Thumbnail photo: The Crescent City Harbor District is working on paying back a $5.5 million U.S. Department of Agriculture loan that rebuilt the inner boat basin following tsunamis in 2006 and 2011. | Photo by Gavin Van Alstine A week after county supervisors rejected a Crescent City Harbor Facilities Plan, its harbormaster argued that voters didn’t want the agency to wait 40 years before it began using Measure C tax dollars to make needed repairs. The transiency occupancy tax measure voters approved in 2018 wasn’t specific about the repairs and maintenance the generated revenue would pay for, Harbor District CEO Mike Rademaker told commissioners at a special meeting Wednesday. In addition to being used to pay back a $5 million U.S. Department of Agriculture loan, Measure C revenue should also fund repairs and maintenance of harbor facilities. Rademaker cited legal advice he received from CCHD attorney Ryan Plotz, who said that could mean “anything that involves repair and maintenance.” “In our broader overall issue with cash flow and the USDA workout plan, we really feel that being able to use Measure C funds for routine maintenance is something that the voters intended,” Rademaker said. “And we feel it’s something that’s really integral to our success as a harbor going through this cash flow constraint we have now.” CCHD HFP Approval Letter to DNBOSDownload CCHD Board President Rick Shepherd, who campaigned for Measure C seven years ago, echoed Rademaker’s argument. He also referred to the Harbor District’s efforts to renegotiate the loan terms with the USDA. “We never said we weren’t going to make the annual payment,” Shepherd said. “We’re going to continue to make the annual payment, but to defer some money to where we can use it… so we can generate more revenue with it and fix things like the dock over here that we’re going to get sued on.” Harbor commissioners on Wednesday were initially asked to consider forming an ad-hoc committee to discuss with Del Norte County supervisors what they think a Facilities Plan for the port should look like. This includes agreeing on what counts as routine maintenance, Rademaker said, and whether that should be included in the plan. Equally as important, according to fiscal advisor Sandy Moreno, is for all the harbor commissioners to be on board with the plan. However, Commissioner Annie Nehmer continued to argue that the plan was too vague. She said she wanted to see a timeline, a priority list as well as potential costs associated with the projects. Nehmer also took issue with a statement Moreno made that the short-term goal with restructuring the USDA loan was to pay the district’s maintenance department. “The TOT was designed to pay the USDA loan and repairs and maintenance,” Nehmer said. “Not payroll.” According to the original Measure C petition, the harbor suffered $54 million in damage from tsunamis in 2006 and 2011. Federal and state dollars paid for most of the repairs, however the district had to borrow $5.5 million from the USDA to make up the difference. When voters were asked to approve Measure C about seven years ago, the Harbor District was running a $498,000 operating deficit annually and was expected to run out of money within two and a half years. The measure increased Del Norte’s TOT from 8% within its jurisdiction to 10% with the additional 2% to be allocated to the Harbor District. It also established a 2% TOT for RV park spaces within the county for the Harbor District. Harbor TOT MOU – Agmt.2020-025Download According to the petition, Measure C tax revenue would pay off the USDA loan and pay for repairs the disaster funding hadn’t covered. Under the terms of an agreement CCHD entered into with the county in February 2020, the Harbor District is required to supply invoices, receipts, account statements and other documents proving that the USDA loan payment was made by Oct. 15. The county auditor-controller is then required to reimburse CCHD between Nov. 1 and Nov. 20. CCHD can make additional payments toward USDA loan’s principal balance — and be reimbursed for it, according to the agreement. Once the Board of Supervisors has approved a harbor Facilities Plan, CCHD can be reimbursed for payments made toward the maintenance projects outlined in the plan. Measure C dollars can also be used as a local match for any additional loan financing or grants “to finance all or part of the Harbor Facilities Plan or for other financing mechanisms to accomplish the elements of the Harbor Facilities Plan,” the agreement states. In Friday email to Redwood Voice Community News, Rademaker pointed to another component of the 2020 agreement concerning transfer of Measure C funds before the USDA loan is fully paid off. In that case, the auditor-controller can transfer Measure C dollars to the CCHD account if the district has made its USDA loan payment, if the balance in its account exceeds $50,000 as of Nov. 1 and if the Harbor District has “documented expenses” associated with projects identified in the Facilities Plan. Measure C – Citizens Initiative TOT Increase 2018Download However, “if all or part of the $50,000” is needed to make the USDA payment in a subsequent year, it must be used for that purpose, the agreement states. A few days before Harbor District officials took the 2025 Facilities Plan to the Board of Supervisors, Moreno said she and Rademaker had met USDA representatives and proposed making 10% loan payments, about $26,000, for three years instead of the full $260,000 annual payment. The district could make the full payment, Moreno said, but she and Rademaker propose using the remainder of those funds to help the district stave off insolvency and start its maintenance and development projects. On Dec. 9, the Board of Supervisors said the Facilities Plan was too vague and were skeptical that the USDA would agree to the Harbor District’s proposal. The Harbor District hadn’t met the plan’s first stated priority, supervisors said, which was to make the USDA loan payment. Commissioner Gerhard Weber argued that supervisors were focused too much on the USDA loan instead of the Facilities Plan itself. On Wednesday he said his colleagues were making the same mistake the Board of Supervisors made a week prior. “We have never gotten approval from the USDA that they would even let us pay less,” Weber said. “Let’s get the Harbor Facilities Plan going, do whatever we have to do and focus on what’s on the agenda.” In response to concerns about the Facilities Plan being too vague, Rademaker said he wanted to avoid ambiguity or any difficulty when it comes to interpreting the current agreement proposed between the Harbor District and the Board of Supervisors. Moreno added that the Harbor District is also trying to financially get through the next six months. Instead of establishing an ad-hoc committee, the Harbor District Board decided to continue working on the plan to come up with a list of priorities as well as the potential estimates for how much a project might cost. However, the district’s vice chairman, John Evans said in addition to having a list of goals and potential projects in the Facilities Plan, it should be flexible. “I would like to see a little bit of leeway so we can direct these funds as needed for the harbor,” he said. Evans also suggested adding language directly from Measure C and the 2020 agreement into the current proposed agreement. Shepherd, noting that the Harbor District can’t use its regular attorney to negotiate with the county due to conflict of interest concerns the county raised, said that whoever is hired should determine whether the Facilities Plan meets the legal criteria of Measure C. “We just need this harbor facilities plan and we need to get one together,” he said. “And obviously, the one that we created is not going to work, so we have to change it.”