HomeMy WebLinkAbout102521cabs01 JEFFERSON COUNTY
BOARD OF COUNTY COMMISSIONERS
AGENDA REQUEST
TO: Board of County Commissioners
Mark McCauley, Interim County Administrator
FROM: Kate Dean, Commissioner, District 1
DATE: October 25,2021
SUBJECT: Fort Worden Public Development Authority (PDA) Loan Guarantee
STATEMENT OF ISSUE: As the BOCC discussed recently, the Fort Worden Public Development
Authority requested the County's assistance in guaranteeing $378,000 in loans that will enable the PDA to
refinance debt and resume full operations, which were greatly impacted by Covid-19. The BOCC gave
staff and Commissioner Dean the green light to proceed with researching the best mechanism to do this in an
effort to help the PDA, an important economic engine for the County, especially since the PDA was not
eligible for any recovery funds.
Commissioner Dean has worked with Interim County Administrator Mark McCauley, Treasurer Stacie
Prada and Chief Civil Deputy Prosecuting Attorney Phil Hunsucker to consider the best mechanism to
provide this loan guarantee. All parties involved recognize the risk associated with the PDA, which has
been found to be out of compliance in financial management and has a former staff member being
investigated for fraud. As discussed in the recent BOCC meeting, the new PDA board and staff seem to be
addressing financial problems with new internal controls and strict audits. They have undergone
significant restructuring, breaking apart hospitality, capital projects and mission-driven life-long learning
activities, making their financials more transparent and accountable. While the financial future and
sustainability of the PDA are still vulnerable at this time, it appears as though they have taken appropriate
steps to get the economic engine started up again and comply with generally accepted accounting principles
for public entities. Thus, Commissioner Dean recommends that the BOCC proceed with a loan guarantee.
ANALYSIS: Significant thought and research have gone into exploring the various mechanisms that could
be used to provide this loan guarantee. Treasurer Prada outlined a number of loan options, and found that
there was no pathway that was clear and compliant. Some of the issues that arose:
• If we use ARPA funds for a loan, they must be spent before the term of this guarantee. Failure to
do so could require they be returned to the federal government;
• Loan funds would still remain in the name of the county and would therefor need to be accounted
for, and there is no clear way to account for funds dedicated to the purpose of another entity;
• Since the PDA is not a junior taxing district, we cannot use registered warrants for this purpose;
• Interfund loans are allowed via the Investment Policy, but only for NON-permanent diversion of
funds, a standard that cannot be reached since these funds are at risk of not being returned.
All of these options also required significant accounting, reporting, and tracking over the course of many
years, which in itself presents risk to the County, especially with inevitable turnover of staff that can be
anticipated before December 31, 2025,the latest date which the loans may mature.
FISCAL IMPACT: Guaranteeing the PDA's loans will require that the County will in some way"tie up"
$378,000. This is an eligible expense of ARPA funds, which is cash that the County has on-hand currently
for purposes such as this.
RECOMMENDATION: Given the challenges and uncertainty associated with executing a loan to the
PDA, after much discussion it appears that providing a grant(instead of a loan)to the PDA is the most
transparent and straightforward pathway to support their effort to return to full and sustainable operations.
Using the County's existing grant agreements for other CARES and ARPA disbursements, the County can
stipulate conditions and safeguards to ensure that the use of these funds is consistent with the BOCC intent
and ARPA eligibility. These conditions could include the following requirements:
• That the funds only be used for loan guarantee and repayment;
• Any funds remaining at the end of the term be used to fund further debt, economic development
activities (perhaps as defined in the County's Public Infrastructure Fund code?) or capital projects;
• The County receives annual reporting on the use of these funds and the status of audits.
REVIEWED BY:
9 Z/ Z
Mark McCauley terim County Administrator Date