Thumbnail photo by Gavin Van Alstine County supervisors sent a facilities plan back to the Crescent City Harbor District, criticizing its vagueness and stating that the agency hadn’t yet met the plan’s first stated priority — making this year’s U.S. Department of Agriculture loan payment. The Board was also skeptical that the USDA would agree to a Harbor District proposal to accept 10% of CCHD’s annual $260,000 payment for three years with the remainder of the funds going toward maintenance and being put into a reserve account. District 2 Supervisor Valerie Starkey said she and her colleagues have a legal obligation to voters to ensure that the stipulations of the transiency occupancy tax measure, Measure C, they approved in 2018 were being met. “My concerns are you don’t have an agreement with the USDA, you’ve had a conversation. That is all you’ve had,” Starkey told CCHD Fiscal Officer Sandy Moreno who assured supervisors that the federal agency was receptive to the Harbor District’s proposal. “I heard you say at the last (Harbor District) meeting that you need to have $262,000 in a restricted fund, you don’t have that. You don’t have your insurance and you have money this county has collected to pay a loan. I believe that that needs to be paid. That’s the guarantee that we gave this community.” Measure C increased the transiency occupancy tax remitted to Del Norte County from 8% to 10% with the additional 2% being allocated to the Crescent City Harbor. This applied to lodging facilities outside of Crescent City limits. Measure C also established a 2% TOT on RV spaces outside city limits. Measure C’s top priority was to provide the Harbor District with funding it could use to pay off a $5 million loan the USDA provided to repair the inner boat basin following tsunamis in 2006 and 2011. At a special meeting Friday, Moreno told harbor commissioners that she and Harbormaster Mike Rademaker had met with USDA representatives and proposed making 10% loan payments, about $26,000, for three years instead of the full $260,000. The remainder of that payment would help the Harbor District stave off insolvency, commence its maintenance and development projects and build its reserves, Moreno said. Moreno and Rademaker also proposed self-insuring the inner boat basin, instead putting the money it would have paid an outside insurance company into a restricted reserve account that would collect interest. “What if we were to take $90,000 a year and put it into a reserve self insured account and say we’re going to do that until 2052 when the loan finishes,” she said, adding that one of the concerns USDA representatives had was the marina not being insured. “In the end we have $2.5 million in our account after that loan’s done and we’re not required to have (insurance) anymore. We’d have $2.5 million — wouldn’t that make us a healthy balance sheet?” The Crescent City Harbor District adopted its Harbor Facilities Plan on Nov. 12. On Tuesday, Moreno told the Board of Supervisors that as of June 30, the county was holding $290,000 in TOT revenue earmarked for the Harbor. She estimated that figure to be about $370,000 currently and admitted that CCHD was noncompliant with the USDA because it didn’t make the loan payment due in September. Moreno balked at using the term default. She also disagreed with an assessment county supervisors made that they can’t yet approve the facilities plan until the Harbor District pays the USDA this year. “I think we’re required to have a harbor facilities plan,” Moreno said. “We would certainly like to have it in place and approved by the Board of Supervisors because if all these things come together, if the USDA does say they will accept $26,000 this year and we make that payment, then we feel like that money, that pot is there for us.” Moreno said if the USDA accepts the Harbor District’s proposal, however, CCHD would like to keep $260,000 in the account held by the county and add to it. “If they allow us to do $26,000 for the next three years, that’s going to increase our annual payment up to $304,000 a year and we have to have a reserve for that,” she said. “We’d like to say let’s keep $260,000 in there. We need $26,000 to pay our annual payment and whatever’s over that amount, we would have access to and it would help offset some of our costs.” Harbor commissioners Rick Shepherd and Gerhard Weber echoed Moreno’s statement, that the Harbor District’s facilities plan isn’t connected to its USDA loan payment. Shepherd, a commercial fisherman who campaigned for Measure C, said a facilities plan is still needed if the USDA doesn’t accept CCHD’s proposal. A plan was created in 2017, Shepherd said, but it was never sent to the Board of Supervisors for approval, he said. “When we negotiated with the county on how that money was (to be) spent, we made it perfectly clear that we could use it for maintenance and repairs, the excess money,” he said. “This wasn’t the plan when we made it back then, but it’s coming to fruition to where what we’re asking today is help save the harbor.” Weber, who is chairman of the Harbor District Board, said CCHD does want to go along with the facilities plan to pay the USDA first, although they’re asking the feds to modify that arrangement for three years. The county’s approval of the facilities plan, according to Weber, will allow the district to use the remaining TOT funds for maintenance it’s already doing. “If we can use this money, the remaining money, for maintenance that we are already doing, we are freeing up some other funds that are necessary as a cushion to fulfill all of the payments that have to do with the grants we have gotten,” Weber said, adding that the Harbor is using a grant to reconstruct Citizens Dock. “As you know with grants, you have to pay first and then you’re being reimbursed.” Weber and Shepherd’s colleague, Annie Nehmer, who they voted to censure in September, thanked supervisors for noticing that the facilities plan lacks a timeline, a list of specific projects and the costs associated with them. According to her, those details are in facilities plans for harbors up and down the coast. “While this was only presented at one meeting for us, I do believe it is something that needs to become a workshop that needs to be presented,” Nehmer said, repeating concerns she raised to her colleagues on Nov. 12. Moreno’s insistence that the USDA was receptive to the Harbor’s proposed loan payment modifications prompted District 2 Supervisor Chris Howard to bring up the Tri-Agency Economic Development Authority. A joint powers authority consisting of Crescent City, Del Norte County and the Harbor District focused on economic development, the Tri-Agency was left owing the USDA money due to a loan program it had administered and its recipients defaulting on their payments. Though all three agencies had tried to resurrect the JPA, they were unable to agree on whether the Tri-Agency should be involved in discussions surrounding offshore wind energy. In June 2024, the city, county and Harbor District voted to dissolve the Tri-Agency. Howard acknowledged that the Harbor District was in a difficult spot, but said he’d been involved in negotiations with the USDA, unsuccessfully trying to get the federal agency to forgive the defaulted loans. “I’m hearing what you’re saying, what I’m really looking for at this point is some kind of assurance ink on paper, whether it’s from the state director who’s brand new in the position or someone else that’s going to tell this county Board of Supervisors that the obligations we have with the harbor are going to be met with the payment we’ve agreed to or not,” Howard said. Joking that he felt like he was on the crew of the Titanic, John Roberts, a Smith River resident who spearheaded the Measure C campaign in 2018, said the Board of Supervisors needs to make sure there’s documentation between the USDA and the Harbor District. “I think that’s critical because it could be a bunch of smoke and mirrors as usual with the Harbor,” he said. Norma Williams, Del Norte County Employees Association president, said she felt like the Measure C dollars were being mismanaged and pointed out that voters may think twice before approving increases in the TOT the county charges. “(Measure C) isn’t being utilized for what the voters agreed on and that was to pay the damn loan,” she said. “I think a full investigation is warranted at this time. As a county citizen, I’m definitely asking for it. As a union leader, I’m demanding it.”