Since Fort Worden State Park was put in receivership on behalf of Kitsap Bank in early October, complaints that critical infrastructure wasn’t being maintained and bills and contractors were going unpaid have mounted.

The State Attorney General stepped into the fray on behalf of the Washington State Parks and Recreation Commission, filing a motion in Jefferson County Superior Court on Dec. 12 that could change the trajectory of the case involving the bank and the Fort Worden Public Development Authority (PDA). The state parks commission owns the park and had a master lease with the PDA to manage the campus area of the park, and with it, campus tenants.

Judge Brandon Mack, who put the PDA into receivership on Oct. 4 and named Elliott Bay Asset Solutions as the receiver, approved a 90-day extension on Dec. 2 for the receiver to come up with a new business model for Fort Worden.

Mack’s decision to put PDA assets into receivership followed a complaint filed by Kitsap Bank on Sept. 27 that plans were underway for the PDA to be dissolved without a plan to repay $6.2 million it was owed for previous loans. Since then, the receiver has been tasked with finding ways to recoup the money, with the bank paying an average of $310 an hour for the firm’s services.

According to state law, the receivership had until Dec. 4 to agree to lease terms with the state.

The latest development came on Dec. 2, when the receiver asked Mack for a 90-day extension with which to negotiate terms with the state parks, which he granted ex parte, a legal term meaning for the benefit of one party. Mack granted the extension and the new deadline for lease assumption or rejection is March 3, 2025.

The state parks commission, through the AG’s office, filed a motion Dec. 12, to vacate that order. Among other things, it notes the uncertainty and disrepair has pushed some Fort Worden tenants to the brink as the campus languishes.

Matt Gurney, chief executive officer of Fort Worden Hospitality warned key state parks administrators via email that the Dec. 2 extension boded ill for the future of Fort Worden Hospitality, according to court documents.

“I wanted to circle back now that there is an extension that was accepted by Judge Mack …” wrote Gurney in an email to Mike Sternback, Anna Gill and Heather Saunders, all key administrators with the state parks commission. “If I’m unable to come to agreement with Elliott Bay in the next few days about their obligations to Campus and a long-term agreement, I will have to close Fort Worden Hospitality.”

Fort Worden Hospitality manages accommodations, restaurants, catering and venues at Fort Worden State Park and works in concert with Centrum to provide key support infrastructure for Centrum programs and for other park visitors and events. 

Rob Birman, executive director of Centrum Foundation, echoed Gurney and described his organization’s precarious position.

“Any delay in compelling decisions in the Receivership jeopardizes Centrum’s prospects of mounting a 2025 season,” Birman said. “Enrollment for our programs opens January 2. Centrum’s residential programs begin March 2 as we welcome students from across Washington state to be here on campus engaged in our immersive arts education programming.”

To gauge Centrum’s economic impact on the Port Townsend area, Birman said Centrum asked a University of Washington economics professor “some years ago” to create a model that could be used to measure Centrum’s impact.

“Based on that model … in 2023, Centrum and its total audience of 24,050 (inclusive of multiple days of service) generated $3,126,675 (estimated) in expenditures, with more than a third of this amount spent locally in the community, and supported 86 full time employees.”

Birman said Centrum had not yet run the numbers for 2024.

Concern has grown that the campus — about 90 acres of real property and an equal number of buildings — risks greater decline as facilities are left to languish. Beyond Centrum and Fort Worden Hospitality, and according to court documents, the state disbursed $17,724 in state funds to the PDA which was intended for contractors who completed landscaping and grounds keeping services at Fort Worden. The documents allege, that “due to the receivership, these funds have yet to be disbursed for the intended purpose.” One contractor, who asked for his name to be withheld for fear of financial retaliation, also confirmed that contractors weren’t getting paid.

Most recently, a boiler failure at The Commons forced that building’s closure, and underscored the current inability of the receiver and Fort Worden Hospitality to agree to terms on maintenance and repair issues. Ultimately, Fort Worden Hospitality and the receiver were unable to devise a plan for its repair.

The state’s main argument is that Mack granted the receiver’s request for an extension ex parte, which meant counsel representing other interests did not need to be present to argue against it. State attorneys and staff with the state parks commission should have been invited to speak as state assets are affected and at risk, but instead, they were excluded because the receiver’s attorneys failed to properly notice state parks of the filing.

The motion asserts that if representatives of the state parks commission had been allowed to speak, Mack probably would not have issued the extension. State parks’ attorneys called this an “end run” by the receiver.

“Currently, Receiver is using the receivership process to indefinitely occupy publicly owned property, without either assuming the lease to undertake the obligations required for occupation of the premises or rejecting it so that the State can properly resume management of this state park,” wrote Andy Woo, the state’s assistant attorney general. “To indefinitely occupy public property in order to effect and compel the particular ends sought by or to exact value for either the receiver or a particular creditor is not an appropriate use of the receivership proceeding. At the same time, Receiver is seeking the Court’s permission to use limited cash collateral.”

Should Mack rescind the deadline extension, Elliott Bay Asset Management would likely be compelled to either accept the master lease that the PDA had with the state parks commission, or to reject it.

If it accepts the master lease, it will have to comply with its terms, including fulfilling commitments to hospitality services and a variety of maintenance obligations, among other items. According to the PROS strategic plan, commissioned by the PDA, buildings and infrastructure within the PDA operating sphere require millions in repairs.

Bill Weisfield, a principal with Elliott Bay Asset Solutions has said the biggest issue on the PDA campus is maintenance. Weisfield referenced the park plan from PROS Consulting that reported that the park would need $150 million to $300 million over 10 years. Weisfield also said he agrees with the plan’s assessment and his firm asserts that maintenance costs should be paid by state parks.

Should the receivership reject the master lease, the receivership could end and park management would likely revert back to the Washington State Parks Commission. This was the assumption of the plan put in place by former PDA management, as they sought dissolution.

A hearing is scheduled at 1 p.m. on Dec. 20 in Jefferson County Superior Court.

Stuart Heath, founder and principal with Elliott Bay Asset Solutions, did not respond to requests for comment.