Fort Worden PDA moves to cover debt, shortfall

Pandemic cut revenues by 85 percent

PORT TOWNSEND — With annual revenues down 85 percent and no cash reserves, the Fort Worden Public Development Authority is scrambling to repay a $1.5 million line of credit due in December and raise hundreds of thousands of dollars to cover operating expenses by the end of the year.

David Timmons, former Port Townsend city manager and the PDA’s acting associate executive director, is hoping the city will guarantee a new $2 million, three-year line of credit that would allow the PDA to repay Kitsap Bank and complete the Makers Square project.

“We’re asking the city to provide a backstop to the $2 million,” Timmons said Monday. “If the city feels it has to decline or cannot accept that much liability, we need to find another path forward. Time is our enemy right now.”

Alternatively, Timmons said he could ask the county to split the burden with the city or explore other options to secure the new line of credit, which would not only cover the $1.5 million debt but also make up for a $500,000 state grant that did not come through for the Makers Square project, which is now due for completion Dec. 9.

If the PDA is unable to pay its debts due to a lack of funds, that could lead it to declare insolvency, Timmons said.

In that worst-case scenario, the City Council would decide whether to dissolve the entity it created in 2011.

“They wouldn’t accrue the liability, but the carnage that would follow from a decision like that, because it would affect so many people, so many jobs, so many businesses,” he said. “That’s why I’m working so hard to find a way to avoid it.”

Timmons, who is set to become the PDA’s interim chief when outgoing Executive Director Dave Robison retires Nov. 15, said he is also talking with private donors about helping to cover a $250,000 to $350,000 operating deficit by the end of the year.

“I think with everyone pulling together, the PDA will get through this,” he said. “It is one of the economic anchors of the community. The outpouring of support I’m hearing is greater than the criticism, and I’m trying to tap into that to find ways for people to help us.”

Operating revenues this year amount to about $1 million compared with $7 million in 2019, he said.

In the course of preparing for a regularly scheduled state audit of its 2018 and 2019 financials, Timmons and other PDA staff discovered that money from two lines of credit and a loan had been diverted to cover operating losses created by the economic impacts of the coronavirus pandemic.

Specifically, $400,000 was diverted from the $1.5 million line of credit for Makers Square; $600,000 was diverted from a $2 million line of credit, due in the first quarter of 2021, for the glamping project; and $300,000 was diverted from a $1.6 million loan for energy efficiency projects.

“The diversion of the money was actually in direct response to COVID,” Timmons said. “If COVID had not happened, you would not have needed to redirect those funds.”

Members of the PDAs board of directors reacted with shock Oct. 28 when Timmons first detailed the findings.

“This should not have been a surprise to the board,” said Jane Kilburn, the board secretary. “I’m just stunned.”

Monthly financial reports to the board during the early part of the pandemic “overstated income and understated expenses to maintain the reopening objectives,” Timmons said.

“Nowhere was it indicated to us that we were using capital dollars for operations,” said Todd Hutton, board co-chair. “I think we need to understand how that happened and why it happened.”

Timmons said the how and why will be investigated by state auditors as part of an accountability audit separate from the financial audit.

A state audit of the 2016 and 2017 financials found that the PDA did not have adequate controls over financial statements. That audit led the PDA to create a finance and audit committee.

Timmons is preparing a lean 2021 budget due by year’s end based on a slimmed-down business model, and the board has resolved join him in doing whatever’s necessary to ensure the PDA’s future.

“We can’t dwell in this for long; it will kill us,” said Jeff Jackson, board treasurer. “We have to fix it, and we have to find a solution that we can build toward our future.”


Jefferson County senior reporter Nicholas Johnson can be reached by phone at 360-417-3509 or by email at

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