens steel. Diversity makes us stronger. What we have now is like a family seeing the consequences of generations of inbreeding. New blood from other gene pools is desperately needed.
If you want more detail, you can read the state audits on FWPDA at the State Auditor’s website. Click on this link for the State Auditor’s latest report on the FWPDA: https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1025573&sp=false&isFinding=false#page=4
Here is our deep dive into those audits, which show that the Fort Worden PDA has never had a clean audit: https://www.porttownsendfreepress.com/2020/11/06/fort-worden-pda-finances-plagued-with-problems-from-beginning/
Jim Scarantino was the editor and founder of Port Townsend Free Press. He is happy in his new role as just a contributor writing on topics of concern to him. He spent the first 25 years of his professional life as a trial attorney, then launched an online investigative news website that broke several national stories. He is also the author of three crime novels. He resides in Jefferson County. See our “About” page for more information.
Robison never served in a City capacity under the Mayor for life…He didn’t even serve under me ,I believe.
He was there 1990 to 96. In the planning department. Thanks for comment. We have corrected the story accordingly.
If it weren’t for the magnitude of the debts involved, this would be just another amusing saga of well-intentioned people being done in by their own ineptitude.
The Leader reports that in its 2016-2017 report the State Auditor said “the PDA lacked internal controls” and “PDA staff responsible for preparing the financial statements ‘lacked the technical expertise needed to perform their duties.’”
Management is responsible for fixing those problems and reporting progress to the Board.
The Board is ultimately responsible for everything that happens or fails to happen. The Board looks forward by approving management’s budgets. It looks backward by reviewing management’s performance against budgets. And it approves policies under which management must operate.
Yet despite having some heavy hitters on the Board, problems identified by the State Auditor apparently were not resolved and other problems festered.
As an aside, no mention is made of the consequences of default on loans. We are not told what security was given. We don’t know whether the lenders have a claim on the assets of the PDA or if the lenders will suffer loss.
Further, we have not been told what consequences, if any, might fall on the taxpayers
Here is a link to the actual Timmon’s live in person report to the board on Oct. 28: Here is a link to the page, and you’ll find the recording link within the October 28th meeting section: https://fortworden.org/category/pda-documents/ [don’t know how to make this light up]
Thank you, counselor!
It all goes back to the fact that the Port Townsend hierarchy can waste more money than a drunken sailor. A revolving City Council/Mayor continue to over pay candidates without checking references and throw money away faster than the speed of light. All this time they will not let business into help their tax revenue. Add to this needed things like city streets are rotting away for lack of funds. Property taxes and real estate are over the top, while wages are abysmal. This can’t go on forever. It’s time to sweep out the barn.