No timeline for repayment of $150,000 city loan to Harbor-Works authority
By Paige Dickerson, Peninsula Daily News
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"There is no specific date in the contract," said Bill Bloor, city attorney.
"But there is a trigger. When they get funds, that is when they should start paying us back."
Port of Port Angeles commissioners unanimously approved giving Harbor-Works $150,000 last week — with no loan agreement.
The port's agreement hasn't been drawn up yet, said Bob McChesney, port executive director, on Wednesday.
"Ours will closely resemble what the city has," McChesney said.
"That is fairly standard for this sort of thing."
The authority, created by the city and Port of Port Angeles in May, wants to acquire the Rayonier pulp mill site, oversee and hopefully speed up its long-stalled cleanup and eventually market the property.
Revenue from sale of the mill site, which is still owned by Rayonier, hopefully will pay back the $300,000 in loans, said Orville Campbell, chairman of the Harbor-Works five-member board that was formed in June.
The Harbor-Works board also hopes to acquire grant funding from state agencies.
Since 2000, Rayonier Inc. — which owns the 75-acre site — the state Department of Ecology and the Lower Elwha Klallam tribe have supervised its cleanup.
The waterfront site , which includes a buried ancient Klallam village on its eastern half — is contaminated with pockets of PCBs, dioxin, arsenic and other toxins left by the pulp mill which operated there for 68 years before closing on March 1, 1997.
The Rayonier site is "moderately contaminated," perhaps 2 or 3 on a scale of 10, the U.S. Environmental Protection Agency said in 2000.
Interest rate
The city's agreement — which was developed by the city staff — allows for an interest rate "equal to the rate of return on the State of Washington Local Government Investment Pool as determined as of the last day of the month prior to the date the funds are advanced."
The anticipated interest rate for August is 2.35 percent, said Robbi Stedman, the administrator for the investment pool.
No collateral was asked for the loan, because the authority has nothing to put up for collateral, Bloor said.
"There is potential that once they have something, that we could collateralize that, but that is just a hypothetical thing," he said.
The authority is required to give the city quarterly reports on financial activities and expectations.
The city money will come from its economic development fund, which has $7.5 million in state settlement money after the state Department of Transportation abandoned the Hood Canal Bridge graving yard project on Marine Drive in 2004.
The funds have to be used for economic development, city spokeswoman Teresa Pierce said.
A total of $200,000 was budgeted for "Rayonier property development" in 2008, Pierce said.
The loans are intended to be start-up funds for the group, which approved anticipated operating expenses of about $195,000 through December.
The authority is operating with an interim manager, Jim Haguewood — who is being paid $8,000 for two months work, and who is also the director of the Clallam County Business Incubator and the former head of the Clallam County Economic Development Council.
The five-member board plans to hire a permanent executive director. It has budgeted $12,000 monthly for the position, but has yet to set a salary for the post or solicit applicants.
The loan will be used to pay bills already incurred and to pay for the rest of the year's expenses, Campbell said.
Owes city
Some of those bills include more than $5,000 owed to the city for assistance from city staff.
Harbor-Works has been billed and will pay once it receives loan money from the city and port, Campbell said.
The money also will go toward an executive director once the person is hired, he said, adding that an executive director is an important piece of the puzzle in figuring out the direction of the authority.
"He is in the center of the whole thing," he said.
"He is the one that has to lead the whole process."
The Port Angeles City Council voted 4-2 for the loan.
Mayor Gary Braun and council members Karen Rogers, Dan Di Guilio and Don Perry voted for it, while Deputy Mayor Betsy Wharton and council member Cherie Kidd voted against it.
Both Wharton and Kidd said they supported the authority's goals — but said they needed more time to go over the loan agreement.
The proposed loan agreement — which was prepared by city staff — was not part of the regular packet issued on Friday before the Tuesday meeting.
Braun and Perry both said they were uncomfortable with voting on it so quickly, but decided to vote in favor of it to support the public development authority.
In addition to Campbell, Harbor-Works board members are Howard Ruddell, owner of Ruddell Auto Mall; Karen McCormick, First Federal president and CEO; Jerry Hendricks, former Port of Port Angeles executive director; and retired attorney Bart Irwin.
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Reporter Paige Dickerson can be reached at 360-417-3535 or paige.dickerson@peninsluadailyenws.com.
Last modified: August 20. 2008 9:00PM