PORT TOWNSEND — Elliot Bay Assets Solutions is still early in its mission following about six weeks of fact finding on the business challenges of the Fort Worden Public Development Authority and affected stakeholders.
The receiver was assigned by Judge Brandon Mack of Jefferson County Superior Court in early October.
Kitsap Bank requested that the court put a pause on the dissolution of the Fort Worden Public Development Authority (FWPDA) just days before a scheduled city council dissolution hearing.
Elliot Bay Assets Solutions, a Seattle-based company, reports to the Superior Court, said Bill Weisfield a principal with the group. It is a neutral party and does not report to any of the involved parties.
“The goal is to communicate and coordinate for a plan to go forward,” Weisfield said. “That’s what the receiver Elliot Bay Asset Solutions is doing right now.”
Weisfield clarified what a receivership is and the core duty of his company.
“The duty of the receiver, under state law, is to preserve and protect the assets of the PDA,” Weisfield said. “That’s language from the state statute that says what the receiver’s supposed to do. A receivership basically permits and calls for a timeout, ‘everybody just freeze.’
“It permits the receiver to collect the facts and understand what the assets and liabilities of the situation are,” he continued. “The receiver can both handle things in the short term and make recommendations for the longer term.”
Recommendations, Weisfield explained, can be anything business-like, including selling assets.
Elliot Bay Asset Solutions has performed more than 100 receiverships over the past several years, Weisfield said, adding that all receiverships are unique.
This particular receivership is unique due to the multiple agencies involved, including state parks, the city of Port Townsend, Kitsap Bank, the PDA and the property’s lessees, Weisfield said.
“Another aspect that is somewhat unique is the magnitude of the park, 400 acres, of which 93 are in the PDA,” Weisfield said. “It’s a big operation. It’s not like a single hotel or a single motel. There’s a lot to get your arms around here and a lot of moving pieces. I would say it’s not totally unique, but it has some unique aspects to it.”
Weisfield said he thinks the company is capable and the receivership can be successful under their management.
Weisfield listed Washington State Parks and Recreation Commission, the PDA, Kitsap Bank, the city of Port Townsend, Fort Worden Hospitality, the Fort Worden Foundation, Centrum and Elliot Bay Asset Solutions as involved parties.
“I think it’s fair to say that everybody that I mentioned regards the park as a precious asset,” Weisfield said.
Weisfield said the PDA owes Kitsap Bank $6 million in bonds, and that was a motivating factor in requesting the receivership. He also believes the bank is motivated by community interests.
“From my perspective so far, Kitsap Bank gets a lot of credit for stepping up,” Weisfield said. “They are paying for the receivership. There was no money in the PDA to pay for the receivership. A receiver normally is paid out of assets of the receivership estate.”
Receiverships are sometimes paid out of liquid assets and payment may be delayed until assets are sold, Weisfield said.
There are also a number of nonprofits on the property. Lease structures in recent years have seen the lessees paying no rent. Instead, they agreed to perform maintenance on the buildings they occupy.
Weisfield said those agreements were ill conceived and that tenants would need to carry their weight in revenue for the park’s future success to be feasible.
Weisfield said the biggest issue on the property is maintenance. He distinguished between operations, repair maintenance and capital projects.
The PDA procured a strategic plan earlier this year from PROS Consulting. The plan advised that the park would need to invest $150 million to $300 million over 10 years. Weisfield said he agrees with the plan’s assessment.
“One of the challenges for the parties moving forward is to bring in additional profit-generating entities that will create a bottom line, which will permit the maintenance and the return to Kitsap Bank and the renovation of the buildings on site,” Weisfield said.
The 73 buildings onsite are about 70 years old, Weisfield said. The majority of the buildings were constructed in the 1920s, ’30s and ’40s.
“There has to be a stop to the spiraling where you have old buildings that aren’t attractive that need to be updated to bring people more revenue and more profit,” Weisfield said.
Weisfield added it seems right that maintenance costs should be resumed by state parks, which owns the park, but the state has a limited budget for the project. He said the receiver is in communication with the stage agency.
Washington State Parks was working with the PDA to resume management of the park when the receivership was ordered.
Weisfield compared the process of overcoming the enormous future costs of building maintenance to eating an elephant, something which must occur one piece at a time.
The first step is to focus on the property’s assets that are already generating revenue and to further invest in those sources.
Weisfield named Fort Worden Hospitality and Centrum as assets which generate some revenue for the park.
Also, the property needs to outgrow its seasonality, he said.
“What has to happen is more activity has to be brought to the park in order to create vitality, whereby there’s something happening all of the time, there’s revenue generating all of the time,” Weisfield said. “Right now the park is very seasonal. The bulk of revenue and therefore profits are generated in the months of June, July, August and September, and the other eight months are not profitable months.”
Weisfield compared the seasonality of the property to a ski resort or a lakefront business.
The park needs other sources of revenue, Weisfield said, whether they be grants, gifts, new tenants or possibly all of the above.
“A receivership is not intended to be indefinite,” Weisfield said. “It should get things righted, it should preserve and protect the asset, and it should have a plan in place. Then the receiver goes before the court and asks the court to terminate the receivership.”
“It remains to be seen, but a general manager or someone who will orchestrate all of this and make it all happen going forward is what is called for,” he added.
The court will want to see that there is order, reasonableness and that the plan going forward makes sense, Weisfield said.
“The judge will know,” he said.
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Reporter Elijah Sussman can be reached by email at elijah.sussman@sequimgazette.com.
