PORT TOWNSEND — Jefferson County’s Superior Court has vacated a previously granted extension for the receivership overseeing Fort Worden’s upper campus.
The extension was pertaining to a legal deadline of 60 days in which the receiver was obliged to reject or assume the master lease agreement held between State Parks and the Public Development Authority.
As a byproduct of the vacated extension on Dec. 20, the receiver was deemed by the court to have rejected the park’s master lease.
“Rejection of a lease does not constitute termination,” said David Neu, a lawyer representing Elliot Bay Asset Solutions, the receiver.
“The lease would still be in place, even if rejected. Parks would have to seek the termination of the lease.”
State Parks Communications Manager Sarah Fronk said the relevant parties who could discuss next steps were out of the office for the holidays, but she added parks is working both internally and with external parties to determine what they would be.
Port Townsend City Manager John Mauro wrote in an email that Kitsap Bank had the right to seek to recoup funds through the receivership process, but their timing was unfortunate. He said they had plenty of previous opportunities in recent months and years that might have been less disruptive.
“I’m hopeful that we can climb out of the recent ambiguity and get our expediency and collaborative stride back,” Mauro wrote.
Centrum’s Executive Director, Robert Birman, said the arts organization is hopeful following the order. He said the organization is waiting on State Parks and that they are meeting with Kitsap Bank on Jan. 7 and the parks commission on Jan. 8.
Birman said Centrum favors an outcome where the master lease has been terminated and leases are renegotiated with State Parks.
“It leads to certainty, and what we’re missing in this equation is any sense of certainty about what’s going to happen in 2025,” he said.
Matt Gurney, CEO of Fort Worden Hospitality, wrote in an email that the fort is still in an ambiguous place.
“Fort Worden Hospitality is prepared to move forward with a sustainable operating model we have developed for hospitality, and hope to work together with all stakeholders to stabilize campus-wide operations,” he added.
The extension was vacated by Judge Brandon Mack, who originally issued the order to extend the receivership by 90 days on Dec. 2.
Assistant Attorney General Andy Woo represented the State Parks and Recreation Commission. He said State Parks and community stakeholders were not given the appropriate notice regarding the motion for extension of the receivership.
Woo said the order was sought and obtained in an improper manner. In his motion to vacate the ordered extension, he said it was both irregular and contradicted the law.
In a declaration submitted to the court leading up to the Dec. 20 hearing, Woo provided a timeline of communications with Neu, an attorney with Miller Nash LLP.
Woo wrote that Neu left a voicemail with him about separate motions on Nov. 25. Woo responded the same afternoon, leaving a voicemail.
Woo took leave over the Thanksgiving break from Nov. 27 to Dec. 1. When he returned to the office on Dec. 2, Woo found a voicemail from Neu stating his desire to discuss the master lease and informing Woo that he interpreted RCW 7.60.130 (7) as not applying to leases.
Later on Dec. 2, Woo became aware of an ex parte order — meaning benefiting only one party — that had gone before the court.
“State Parks has always wished for this receivership to work,” Woo said. “The reason we are here today is that the parties were blinded by this ex parte motion. This really has presented not just a lot of concerns from the parties involved but also just the method in which this receiver is conducting this receivership proceeding.”
The reasons justifying the ex parte were not adequately grounded, Woo said, and none of Neu’s justifications for the ex-parte hearing were compelling, he argued.
“They say they want to collaborate, but then they secretly went behind the backs of all the parties that are working on this issue and obtained an ex parte order, the one that is at issue today.”
“I think we can all agree that the PDA was mismanaged and is hopelessly insolvent,” Neu said. “The charge of the receiver, who is an officer of the court, was to come in and try to negotiate a restructuring of the PDA that inherently requires negotiation of new lease terms.”
Neu said the current terms of the lease are part of what led to the insolvency, and he quoted from the strategic PROS plan. The PROS plan was a part what led the PDA to seek dissollution this past summer.
Neu said the receiver never intended to assume the lease as previously structured.
“Over the first two months of the receivership, the receiver’s team spent almost 700 man hours working on a restructuring plan, an MOU (memorandum of understanding) and terms of an amended lease,” Neu said. “They had 28 meetings with parks, either by phone or in person. They presented these documents to parks who, as represented, did not review the MOU or master lease amendment.”
Neu said actions for an extension were taken as the receiver saw that restructuring the lease wasn’t imminent and the 60-day deadline was approaching.
“Then, procedurally speaking, you’re getting into the middle of November, towards the end of November, you haven’t reached all the final details on any kind of negotiations, why not just note this up within the 60 days, give notice to all the parties?” Mack asked. “Did the receiver just find themselves the day before Thanksgiving and think, ‘Goodness, we’re almost at 60 days, we better get the court’s authority?’”
Neu said he and his team interpreted RCW 7.60.130 (7), which specifies the requirement of assuming or rejecting contracts with the state within 60 days, as not including leases.
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Elijah Sussman can be reached by email at elijah.sussman@sequimgazette.com.
