PORT ANGELES — Clallam County commissioners rejected a plea Monday for a $7.75 million loan to help pay for improvements to the city’s old landfill on an eroding bluff overlooking the Strait of Juan de Fuca.
During their Monday work session, the three-person board declined to ask the county Prosecuting Attorney’s Office to examine the city’s proposal after County Treasurer Selinda Barkhuis advised against loaning the money — and went against the recommendation of County Administrator Jim Jones.
“It would be very difficult to go against her stated position, quite honestly,” commissioner Chairman Mike Chapman of Port Angeles said.
“I’m not hearing a lot of enthusiasm to take this on today. I don’t see how a loan can move forward.
“She’s the people’s representative with the people’s money.”
Port Angeles city officials who attended the meeting, including City Manager Dan McKeen, asked the county to help cover half the $15.5 million of the total of $19.5 million needed to address the bluff erosion and prevent waste from the closed landfill from falling onto the shoreline and into the Strait.
Supplemental funding of $2.5 million also may be provided by the state Department of Ecology, which has already committed $4 million to the project.
“If we don’t do anything, we will have a disaster on our hands,” McKeen said.
The landfill is 11 feet away from the bluff, which is eroding at a rate of 3 to 5 feet a year.
“As a project, it’s obviously very important, but it’s not a good investment opportunity, and that’s where I’m coming from,” Barkhuis said.
“In my opinion, this loan is not liquid and is not safe.”
Barkhuis read a three-page statement to the commissioners before they declined to move the proposal forward for further review by county staff.
“The city’s increased cost of borrowing in the financial market is not ‘rate-of-return’ opportunity for the county — it is a giant red flag impugning investment safety,” Barkhuis said in the statement.
“The county’s track record collecting on any loans made to other districts is dismal.”
But Jones said the funds would be paid back at a higher interest rate than the county is earning, and that the county had the money available.
“There is some portion of almost $30 million worth of county funds that are available to commissioners at their sole discretion to loan,” he said.
“We could afford to go down this path.”
“I totally disagree with that,” Barkhuis responded.
The city’s proposal contained two options: 15- and 25-year bonds on the $7.75 million.
Under the 15-year bond, the county would receive $2.5 million in interest.
Under the 25-year bond, the county would receive $5.4 million in interest.
After five years, the county could have employed a “call option” for either issue, under which the city would be required to pay any interest owed and the remaining principle.
“You can call it in five years,” Barkhuis said.
“The money may be there, or it may not.”
She added that if reserve funds already dedicated for such areas and law and justice services and unanticipated capital needs are loaned out, they would not be readily available for those needs.
Commissioners acknowledged that paying for the landfill fix will fall on the shoulders of landfill users in the form of fees.
Officials present at the meeting agreed easing that burden meant that “flow control” needs to be established, with all solid waste collected in Clallam County ending up at one of two waste sites in the county, both of which are operated by the city of Port Angeles.
“We want to ensure that we have a revenue stream that can pay the bills at the landfill but protect against liabilities,” McKeen said.
“If this was in fact just a city issue, we wouldn’t be here talking about it.”
Jones also insisted the county funds were not an investment opportunity.
“Is the county legally allowed to loan money to taxing district? Clearly yes.
“That is something the commissioners can do.”
Monday’s meeting included a PowerPoint presentation by Tom Bourque, director of engineering for Seattle-based Herrera Environmental Consultants.
Herrera is designing the project in a manner that employs what Burke called a “managed retreat approach” to address the eroding bluff by managing the site within budget cycles and funding limitations.
McKeen said he was disappointed by the commissioners’ rejection, adding that city staff will continue to look for financing alternatives.
The entire remaining $15.5 million for the project will be financed, he said.
“I’m only disappointed in that many of the options will likely be more expensive options than an option that we could partner with the county,” he said.
“Having said that, I also understand the county has to look out for their financial requirements.”
The city wants to begin construction on the landfill project in mid-May.
Doherty and Chapman questioned why the city did not approach the county sooner, for which McKeen apologized.
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Senior Staff Writer Paul Gottlieb can be reached at 360-452-2345, ext. 5060, or at pgottlieb@peninsuladailynews.com.