By Paul Gottlieb
Peninsula Daily News
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Commissioners heard impassioned pleas from park and recreation district board members at the commissioners’ Monday work session before asking the county Prosecuting Attorney’s Office to explore the ramifications of forgiving the loan or having the district delay payment until 2023, when the district will finish paying for the facility.
The district runs the Quillayute Valley Aquatic Center, 91 Maple Ave., next to the Forks Community Center.
The lap pool remains, but the rest of the structure is a fitness center.
Voters approved a $2.9 million bond issue to build the facility in 2005 but in 2006 rejected a tax levy to fund operations.
It was closed in 2007 and later reopened, becoming a magnet for residents, park board members said.
But the district is now four years past due on the loan and owes $31,892, an amount that includes 12 percent interest.
The county Opportunity Fund, from which the loan came, consists of sales tax revenues that are loaned for public infrastructure projects that lead to economic development.
“I hope the county will not wait until the Quillayute Valley Park and Recreation Board is filing for bankruptcy and the county will end up with it back,” park board chair and former Forks Mayor Nedra Reed told the commissioners.
Commissioners could have a report from the county Prosecuting Attorney’s Office at their next work session Monday and “definitely” will have it by the May 6 work session, Chief Deputy Prosecuting Attorney Mark Nichols said after the meeting.
His office will explore competing interpretations of state law over use of timber tax revenues, one interpretation of which, as commissioners’ Chairman Mike Chapman put it, hit like “a nuclear bomb.”
County Treasurer Selinda Barkhuis said the state Auditor’s Office agreed that timber tax revenues could be used to pay off the 2004 loan.
“It now appears that the district did have, and continues to have, more than sufficient funds to meet its obligations under the note,” Barkhuis told Reed in a March 22 letter.
Barkhuis said the matter should be resolved in one of three ways:
-- Paying the money owed by April 30.
-- Meeting with commissioners before April 30 “to discuss why the district should not immediately pay the amount due.
-- Or by allowing Barkhuis’ office — subject to the commissioners’ approval — to withdraw the owed money from the parks district’s $650,000 bond fund, which includes timber tax revenues.
When Barkhuis raised the issue of repayment, “although we were a bit taken aback in the manner in which this was approached, we were more than willing to work out an arrangement to do so,” Reed said in a five-page letter to Commissioners Mike Chapman, Mike Doherty and Jim McEntire.
But the district’s bond attorneys at Foster Pepper PLLC in Seattle had a different interpretation.
“Timber revenue can only be used for capital expenditures or debt service accrued by a ‘vote of the people,’ by which this loan was not established,” Reed said in her letter.
“It was never our intention to default on the loan,” she said.
“However, we find we simply do not have the money to cover the payments.”
Reed and park and recreation district board members Gordon Gibbs, Don Grafstrom and Bill Peach, a 2010 candidate for Doherty’s West End county commissioner seat, also attended Monday’s meeting.
“Our financial position this time next year will be negative cash flow,” Peach warned the commissioners.
“That’s the reality we’re facing.”
Chapman said his first choice is to forgive the loan.
By sending the letter, Barkhuis “just threw a nuclear bomb out there,” he added.
Barkhuis said she made clear to the park board that they could discuss the issue with the commissioners.
Her “only option,” she said, was to send the park board a bill and for the park district to pay it.
“All I did here was due diligence and try to find out the facts,” Barkhuis said.
“Whatever decision commissioners want to make is completely in their authority.”
Chapman said he was open to not requiring repayment as long as the park board maintains ownership of the facility.
“I’m not sure they should have to pay it,” he added.
McEntire also indicated he was inclined to forgive the loan rather than wait until 2023 to pay it off.
“Ten years away is too far to know what the world will look like,” he said, adding that forgiving the loan would “remove uncertainty.”
“Let’s clean the table off here and give you guys a fresh start,” McEntire said.
But Doherty was troubled that forgiving the loan would set a precedent.
“Choices were made, and now we are being told to write off the debt partly because of some of those choices,” Doherty said.
Reed said the district had “a nonfunctioning board” for at least six years.
“We’re here with our pride in hand asking can you help us, can you help the West End to make this work,” she said.
“The treasurer’s letter brought to the forefront in critical terms what we’ve been facing in the last couple of years.”
The pool has become a magnet for the community, she added.
Senior Staff Writer Paul Gottlieb can be reached at 360-452-2345, ext. 5060, or at firstname.lastname@example.org.