Citing more than $230,000 in unpaid utility bills and vendor payments, the City of Port Townsend has entered the fray of the Kitsap Bank versus the Fort Worden Public Development Authority case urging the court through recent filings to prioritize that the receiver pays for basic operations and obligations — before paying its own attorneys and professional fees.

Separately City Council Member Libby Wennstrom filed a declaration in support that included details about what isn’t being paid, things necessary to maintain the upper campus property.

“The city’s $121,798 outstanding utility bill is quite substantial; nearly half of that balance ($55,814) has been incurred since the receiver took over management of the Fort Worden campus,” wrote Wennstrom in the Dec. 26 declaration. Both documents were filed by Kenyon Disend PLLC, which represents the city.

Wennstrom details a litany of unpaid vendor payments totaling $109,233 that date back to September 2024, alleging that Kitsap Bank “dishonored”  those payments by citing insufficient funds in the PDA account, despite evidence to the contrary. Wennstrom argues that the receivership, Elliott Bay Asset Solutions, now operating as the PDA, should make good on these payments before paying itself.

Kitsap Bank pays an average of $310 an hour for the firm’s services.

“While the receiver is entitled to compensation for its services,” the Wennstrom declaration continues, the “need for such compensation must be balanced against the need for the receiver, as part of its legal obligations to responsibly manage the property on the PDA’s behalf to provide basic, necessary operational expenses, (such as utilities, safety services, internet and needed systems repairs and maintenance) to ensure the continued operations and functionality of the properties …”

One contractor, who asked to remain anonymous for fear of financial retaliation, confirmed that unpaid bills, including payments for vendors, are putting key communications and safety systems in jeopardy.

Wennstrom’s filing comes after a Dec. 20 hearing when Mack approved two motions for payment of professional services to Elliott Bay Asset Solutions. According to court documents, the receiver has billed $218,704 for professional services for the months of October and November. On Dec. 23, Mack also vacated his earlier order extending time to accept or reject the master lease. The judge suggested in the hearing he would issue an order that balanced the interests of all parties but none has been forthcoming.

City Manager John Mauro addressed the filings in an email.   

“The receivership process is a legitimate right that the bank had to exercise given their investment in the PDA during a calamitous and uncertain time and the potential for loss,” wrote Mauro in an email to The Leader. “Unfortunately, and in my opinion, they were shockingly late to the table after months (and, arguably years) of invitations and decided quickly to take a legal route as the runway for better and more collaborative solutions evaporated.”

Mauro said he didn’t fault anyone for trying to “protect their interests, but it’s cost us time and momentum toward achieving stability and what’s best for our community.” He said he also understood the right to be compensated for their work, “but it’s also collectively costing us on legal wranglings which are also opportunity costs on solutions, progress, and eventual stability.”

Mauro said in his view Washington State Parks and Recreation Commission “has shown a remarkable ability to understand the complexity of the situation, and to work with the city and others collaboratively and with the best interests of the community and region in mind.”  

Attorneys with the state attorney generals office, on behalf of state parks, have called the receiver’s tactics into question.

In a filing leading up to a Dec. 20 hearing, Assistant Attorney General Andy Woo wrote, “The receiver’s self-serving interpretations of the Receivership Act and apparent casual disregard for procedural requirements established therein and by Court Rules do nothing but erode the trust of creditors and other parties-in-interests in this Receiver’s ability to conduct an orderly and transparent proceeding, and should rightly alarm the Port Townsend community and the citizens of the State of Washington at large, all of whom are directly or indirectly impacted by this receivership.”

During court proceedings, David Neu, an attorney for Elliott Bay Asset Solutions said that rejection of the lease did not constitute the lease’s termination. Termination, he said, would be up to the state.   

With the deadline extension order vacated and thereby the lease rejected, key players such as Centrum, Fort Worden Hospitality, the State Parks and Recreation Commission and the receivership will likely enter into discussions early in the new year to set the course ahead.

“The order from the Dec. 20 is only a step,” said Robert Birman, Centrum’s executive director. “It rules the Receiver having rejected the master lease. As I understand it, now the Parks Commission needs to decide what they wish to do with this information.  They may continue negotiating for a master lease or they can consider moving to terminate the lease as the rejection puts the Receiver in breach of the agreement. Because of the holidays, Parks has not yet had any meetings on this.”

Birman said a state parks meeting on Jan. 8, may help clarify the course ahead.

“The PDA still exists, but having rejected its Master Lease,” Birman said. “Tenant leases still exist as well — nothing has been done to those at this point. If the PDA lease is eventually terminated, then parks would have the legal right to execute leases with the campus tenants. Centrum is in support of that outcome should parks elect to pursue it.  Centrum is planning to open registrations for 2025 workshops by January 15 if possible, which is a delay from our typical date of January 2.”

Directors of Fort Worden Hospitality say that are also poised to work with parks.

“Fort Worden Hospitality (FWH) remains in a difficult ambiguous position,”wrote Matt Gurney, chief executive officer for Fort Worden Hospitality. “Fort Worden Hospitality is prepared to move forward with a sustainable operating model we have developed for hospitality, and hope to work together with all stakeholders to stabilize campus-wide operations. Prior to the receivership, FWH and parks were working on continuity through a direct contract which we hope to be able to complete. Fort Worden Hospitality is hopeful legal actions can conclude, so we can have clarity in short order.”