There’s a line here; the city needs to oversee, not control the PDA.”

John Mauro, Port Townsend City Manager

The Port Townsend City Council unanimously gave initial approval Monday to code changes that will strengthen its internal guardrails to keep the Fort Worden Public Development Authority on the right path.

The Fort Worden PDA has been in a financial freefall since last year and is struggling to pay its bills on a month-to-month basis.

The PDA announced in late October that officials had found “financial irregularities” that put the future of the fort’s managing agency into question, including the diversion of millions of dollars from construction projects to the costs of daily operations. Officials also said they had discovered that hundreds of thousands of dollars in debt had been racked up on more than a dozen credit cards.

PDA officials have since announced they hope to resolve the authority’s financial burden by borrowing approximately $1 million and shifting much of the PDA’s debt into newly created nonprofit corporations that would be overseen by the agency.

The city of Port Townsend created the Fort Worden PDA, a public corporation that manages a 95-acre campus with 73 historic buildings in Fort Worden State Park, via a charter adopted in 2009.

At the council meeting earlier this week, councilmembers approved changes that includes qualifying standards for members of the PDA’s board of directors, prohibitions against board members from serving on other nonprofit boards due to potential conflicts of interest, and the creation of a financial oversight committee staffed by city officials that will step in if needed.

While PDA officials have been supportive of some of the changes, they have bristled at the suggestion of an oversight committee.

At the PDA board’s last meeting, PDA Interim Executive Director David Timmons repeatedly called the proposal an “overreach” by the city of Port Townsend.

At Monday’s meeting, council members said the new rules were needed to prevent the PDA’s recent financial problems from happening again.

City officials also said the changes were carefully crafted to maintain the arm’s-length distance needed by the city to keep the PDA as an independently managed operation.

“There’s a line here; the city needs to oversee, not control the PDA,” explained City Manager John Mauro.

If that line is crossed, he added, the city will take on greater financial and legal liability.

That’s something the city does not want, Mauro added.

“We trying to really balance a number of factors here,” he said. “The aim here is to assist.”

The changes are not final, as a subsequent approval will be needed at a future council meeting.

“I am very delighted with where we are on it, and that we’re bringing it forward to the community” said Councilmember Monica MickHager.

The changes were needed to “make sure we’ll have a functioning PDA for many, many years to come,” added Councilmember David Faber.

“This is a necessary step to regain some of the trust of the public,” he said.

Mayor Michelle Sandoval said she had met with representatives of the Washington State Auditor’s Office last week.

The auditor’s office is currently conducting an accountability audit of the Fort Worden PDA, including a probe of potential fraud within the authority.

Reading from her notes from the meeting with auditors, Sandoval recalled the auditors said the PDA’s “financial situation was not being monitored per the charter.”

State auditors also said they hoped there would be a more collaborative relationship between the city and the PDA in the future.

They also said, Sandoval added, that former PDA executive director Dave Robison “was not as willing to ask for help when he needed it, either from the state or the city.”

She also said the PDA board did not appear to have a lot of involvement in the authority’s budget over the past two years.

The audit is expected to be released before the end of the month, Sandoval said.