PORT ANGELES — Clallam County commissioners and Port Angeles School Board members moved closer Tuesday toward dissolving the moribund Clallam Business Incubator, a private nonprofit business development group.
At a 20-minute joint meeting at the county courthouse, they decided the disposition of remaining Incubator debt from a $750,000 loan, including interest, incurred by the 8-year-old private nonprofit organization at the Lincoln Center at 905 W. Ninth St.
They also laid the groundwork for the continued use of the Lincoln Center space.
School Board members Steve Baxter, Sarah Methner, Cindy Kelly and Lonnie Linn voted to assume the debt of the cash-strapped Incubator before County Commissioners Mike Doherty, Jim McEntire and Mike Chapman agreed that the county would cover the financial liability, immediately forgiving the school district the debt and taking it out of the school district’s hands.
The school district gains about $1 million in assets that cover Incubator improvements to the facility.
The Incubator, most of its facilities occupied by Peninsula College’s Business and Community Development Center, should be completely dissolved by the end of the year, County Administrator Jim Jones said.
“This makes it possible to put the final nail in the coffin,” Jones said after the meeting, estimating the Incubator would be fully dissolved after paperwork is filed with the state Secretary of State’s Office.
Make payments
The county, which now owes $584,768 in principal after Tuesday’s action, will make yearly payments of $48,194, plus 1 percent interest, through 2025 to the state of Washington, expending Opportunity Fund proceeds that consist of a 0.09 percent sales tax dedicated to public infrastructure projects that lead to economic development.
The Incubator, which had not made payments on the loan for three years, ended up owing the county $733,541, including interest, Jones said.
The county will pay $626,516 if the loan is paid off according to the repayment schedule, county Administrator Jim Jones said.
As an economically distressed county, Clallam receives about $900,000 a year in state Opportunity Fund proceeds that are targeted for public infrastructure improvements that lead to economic development.
The purpose of the Incubator was to nurture new businesses at the Lincoln Center before they take flight on their own.
The state Department of Community, Trade and Economic Development — now the state Department of Commerce — loaned the county $750,000 in 2004 for the Incubator project.
The county in turn loaned it to the Incubator.
The county also won a $250,000 CTED grant in 2004 that was passed on to the Incubator.
But the economy went sour, and the grants the Incubator relied on dried up, Jones said.
“They [the Incubator] were going to default on their indebtedness to Clallam County,” Jones said.
Incubator clients
Jones estimated the Incubator launched about a half-dozen businesses during its eight years of existence.
The county Economic Development Council, Homeward Bound and Craft3, a banking institution, are the remaining Incubator clients.
The procedure was to avoid receivership, Jones has said.
Jones said the Incubator, a private nonprofit, cannot dissolve without going into receivership — a type of corporate bankruptcy — if it still owes money.
At the same time, the county also couldn’t forgive a loan to a private group. Instead, it needed a public entity to place the debt in its name.
Going into receivership, in which property is placed in the custody of a third party — a judge — could prove expensive and could render the site unusable for too long, Jones said.
“It would have completely taken it out of our hands for future use,” he said, adding that it could have cost “many thousands, maybe hundreds of thousands, in legal fees.”
The Incubator leased space at the Lincoln Center from the Lincoln Center Condominium Association.
The Port Angeles School District controls 89 percent of the Lincoln Center and Peninsula College the remaining 11 percent.
After Incubator board members, who were unpaid for serving on the board, resigned in 2009, county, school district, city of Port Angeles, Peninsula College and Port of Port Angeles representatives became board members to help keep the Incubator afloat, Jones said.
At first, Peninsula College had hoped to assume the debt, Jones said.
But the college could not because it did not own the space that was improved with the loan.
“We all kind of all had this on our B List because we all had our own organizations to run while working on it,” Jones added.
“It did take awhile to do all the paperwork and get all the I’s dotted and T’s crossed.”
Meeting participants Tuesday said the Incubator’s assets should be put to good use.
‘Worthy, noble purpose’
McEntire said the Incubator had “a worthy and noble public purpose” of fostering business growth and formation.
“We are embarking on a process of dissolution today and rebirth in a sense because the need still exists,” McEntire said.
The Opportunity Fund “is dedicated to this sort of purpose,” Doherty said.
Lincoln Center, which includes the North Olympic Peninsula Skills Center, “brings life to Eighth and C” streets, Doherty added.
Currently on the Incubator board are Jones, Port of Port Angeles Executive Director Jeff Robb, Peninsula College President Luke Robins, Port Angeles Schools Superintendent Jane Pryne and Port Angeles City Manager Dan McKeen.
All were at Tuesday’s meeting.
Robb called Tuesday’s action “an appropriate way of doing business” in the face of potential receivership.
Robins said it paved the way for the college to engage in more workforce training.
“Lincoln Center gives us the opportunity to use space in cooperation with the high school,” he added.
EDC Executive Director Linda Rotmark, an ex-officio board member, said she hopes the EDC can stay put.
“We need to have space here for education and meetings that is not continuously booked and can adapt to whatever the needs are,” she said after the meeting, likening the facilities to “a community center.”
“Educators, young people and business people are all managing to co-exist,” Rotmark said.
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Senior Staff Writer Paul Gottlieb can be reached at 360-452-2345, ext. 5060, or at paul.gottlieb@peninsuladailynews.com.
