By Mark St.J. Couhig

Forks Forum Editor

Clallam County and the Quillayute Valley Park and Recreation District are still struggling to settle questions that arose after the district failed to pay the note on a $225,000 loan.

The issue came to a head during an April 22 work session of the Clallam County Commissioners. At the meeting they learned from Clallam Treasurer Selinda Barkhuis that the loan is now four years in arrears.

Early news reports stated that the loan was for the district’s aquatic center. “It’s completely separate,” Barkhuis said.

The loan was provided by the county in September 2004 to allow the district to purchase four rental homes on the parcel adjacent to the aquatic center and community center. The property formerly was owned by the U.S. Forest Service.

The district receives $800 a month for each rental unit.

In a letter to the commission, the board members said, “the revenue stream from the houses purchased with the funds has not been sufficient to cover much more than the basic cost of maintaining those houses.”

They said they’ve been required to replace two septic systems, repaint two of the houses and repair the access road. They added, “Our yearly cost for insurance on the buildings and houses is about $11,000.”

In its letter, the board states that “it was never our intention to default on this loan.”

They further asked the commissioners to forgive the loan, freeing up the board to “concentrate on serving our community.”

Money elsewhere?

Barkhuis told the commissioners the district has $650,000 in a bond fund and suggests it could be used to pay the past due amount on the loan. She said the district now owes $24,000. With interest — which the commissioners could choose to forgo — it comes to a little more than $30,000, she said.

Barkhuis said after the overdue bill came to her attention, she started “exploring why they weren’t using those funds.”

Board president Nedra Reed told Barkhuis the funds can’t be used for that purpose because it includes timber tax revenues. “I was assured by Ms. Reed that they would be happy to pay that if they could,” Barkhuis said.

Barkhuis said she turned to the state auditor’s office for assistance. “They issued an opinion saying the district could use it to pay the loan.”

She said, “The district hired a private attorney who disagreed.”

The district’s bond counsel, the Seattle firm of Foster-Pepper, provided that opinion.

Craig Miller, the district’s general counsel, said he agrees.

Miller said while the relevant statute is somewhat vague, it does say that timber tax revenues can only be used for voted indebtedness — that is, debt approved by a public vote.

But Miller said other sections of the statute may or may not provide an opening for using the funding to pay the loan. The issue lies in the interpretation.

Miller said, “to the best of my knowledge, (the issue) is now being looked at by three different lawyers.”

He said the commissioners have asked the Clallam Prosecutor’s Office to investigate the issue.

At the same time, Miller and “Fork’s bond counsel” are also looking at it.

Barkhuis added that the district maintains it has no other money to pay the bill.

“I don’t have the authority to waive the loan,” Barkhuis said.

“I only collect taxes.”

Barkhuis said she’s also concerned because the original loan documents stated the board would use the property to provide affordable housing. “It was managed that way for a while and is now being managed by Lunsford. I’m concerned that it’s now being used for a purpose now not?

In the end, she said, resolving the issue is up to the commissioners.

Reed declined an interview, saying the board members had been advised by their attorney to direct all questions to him.

Reach Mark Couhig at mcouhig@soundpublishing.com.