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HomeMy WebLinkAbout110121ca05 JEFFERSON COUNTY BOARD OF COUNTY COMMISSIONERS AGENDA REQUEST TO: Board of County Commissioners FROM: Mark McCauley, Interim County Administrator DATE: November 1, 2021 SUBJECT: Fort Worden Public Development Authority (PDA) Loan Guarantee STATEMENT OF ISSUE: 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 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. 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 recommended 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. The Board discussed these options on Monday, October 25, 2021 in open session and following the discussion voted unanimously to proceed with the grant option. They also directed staff to prepare a grant agreement for the Board to consider for the Monday, November 1, 2021 Board meeting. FISCAL IMPACT: Fiscal impact is $378,000 which will be paid out of Fund 123 —Grants Management Fund, which has the budget to support the expenditure. This is an eligible expense of ARPA funds, which is cash that the County has on-hand currently for purposes such as this. RECOMMENDATION: That the Board approve the attached grant agreement with the Fort Worden Public Development Authority. REVIEWED BY: Mark McCaul nterim County Administr to Dat GRANTEE AGREEMENT WITH THE FORT WORDEN PUBLIC DEVELOPMENT AUTHORITY This Grantee Agreement ("Agreement") is by and between Jefferson County, a Washington political subdivision ("County") and Fort Worden Public Development Authority, ("Grantee"). WHEREAS, on March 11, 2021, President Biden signed the American Rescue Plan Act (ARPA) into law; and WHEREAS, the ARPA allows that funds received under the act can be used to address negative economic impacts caused by the Covid-19 pandemic; and WHEREAS, the Grantee has experienced massive Covid-19 related revenue losses which threatened its very existence and required exceedingly complex and innovative financing strategies to ensure its survival; and WHEREAS, the Grantee is a major employer and economic driver in Jefferson County and the larger region: and WHEREAS, the County has a legitimate and significant interest in the survival of the Grantee and wishes for it to thrive: and NOW, THEREFORE, in consideration of the foregoing recitals, which are incorporated herein by reference, and the terms and conditions set forth below, the parties agree as follows: 1. Grant Amount and Grantee's Use of Grant Funds. The Grant amount is $378,000. The Grant shall be used in a manner consistent with the requirements of ARPA. The Grant shall be used for two separate purposes consistent with the requirements of ARPA, in order of time, as follows: a. First use: as a loan guarantee to be used, if necessary, to service payments due on a Revenue Anticipation Note, 2021 B (Taxable) (Revolving Line of Credit) until maturity. Amounts used for this purpose are to be used for the second use, as soon as cash flow is sufficient to do so. b. Second use: any of the $378,000 remaining after the second use must be used for capital improvement projects promoting economic development or energy efficiency on the Fort Worden campus. Should Grantee wish to use any of the Grant funds other than the two separate purposes specified above, the Grantee must first obtain prior written approval of the Jefferson County Board of Commissioners. Any use must be consistent with the requirements of ARPA. 2. Reporting Requirements. Grantee will submit a report to the County on an annual basis by January 31 of each year. The report will include information regarding the usage of the $378,000 grant amount. This will include: 1 a. Amounts used for the first use, namely to guarantee the payments on the Revenue Anticipation Note, amounts repaid and amounts still owing. b. Amounts used for the second use, namely financing capital improvements that promote economic development on the Fort Worden campus. c. Exit letters of any independent or state/federal audits performed,and any findings. 3. Effective Date and Term. This Agreement shall commence on the date when last executed by the parties and remain in effect until the Grant is exhausted following the three uses listed above. 4. Termination. The County may terminate this Agreement, for convenience or otherwise and for no consideration or damages, upon prior notice to the Grantee. 5. Independent Grantee. Each party under this Agreement shall be for all purposes an independent Grantee. Nothing contained herein will be deemed to create an association, a partnership, a joint venture, or a relationship of principal and agent, or employer and employee between the parties. The Grantee shall not be, or be deemed to be, or act or purport to act, as an employee, agent, or representative of the County for any purpose. 6. Indemnification. The Grantee agrees to defend, indemnify and hold the County, its officers,officials, employees,agents and volunteers harmless from and against any and all claims, injuries, damages, losses or expenses including without limitation personal injury, bodily injury, sickness, disease, or death, or damage to or destruction of property, which are alleged or proven to be caused in whole or in part by an act or omission of the Grantee, its officers, directors, employees, and/or agents relating to the Grantees' performance or failure to perform under this Agreement. The section shall survive the expiration or termination of this Agreement. 7. Compliance with Laws. Guidelines. The Grantee shall comply with all federal, state, and local laws and all requirements (including certifications and audits), to the extent applicable, when seeking Reimbursement. 8. Maintenance and Audit of Records. The Grantee shall maintain records, books, documents, and other materials relevant to its performance under this Agreement. These records shall be subject to inspection, review and audit by the County or its designee, the Washington State Auditor's Office. If it is determined during the course of the audit that the Grantee was reimbursed for unallowable costs under this Agreement or any, the Grantee agrees to promptly reimburse the County for such payments upon request. 9. Notices. Any notice desired or required to be given hereunder shall be in writing, and shall be deemed received five(5)days after deposit with the U.S. Postal Service,postage fully prepaid, certified mail, return receipt requested, and addressed to the party to which it is intended at its last known address, or to such other person or address as either party shall designate to the other from time to time in writing forwarded in like manner: 2 Grantee Executive Director Fort Worden Public Development Authority 200 Battery Way Port Townsend, WA 98368 Jefferson County County Administrator Jefferson County Courthouse 1820 Jefferson Street Port Townsend, WA 98368 10. Improper Influence. Each party warrants that it did not and will not employ, retain, or contract with any person or entity on a contingent compensation basis for the purpose of seeking, obtaining, maintaining, or extending this Agreement. Each party agrees, warrants, and represents that no gratuity whatsoever has been or will offered or conferred with a view towards obtaining, maintaining, or extending this Agreement. 11. Conflict of Interest. The elected and appointed officials and employees of the parties shall not have any personal interest, direct or indirect, which gives rise to a conflict of interest. 12. Time. Time is of the essence in this Agreement. 13. Survival. The provisions of this Agreement that by their sense and purpose should survive expiration or termination of this Agreement shall so survive. Those provisions include without limitation Indemnification and Maintenance and Audit of Records. 14. Amendment. No amendment or modification to this Agreement will be effective without the prior written consent of the authorized representatives of the parties. 15. Governing Law; Venue. This Agreement will be governed in all respects by the laws of Washington state, both as to interpretation and performance, without regard to conflicts of law or choice of law provisions. Any action arising out of or in connection with this Agreement may be instituted and maintained only in a court of competent jurisdiction in Jefferson County, Washington or as provided by RCW 36.01.050. 16. Non-Waiver. No failure on the part of the County to exercise, and no delay in exercising, any right hereunder shall operate as a wavier thereof; nor shall any single or partial exercise by the County of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedy available to the County at law or in equity. 17. Binding Effect.This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors. 3 18. Assignment. Neither party shall assign or transfer any of its interests in or obligations under this Agreement without the prior written consent of the other party. 19. Entire Agreement. This Agreement constitutes the entire agreement between the County and the Grantee for the use of funds received under this Agreement and it supersedes all prior or contemporaneous communications and proposals, whether electronic, oral, or written between the parties with respect to this Agreement. 20. No Third Party Beneficiaries. Nothing herein shall or be deemed to create or confer any right, action, or benefit in, to, or on the part of any person or entity that is not a party to this Agreement. This provision shall not limit any obligation which either party has to the Washington State Department of Commerce of these grant funds, including the obligation to provide access to records and cooperate with audits as provided in this Agreement. 21. Severability.In the event that one or more provisions of this Agreement shall be determined to be invalid by any court of competent jurisdiction or agency having jurisdiction thereof,the remainder of this Agreement shall remain in full force and effect and the invalid provisions shall be deemed deleted. 22. Counterparts. This Agreement may be executed in counterparts, any of which shall be deemed an original but all of which together shall constitute one and the same instrument. 23. Authorization. Each party warrants to the other party, that the person executing this Agreement on its behalf has the full power and authority to do so. 24. Public Records Act.Notwithstanding any provisions of this Agreement to the contrary, to the extent any record, including any electronic, audio, paper or other media, is required to be kept or indexed as a public record in accordance with the Washington Public Records Act,Chapter 42.56 RCW (as may be amended), the Grantee agrees to maintain all records constituting public records and to produce or assist the County in producing such records, within the time frames and parameters set forth in state law. The Grantee also agrees that upon receipt of any written public record request, Grantee shall, within two business days, notify the County by providing a copy of the request per the notice provisions of this Agreement. (SIGNATURES APPEAR ON THE NEXT PAGE) 4 IN WITNESS WHEREOF', this Agreement is executed and shall become effective as of the last date signed below. JEFFERSON COUNTY BOARD OF FORT WORDEN PUBLIC COMMISSIONERS DEVELOPMENT AUTHORITY By: By: Kate Dean,Chair DATE DATE Name: SEAL: A IThST: Carolyn Galloway DATE Clerk of the Board Approved as to form only: ,/"? October 28, 2021 Philip C. Hunsucker DATE Chief Civil Deputy Prosecuting Attorney