“We really don’t have a future if we try to remain status quo,” David Timmons, Acting Executive Director of the Fort Worden Public Development Authority told its Board of Directors at their December 9, 2020, special meeting. The PDA will run out of money in several weeks. It needs over $1.5 million to cover operating and capital costs over the next six to seven months, and then it will face over $1 million a year in maintenance costs while the hospitality industry, its major source of funds, recovers from COVID lockdowns.
Timmons recommended that to survive the PDA privatize its hospitality and facilities operations as two separate nonprofit corporations. The Board unanimously authorized him to proceed with preparing a more formalized plan that will be presented at its December 16 regular meeting.
Timmons so far has worked more than minor miracles with the PDA’s disastrous financial situation. He has succeeded in obtaining deferments of major loans with Kitsap Bank. Historic Tax Credits will be secured. A $200,000 donation is helping with operating costs, though it is not enough to stave off impending collapse on the the PDA’s current course. Maker’s Square is anticipated to be ready for occupancy within weeks. Washington State Parks is considering stepping in to take over major maintenance needs, at least for the short term. Centrum is considering partnering on Maker’s Square. The KPTZ lease is on track. Operations have been curtailed, buildings closed and staff furloughed to cut expenses.
“Things are starting to fall in place,” said Timmons, but “the big items” are still unresolved. The biggest item is the need for money just to stay afloat. Taking out a line of credit would be one solution. But that is not possible.
“We’re just not credit worthy,” Timmons told the Board. The PDA cannot realistically expect to secure more loans. At best, its millions in outstanding debt payments are being deferred. A completely new corporate entity is required if there is to be any chance of attracting investors who will provide desperately needed new funds.
“We don’t have a workable business plan in place right now,” he said. The COVID crisis destroyed the PDA’s hospitality business, which had already been struggling with huge maintenance and repair costs on the historic facility.
Timmons’s recommendation would create a new nonprofit corporation to run the hospitality side of the PDA’s activities. It would operate under a long term franchise agreement, with the PDA retaining control over the real estate, which, in turn, is leased State Parks property. Phase two would see a nonprofit corporation created to maintain and repair Fort Worden’s buildings.
“Bankruptcy would be easier,” said Treasurer Jeffrey Jackson, but this is the best hope for keeping the PDA alive.
Even with the privatization of hospitality and maintenance operations, the PDA’s future remains very shaky. It must find–very quickly, said Timmons–investors to extend $1.5 million in new loans. That’s going to be “a leap of faith,” according to Timmons.
The PDA has millions in debt and is facing an accountability audit by the State Auditor that will look closely at issues of fiscal malfeasance. Criminal investigators were called in after abuse of credit cards was discovered. Over a million dollars in dedicated loan funds were diverted to cover other expenses, while the Board appears to have been purposefully kept in the dark.
Timmons stepped in after CEO Dave Robison was stripped of responsibilities then retired.
The bridge loans will almost certainly require a guarantor. The City of Port Townsend has been approached to guarantee $900,000 of loans needed for capital projects. No commitment has been made. Mayor Michelle Sandoval was one of the on-line attendees at the special meeting but said nothing more than letting the BOD know she was listening.
The City created the PDA a decade ago. With 170 jobs at its peak, Fort Worden PDA became one of the area’s major employers. It grew rapidly from nothing in 2014 to $7 million in revenue in 2019.
The City is facing its own dire financial situation. It is over $17 million in debt and is experiencing reduced tax revenues. It has slashed its 2021 budget and projects continued depressed revenues. [At the same time, as we have reported, the City has ignored an offer of $1 million cash to bail it out of the failed Cherry Street Project. That sum would be more than enough to back up a loan guarantee to keep the PDA afloat during the coming critical months.]
Board member and past Chair Cindy Finnie questioned whether it was realistic to believe that State Parks would step in to cover the enormous maintenance cost of Fort Worden’s old buildings. “This is our Achilles heel,” she said. The hospitality side of the business depends on a facility that is attractive to visitors. She cautioned the Board to include in its forecasts added expenses when it came time to ramp up operations for the Summer season. Timmons has repeatedly informed the Board that the aging infrastructure is beyond repair stage, and frequently needs complete replacement.
Timmons’ effort to obtain a partner for the Maker’s Square project addresses what–to this author and a business consultant who has studied the project–may have been a fatal shortcoming in its business plan from the beginning. The comparative models of other makers enterprises that were used to evaluate Maker’s Square’s potential for success had major funding partners, including government entities, or other support systems. None operated as municipal corporations, which the PDA is. Those operations did not rely on significant income from food and hospitality. Maker’s Square’s business model requires that Maker’s Square itself–not Fort Worden’s other hospitality operations–generate over a quarter million dollars a year in profit from those sources. Lastly, Maker’s Square’s business model, which had always projected two years of losses followed by a future of just breaking even, did not depend on sizable gifts or outside funding.
With the added debt burden for Maker’s Square resulting from diversion of funds and the prolonged downturn in the hospitality industry, its original business model is no longer valid. Enlisting a major partner such as Centrum may be the only thing that keeps it from failing. Large gifts ang government help will be needed. Timmons has hopes that the area’s legislators will be able to bring state resources to the rescue.
Timmons has been working with a nightmarish situation. He impresses at every meeting with his firm grip on problems, his financial expertise, and his crisis management skills. The news has been very bad, but he has not exhibited panic or despair. His calm and always realistic approach is providing a desperately needed ray of hope. The highly accomplished Board he serves is also stepping up and giving him the support he needs. But, though many important pieces are falling in place and a path ahead has been mapped, as the pragmatic Timmons cautioned, “This is going to be a stretch.”
Related: Fort Worden Hit by Cherry Street Project Disease, PTFP, 11/5/2020
Fort Worden PDA Finances Plagued with Problems from Beginning, PTFP, 11/6/2020
Fort Worden Glamping a Soggy Mess, PTFP, 11/14/2020
Fort Worden’s Promised Financial Oversight Never Happened, PTFP, 11/20/2020
Maker’s Square Business Plan, November 2017
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.
Government is the problem. Now they are starting to recognize that. Privatization they say!
“Bankruptcy would be easier,” said Treasurer Jeffrey Jackson, but this is the best hope for keeping the PDA alive.
The question is is it best to keep the PDA alive? The current board is responsible for “being in the dark”. It was their job to not be in the dark and manage their employee Robeson.
The money game they as the PDA are involved in is their creation without backups. These same people are now plotting a new course.
Centrum, if you know your history is part of the root cause of “partners” not being what was required by the State when it bailed out of managing the campus years ago. Centrum is a shiny brand for most. Not all.
This article and the author seems to support Mr. Timmons ability. Perhaps the thing he pilots should be retired by bankruptcy and a broader based board could start anew. A broader base in structures is always best.
At this point the money game is so complex most can’t or won’t choose to really understand it.
The PDA is not Fort Worden. It is an entity that failed miserably. It ignored much public input at its inception. It is the City of Port Townsend behind a thin veil.
Everyone paying attention knows how the City of Port Townsend manages money and priorities. And staffing.
If bankruptcy protects the property of all of the people of the State of Washington, it should be considered. Those leading the entity that is the PDA should accept responsibility. I believe local egos will drag all down with them.
No easy answers. Bankruptcy and looking at a more inclusive business model should be considered. Will it be?
Quote- “Timmons’s recommendation would create a new nonprofit corporation to run the hospitality side of the PDA’s activities”
Question- Correct me if I am mistaken that this is not what they did with the failed Cherry Street project? We have a model done by the same City Government to see how that will work. It didn’t Who will be the players this time? More controllable unqualified insiders?
Quote- “Timmons has repeatedly informed the Board that the aging infrastructure is beyond repair stage, and frequently needs complete replacement.”
Question- They didn’t know? What corporation would keep this board? You have to look and plan ahead. And manage your manger, Robeson. Where is Dave?
Quote- “The highly accomplished Board he (Timmons) serves is also stepping up and giving him the support he needs.”
Question-At what point did they become “highly accomplished”. Not in any aspect of managing the FWPDA. What support? Go Timmons!
Quote- “Mayor Michelle Sandoval was one of the on-line attendees at the special meeting but said nothing more than letting the BOD know she was listening.”
Question- Shouldn’t all of the City Council be paying attention? Sandoval is Appointed Mayor. What is called a Weak Mayor. That describes a figurehead with no more or less power than other Council. Only in theory in PT. The figurehead Appointed Mayor is supposed to chair meetings and hand out awards like Timmons got on retirement, leaving decaying roads, 17 million in debt, and many other problems. Seems we are already off track with the Sandoval/Timmons duo. Sandoval has no skills. Look at her legacy of 20 years on the No Term Limit Council. With Timmons along side. Or in front.
Where is the public input? in 2012 there was input from people from many walks of life to say No to the FWPDA. One of the main concerns was privatization of public assets. Look what is being suggested now. I once knew a person who hired a total goon to assure his business went into bankruptcy so he could re boot his finances. What is going on here? Some games take years to play to the real end.
Disband the FWPDA. It is not too big to fail. It has. Fort Worden is not the FWPDA. Let others begin with a clean slate. This is a prime place for veterans. Veterans and others at Makers Place learning skills producing real things, and veterans and others helping rebuild Fort Worden to serve veteran housing and more. Seems grants for that would be easier. The military gets things done when it has to. Brothers in arms can take care of brothers in arms if allowed, and open up the very private elements the FWPDA caters to. Proudly.
Where is the question of “partners” underpaying rent for years as the State was looking into a few months ago?
Here are 2 links to stories the Leader carried in 2012. The comments were removed after 2012. I restored recently them from copies I kept.. Where are these concerned citizens now, that predicted what has happened? What is in the water here? Dumbdownium? Most of these concerns are relevant now. Seems the PT power core is alive and well. Sometimes you need to take the keys away from grandma for everyone’s safety.
I would volunteer my time at Maker Square. It is what I suggested in 2012. I kind of know how these kind of things work.
https://www.ptleader.com/stories/fort-worden-forum-draws-a-crowd-full-of-questions,49740
https://www.ptleader.com/stories/frustration-at-fort-worden-forum-where-are-the-details,49449
For Christs sake speak up. There will never be a better time.
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Do you hear that flushing sound? That’s the money spent in Port Townsend that could have been used to repair the crumbling streets.
I was very skeptical about PDA when it first was applying to take over Fort Worden Campus, but I was hopeful that they would adhere to their stated goals of working to restore and rennovate the campus buildings. What has been accomplished in that regard has had little to do with the monies they were generating with the hospitality business and more due to government grant monies received for Makers Square and Building 202.
Instead of hiring skilled carpenters, painters, plummers, electricians to start fixing and cleaning up the campus, they focused on hiring expensive admin staff that, for the most part, was probably very unnecessary. All the basic repair was left to a couple of maintenance persons, but nothing for any real substantive clean up and repair of the structures.
I am even more skeptical of the latest proposal to create a new privatised LLC/franchise where the holder of the francise will now be responsible for paying down the debts, and for paying for the fixed salaries of four, presumptively very expensive $100,000 + K salary admin staff for PDA to continue to run as a separate entity that will have to be supported by fees paid by the franchise holder (can I please have one of those new PDA jobs? Honestly, working at the fort in that capacity would be a vacation given what I am currently responsible for) I believe this proposal is just a rescipe for disaster, and anyone taking up the offer of franchise will find themselves bankrupt in a very short time. Also, the incentive of any francise ower will be to cut costs and cut mainenance in order to maximize profits for the franchise holder; again, no consideration or incentive towards restoring the Fort.
The other hardship for any inexperienced prospective franchise/business owner is that things are just not going to get back to normal until 2022. I know that Vaccines are now being distributed, but it is projected to be around the fall of 2021 before enough persons have been innoculated before we can be normal again, and then its going to take the following year for the economy to begin to recover so somehting resembling the Pre Covid status. Again, another factor that can contribute to any unsavy person trying to take on the franchise, which will create another potential bankruptcy; how would they even be able to pay for the salaries of the PDA staff that will be left behind to continue their landlord responsibilities?
PDA got themselves into this mess because of the excessive salaries that they paid to its members. Covid did not force PDA to divert loan money earmarked for projects, they are responsible for their own malfeasiance. If they had been using their monies more wisely to pay maintenance workers to clean up the campus instead of thinking about their own pockets and paying for an executive of finance, executive of reservations, executive of strategic planning, execuitve of housecleaning, executive of restaurants etc . . . they might have been able to get something accomplished on the campus over the past five years.
Port Townsend, like Seattle and other hard-left cities, deserves the leadership they elect. Over and over they vote for the most poorly-educated, inexperienced and simple-minded fools they can find and then expect them to govern using intelligence, common sense and reason. If it wasn’t so pathetic it would be humorous.
Give them a feel of reality. Make them live for a week in the homeless camps. Hopefully it would change their minds.
Malfeasance. As of right now the public is in the dark regarding where responsibility will be officially designated.
No matter that finding, the entire FWPDA board failed to set up a system of checks and balances to protect funds from being misappropriated. They also approved the destined for failure “glamping” project. And more.
Timmons is being credited for working miracles with Kitsap Bank. Kitsap also failed to have checks and balances before releasing funds. Hundreds of thousands of dollars. Of course Kitsap Bank is going to work with anyone they have handed to them, to fix their mistake. A new deal is the only option other than bankruptcy. The FWPDA and Kitsap Bank are both guilty of extreme carelessness. Chips fall where they may.
Now the capital improvements are hundreds of thousands of dollars short.
We are now in the situation where the FWPDA board is using 20 year PT City Manager Timmons as Executive Director. He is so ingrained in City methods and devised them. So many know his methods as smoke and mirrors, leading to 17 million in City Debt, failing roads, privatized Cherry Street and its champion Appointed Mayor Sandoval. Sandoval signed the FWPDA into existence. Timmons was right there as City Manager. Timmons broke a direct representation to me regarding fixing parking problems after he helped deconstruct the volunteer parking enforcement team. Now its every person for themselves. Sound familiar?
Many see a bad outcome just down the road after the FWPDA has made sure it remains in control. Timmons has his play book. Control. He is using it here. Privatization. It was the goal from the beginning if you look at the record. The public said no. God no. Timmons wants to “Cherry Street” the poor foster child that the Campus at Fort Worden has become, because the FWPDA blew it and can’t admit it. Raw ego at work. How convenient that privatization is Timmons (representing all power players) solution. Who represents the People of the State of Washington that owns Fort Worden. The FWPDA would own all of Fort Worden if no one had spoken up in 2012. They have a 50 year lease on the Campus only. The people spoke. They need to again.
While the board is under investigation with audits with criminal aspects it seeks to cement itself further by continuing to implement plans and debt that anyone taking over from them will be saddled with. How God Damn Dare They. How God Damn Dare the State of Washington let them. The State that was the true architect of the hand over to the FWPDA on a hurried time line 7 or so years ago?
Look. Another hurried time line. Is jail time in the future of any of these architects? Yet they want to build on the very bad foundation.
The promise of being more transparent seems to be off on the wrong foot. Who put up the $200,000 mentioned twice to keep the FWPDA afloat for the very short term?
Years ago at my business I casually asked a woman making a purchase where she was from and what she did for a living. Those questions have provided me with a sense of so much over the years. This was around 2012 when I was very vocal trying to keep the FWPDA from gaining title, then having a more widely based inclusive board and plan (that failed). This woman leaned in close and kind of mockingly said, “I am in development in a way. Some of the things we do take 10 years or more to accomplish.”
Privatization. Exclusive not inclusive majority of tenants (“partners”) = Special interests.
There is talk about the homeless. Those who are victims and those who chose the lifestyle. Some say you can enable the wrong people by catering to them. Some are hooked on bad substances. Lets think about the FWPDA in the same terms. They chose their methods. They are hooked on them, bad substance.
Their methods keep the public at a distance so they can administrate what should have a soul. Soul comes from hands on efforts by the true owners and those they chose to benefit. I once again submit that Veterans, especially those with PTSD and First Responders from medical to police deserve a place to call theirs, and all of ours. We trust them. They earned it.
Give them this monument to bring back to its great potential. I will help. Just eliminate all the pimps and double dealers keeping “us” away from the soul.
Years ago regarding the Pike Place PDA I said “The Pike Place Market doesn’t need a Soul, it has the PDA PR department”. True then and there. True here and now. Don’t believe the PR.
Stop the momentum. Stop the machine that mindlessly absorbs all it can for reasons it probably doesn’t even understand.
Time out. Re Set. Get rid of the overpaid and underqualified. They are leeches and parasites. Those who built Fort Worden deserve far more respect. Get this foster child a caring family. Vets and PTSD First Responders. They make us proud. The FWPDA and so many involved do not.
I know first hand of the money available in private hands near and far, I know proud people of rank can get this done along with the enlisted. I know the pride we have in our military vets and First Responders. I know some in town and further away know how to get grants for good causes like Vets and First Responders. Makers Place as a place to heal is ideal. Some would find a calling in art, craft, or other aspects that can be shared. The public can participate and purchase some items some would learn to make. There could be a proud Brand created. Something real.
For others Fort Worden could be just a place to get away for a brief while and heal a bit. Perhaps they could help rebuild. Who keeps this fertile idea and fertile ground from becoming one?
Special interests. The hurried time line is part of the play book.
Excellent comment, Harvey. Problem is, this is Port Townsend, where it is the leftists’ way or the hi-way. Their socialist indoctrinations only allow for limited options, and your suggestions don’t fit with their regimen or political agenda. In their fiefdoms, only the “right” people are allowed to have a voice and participate. Others would quickly grasp the incompetence and corruption that brought them to the place we find them. And yes, this “how we got there” assessment includes the Cherry Street fiasco and the Jefferson County Fairgrounds debacle,
And one more thing: The recent presidential election reveals the same (underhanded and corrupt) methods and the same results. Republican observers were kicked out of ballot counting centers in multiple cities so that criminals (yes, criminals) could steal a presidential election. Shamefully, the corruption at this point runs so deep even the courts are complicit. If this election is allowed to stand we have lost our republic and will never again see a fair and honest presidential election….or fair and honest ANYTHING for that matter.
One question is the PDA’s total debt. Board packets indicate the PDA would not refund lodging deposits the last six months, so these are probably a signiicant current liability. The PDA’s debt could also include amounts owed Kitsap Bank, First Federal, credit card companies, or other financial institutions; suppliers and contractors; the amount of taxes payable to other government agencies for sales, lodging or social security withholdings; insurance; utilities; and payroll, including accrued vacation or sick time. The other critical question, in terms of the PDA or a successor starting up again, is working capital: the amount of money that must be spent on salaries, supplies, marketing, utilities, etc. to simply get the business going again before revenue flows in. That can sometimes be partially financed with trade debt, but that source would be out if the PDA leaves unpaid debts behind it, even if its reorganized under a new legal entity.
Saltherring- Get over it. Focus on what is right before you. Locally. Thousands of local make a nation. Trust there are others working in small ways to get to the place all need to be. Don’t play donkeys and elephants. Do some work. Help get the FWPDA out and veterans and first responders in. The rest will take care of itself. No more pimps.
Rod Stevens thanks for the thoughts. Something has to change. Veterans and First Responders and opening up the campus for everyone will find a way if anything can. There are amazingly capable people out there held at bay by the local status quo. They are laughable in ability. The emperor has no clothes. Many know it. All must come to terms with it. Fort Worden can be an example and answer to the incompetence so many see. This comment stream needs to keep going. Public input. On the record. Then we petition the State.
Harvey-If the results of the recent presidential “election” stand I and millions of patriots like me will never “get over it”, and you should not either, for it’s not about “donkeys and elephants”, but about the United States Constitution and the rule of law. For without the law, and lawfully conducted elections, we cease to be a republic and will ultimately descend into anarchy. Look no further than downtown Minneapolis, Portland or Seattle to see what that looks like. But then it’s your choice, too. And those who choose to “get over it” will deserve what they get.
Bad choice of words. Know your truth and keep working where you can to make positive changes. Giving up locally is no answer. Fort Worden is a huge symbol. It was taken and misused.
Many say that about the election. We can plainly see locally what one group has done.
Give the fort back to the community it was built for. The military, for our broken vets. If we can’t do that, give it back to the broken and troubled youth that called Fort Warden home when the military left… If we can’t do that give it back to the broken families that are hardest hit during this time in our history. If we can’t do that, let it rot…..The state failed to run it, and the city ran out of ways to exploit it. Why would we want the same people who tore it down to pretend they know how to fix it?
Check out the site dilbert.com. 12/31/2020. Scott Adams must have heard about this. He sure hit the nail on the head.