The Washington State Parks and Recreation Commission will consider giving the Fort Worden Public Development Authority more time before the agency needs to start sharing revenues with the state.

The Fort Worden PDA is facing a financial meltdown due to the COVID-19 pandemic.

In a memo on a lease amendment to the state parks commission for its upcoming
July 30 meeting, commission staff noted the PDA’s business model relies on overnight lodging, meeting and conference facilities, and food and beverage services.

And with the coronavirus devastating the hospitality business, the PDA has suffered along with other event venues across the country.

“The PDA’s financial situation is increasingly dire,” commission staff wrote in a memo detailing a proposed amendment to the state’s lease with the PDA. 

“The PDA is projecting a decrease in nearly $4 million in revenues through
July 2020. If not able to reopen for business or secure additional revenue, the PDA will run out of money and suspend its operations at the end of July 2020,” the memo continued.

The commission said the PDA is also not eligible for federal relief funds, as it operates as a quasi-public entity.

The PDA leases the Fort Worden campus from the state parks commission, and the lease contains a provision in which the PDA will pay 3.5 percent of its gross revenues annually to State Parks, starting on the seventh anniversary of when the PDA took over Fort Worden.

That anniversary arrives in May 2021. Using the PDA’s 2019 gross revenues of
$6.9 million as a benchmark, 3.5 percent would amount to an approximately $243,000 payment to State Parks.

The PDA’s board of directors has asked the parks commission for a three-year delay in revenue sharing.

“During this period the PDA intends to work with its 15 partner organizations, representatives from the city of Port Townsend, State Parks staff, and public stakeholders to develop a long-term integrated plan to rebuild programs and services offered at Fort Worden,”  the staff memo noted.

“This effort will evaluate the commission’s Lifelong Learning Center vision for Fort Worden and assess the long-term financial viability of a conference center driven by partner-developed programming. This analysis will examine efficiencies of the hospitality business model, the mix between group, leisure and partner business, as well as assessing the cost/benefit of the services and the leases the PDA provides to resident partners at discount rates.”

The PDA board expects the effort to evaluate the vision for the fort to take three years.

The PDA is also asking Washington State Parks to release the agency from an obligation in its lease for the PDA to sell at least $250,000 annually in Discover Passes through May 1, 2021, and for State Parks to buy back $50,000 in unsold, previously purchased Discover Passes.

Once the PDA resumes its operations, it expects to resume selling Discover Passes and expects to meet the $250,000 revenue target, according to commission staff.

Commission staff have recommended approval of the PDA lease amendment, but with a requirement that the updated business plan be finished before May 1, 2023.