PORT ANGELES — Originally seen as an important economic development tool but unable to stay afloat, the Clallam Business Incubator is on the verge of dissolving, then becoming part of the existing Business and Community Development Center.
It could cost Clallam County up to $626,516 in sales tax revenues to ensure the Incubator’s long-term viability by paying off an outstanding loan rather than having the Incubator face bankruptcy, county Administrator Jim Jones said Monday.
The three Clallam County commissioners reviewed a resolution Monday that would be the first step in dissolving the Incubator.
The resolution would forgive the remainder of the Incubator’s $750,000 state Department of Commerce loan, not including interest, that Commerce made to the county, which in turn the county made to the private, nonprofit organization in 2004.
Commissioners would forgive the $709,000 if it is transferred to the Port Angeles School District, which owns the space at the Lincoln Center in Port Angeles where the Incubator is housed, according to the resolution.
Because the county, which has already taken over loan payments, cannot forgive a loan to a private entity, the county would forgive the loan to the school district, then pay the amount off with payments of $48,194 a year, including 1 percent interest, until the loan is retired.
“We want to make sure that in no way would it turn around and the district would be responsible,” Port Angeles School Board President Patti Happe, who attended the meeting as part of a quorum of board members, told the commissioners.
“That is our concern.”
With finances taken care of, the Incubator facility, the interior of which was completed with the loan, would be run for at least a year by the Peninsula College Business and Community Development Center, which already operates out of the Lincoln Center in Port Angeles at 905 W. Ninth St. and has a full-time director.
“We’re very much in favor of this model,” college interim President Brinton Sprague said at the commissioners meeting.
Commissioners will consider passing the resolution, written in consultation with the school district and Peninsula College, at their 9:30 a.m. meeting today at the county Courthouse, 223 E. Fourth St., Port Angeles.
The Incubator, which stopped making payments on the loan after 2009, owes $709,000 of the loan to the county, which has been making the payments since 2009.
If the county did not forgive the loan, the Incubator would go to bankruptcy and the business center would not be able to operate,” Jones said Monday.
“It we didn’t forgive the loan, that absolutely would be the next step,” he said, adding at least $100,000 in legal fees would be incurred by the county alone for bankruptcy proceedings.
As of Jan. 31, the Incubator had $12,602 in cash and expenses of about $2,000 a month, Jones said.
If the county took the full remaining 13 years to pay off the loan, the county would pay $626,516, Jones said.
The loan would be paid off by using proceeds from the county Opportunity Fund, which consists of money from a 0.09 percent sales tax dedicated to public infrastructure projects that lead to economic development.
The fund generates about $900,000 each year, Jones said.
“We’re making good on our loan to Commerce,” Jones said Tuesday after the commissioners’ meeting.
“We are forgiving our loan to the school district after they assume it from the Clallam Business Incubator.”
The arrangement of the county transferring the loan and forgiving it so the school district is not liable has the blessing of Commerce as long as the loan is paid back at 1 percent interest per year and the Incubator space is used the way it was intended, Jones said.
Schools Superintendent Jane Pryne and Happe — along with School Board members Cindy Kelly, Steve Baxter and board Vice President Lonnie Linn — attended the commissioners meeting.
The School Board still needs to have an open discussion “in a couple of weeks” on the proposal, Pryne said Monday in a later interview.
“We are waiting to pass the resolution to see what else on our end we need to complete,” she said, praising the commissioners for “acting in good faith.”
The Incubator “is a great facility, and should be saved somehow,” commission Chairman Mike Doherty said Monday at the work session, adding that the National Board of Incubators had suggested “it’s difficult to make this work in a small, rural community.”
Referring to the Incubator as “a first model,” he added, “it was always a challenge.”
A community land trust, a pretzel company and the Clallam County Economic Development Council administrative office, which has been running the Incubator, are today the Incubator’s sole tenants, eight years after it was created with broad community support.
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Senior Staff Writer Paul Gottlieb can be reached at 360-417-3536 or at paul.gottlieb@peninsuladailynews.com.
