On Dec. 2, Jefferson County Superior Court Judge Brandon Mack granted a 90-day extension to Elliott Bay Asset Solutions, as the receiver of the Fort Worden Public Development Authority (PDA), to assume or reject the master lease between the now defunct PDA and the Washington State Parks and Recreation Commission.

The master lease dates back to November 2013, when a deal was struck between the PDA and the Washington State Parks and Recreation Commission. It details the terms for 50-year co-management of 90 acres of real property known as the “Fort Worden Campus.” That acreage included the campus of about 90 buildings.

The PDA was on the verge of dissolution and working with the parks commission to resume management of the campus when lawyers representing Kitsap Bank filed a complaint. It argued that the PDA's plan to dissolve without addressing $6.2 million it owed the bank in loans was due greater scrutiny.  At the same time, it is unclear whether there was any collateral for the loans aside from the promise of revenues.

The decision to place the PDA assets in receivership came on Oct. 4, when Mack issued an order appointing a general receiver over all PDA property and assets. Mack’s Dec. 2 ruling came after a hearing Attorneys for Elliott Bay Asset Solutions requested the extension on Nov. 27, citing state law that may have imposed a Dec. 4 deadline for the company to accept or reject the master lease.

According to state law “any contract with the state shall be deemed rejected if not assumed within sixty days of appointment of a general receiver unless the receiver and state agency agree to its assumption …” Without the extension, that 60-day window would have closed on Dec. 4. The new deadline for lease assumption or rejection is March 3.

With the PDA in receivership, it falls to the principals with the Bellevue-based Elliott Bay Asset Solutions to recoup $6.2 million the failed PDA owes to Kitsap Bank. According to documents filed with the court by Elliott Bay Asset Solutions, the 90-day extension “will facilitate the ongoing discussions regarding restructuring of the PDA that affects multiple parties and constituencies and does not affect the Commissions’s ability to request relief from the Court with respect to the lease.”

Meanwhile, key players at the park remain in a holding pattern as they await the outcome of those negotiations.

“Because Elliot Bay is managing the master lease under court direction, your questions are best addressed to them,” wrote Clare DeLong, communications director with the Washington State Parks and Recreation Commission.

“It is a complex situation that continues to evolve. State Parks is monitoring the situation closely,” said DeLong. 

Stuart Heath, principal for Elliott Bay Asset Solutions, wrote to the court, “Since its appointment, the Receiver has been engaged in discussions and negotiations with the Commission (Washington State Parks and Recreation Commission), Kitsap Bank, and other parties in interest regarding a restructuring of the PDA. The discussions and negotiations are ongoing.” 

Receiverships in Washington State are governed by state law and provide an alternative to bankruptcy proceedings. Receiverships provide for asset management, protection, and disposition of distressed real property or business ventures.

The receivership also acts as an advocate for the interests of creditors and equity holders — in this case, Kitsap Bank— and are tasked with ensuring the preservation and potential recovery of assets. In the matter of Kitsap Bank versus the PDA, Mack named Elliott Bay Asset Solutions the receiver.

Heath did not respond to phone calls or email requests for comment.

As part of the master lease agreement, the PDA paid no rent in exchange for assuming all of the maintenance obligations to that part of the campus. The lease also allowed the PDA to sublet, which it did. In 2022, the PDA offered the same general terms and conditions to the campus tenants, many of which have been non-profits, as a means of reducing the PDA’s deferred maintenance obligations.

Principals with Elliott Bay Asset Solutions say these agreements were ill-conceived. In order to address the financial burden of maintenance, renovations and repayment to Kitsap Bank, they say the park has to bring in additional profit-making entities and generate year-round revenue streams. By contrast, current park revenues are derived largely from summer events and activities.

That has prompted several tenants to express concern for the future of their organizations in the park. They need to plan ahead and can’t prudently do so as long as things remain in flux.

According to court documents, principals with Elliott Bay Asset solutions will be paid $395 per hour. All other principals will be paid $325 an hour, directors $295 per hour and paralegals, accountants and associates $225 per hour.

Heath, according to his company profile, has managed more than 100 receiverships with more than $1 billion in assets. He is the owner and designated broker of a full-service real estate brokerage, vice president of the Independent Brokers Association, and former chair of the Northwest Multiple Listing Service. It states he has managed, developed, repositioned, listed, and or, sold more than 800 properties. He is also a business and real estate attorney.

Heath’s team includes Bill Weisfield, Lennart Bentsen and Brooke Knight, with Bentsen taking a lead role on the ground.

The Elliot Bay website describes Weisfield as having more than 40 years as a board member and strategic planner for companies such as Hawaiian Airlines, Weisfield Jewelers, Valu-Mart, The Northern Capital Company, Bayley Construction, Lindal Cedar Homes, Shurgard Storage To Go, The Cornerstone Columbia Development Company and financial institutions such as Federal Home Loan Bank and Bank of Montreal, leading businesses through turnarounds and workouts.

Bentsen served as a hotel executive with more than 25 years’ experience in all levels of hotel operations with companies such as Marriott, Hilton, IHG, and others.

Bentsen and Weisfield both have hospitality experience.

Knight reports that she has more than 25 years of non-profit leadership experience and co-managed a public-private process for a public parks district that leased facilities to a non-profit organization that then required further funding.

Collectively, the group has extensive experience repositioning, marketing and selling various property types, including hotels and motels, RV campground resorts, multi-family complexes, office buildings, retail stores, restaurants, housing complexes with government debt structures and more.