By Paul Gottlieb
Peninsula Daily News
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Attorney Richard Shattuck, who is seeking mediation, is being paid with money the downtown group received from the city in the past.
City officials contend the downtown group has breached its agreement with the city.
They suspended funding to the group July 24.
PADA board President Bob Lumens said Friday the city and the downtown association could part ways over the city officials' contention that the group is not doing what it should be doing to maintain parking lots and retain and recruit businesses.
“I think that's what [the city] had in mind in the first place,” Lumens said.
Lumens said he did not know how long PADA and the city could maintain a relationship.
“I hope not for much longer,” he said.
“I don't see that they've left us any room to work,” Lumens said.
“Things have all gone to hell.”
Lumens said if there is a split, it would leave the downtown association to go it alone with business-and-occupation (B&O) tax proceeds PADA receives directly from businesses that totaled $34,000 in 2013 and whatever fundraisers the group would sponsor.
Lumens said the downtown association, made up of 178 to 200 businesses, would ramp up its efforts to collect the maximum of $133,000 in B&O taxes.
The downtown association receives $20,000 in B&O taxes from the city for the Main Street Program.
The city paid the group $65,000 in Parking and Business Improvement Area (PBIA) money from mandatory parking assessments on downtown businesses.
PADA also got proceeds from parking-permit decal sales and payments from a lease agreement that covers maintenance of the parking lot used by the state Department of Social and Health Services.
If there is a breakup, PADA's maintenance of city parking lots would end, leaving the city to decide how to spend PBIA funds that have been suspended, as would occur from proceeds generated by the decals and the lease agreement.
Shattuck, who has represented PADA in the past, is being paid with downtown association general funds that include money from the PBIA, Lumens said.
Shattuck said Friday in an interview that he has spent “a couple of hours' worth of time” representing PADA this time around.
But his participation in the current dispute could create another sticking point with the city.
Community and Economic Development Director Nathan West said Friday that lawyer fees are an improper use of money that the organization should instead be spending, for example, on maintaining city parking lots — which the city says PADA is not adequately doing.
“City funding that goes to the downtown association must be utilized for contract purposes, and the hiring of an attorney is not one of those contract purposes,” West said.
The fact that city funds are paying for an attorney “will be presented to the city attorney [Bill Bloor] for consideration,” West said.
City Manager Dan McKeen said in a letter Tuesday to Lumens that the city will continue withholding payments to PADA.
“Because payment is due for services performed, no payment is due until PADA shows evidence of performance,” McKeen said.
McKeen raised financial accountability concerns with PADA in May before the city took action two months later.
McKeen said in a July 24 letter to Lumens that the downtown association had demonstrated a “lack of measurable performance” that included tepid business recruitment, lack of documentation on existing downtown business activity and being inattentive to parking lots that were “in a state of disrepair.”
In his Aug. 5 response, Shattuck said the city and downtown association should “engage in a formal mediation conference” to resolve their differences and should discuss “a long-term capital program” to improve downtown parking lots.
Shattuck said the standards for business recruitment were unilaterally imposed without justification and “go well beyond the requirements” of the funding agreement, including making repairs to the parking lots.
“The PADA is clearly not in default under the terms of the funding agreement,” he said.
“Nowhere in the funding agreement is there a requirement that the PADA be financially responsible for surface grinding, asphalt paving or asphalt overlaying,” Shattuck added.
“There clearly has been a default under the funding agreement — that is the city's unilateral and unauthorized 'suspension' of further payments until the PADA meets the city's demands as outlined in [McKeen's] July 24 letter.”
In his Tuesday letter, McKeen told Shattuck that the downtown association had done nothing to provide the documentation requested July 24.
City parking lots “are badly deteriorated,” he said.
“I need to be very clear and state the city rejects any implication it pay additional money to the PADA,” McKeen said.
“According to the funding agreement, it is the sole responsibility of the PADA to maintain these parking lots; therefore, PADA is solely responsible to remedy this situation.”
One suggestion from Shattuck that McKeen did not address in his letter was Shattuck's repeated offer in his Aug. 5 letter to have the dispute mediated.
“Let's find mutual ground where the city and the downtown association say, 'Hey, we are reaching for the same goal, let's not go through litigation,'” Shattuck said Friday in an interview.
McKeen said Friday that mediation is not a possibility until the downtown association addresses “unanswered questions” regarding its activities.
“At some point, we might be able to sit down and discuss where we're at, but we never have had some basic questions answered by the Port Angeles Downtown Association.”
In his letter to Shattuck, McKeen said Bloor would be drafting “a formal response” to Shattuck's Aug. 5 letter.
West said Friday that Bloor would send that letter to Shattuck by Sept. 5.
A city audit of downtown association finances will be completed by Sept. 15, West said.
Senior Staff Writer Paul Gottlieb can be reached at 360-452-2345, ext. 5060, or at email@example.com.