Thumbnail photo by Gavin Van Alstine Updated at 1:52 p.m. to correct an error about the Harbor District's loan status with the USDA. According to CCHD financial advisor Sandy Moreno, the agency has 120 days to make a loan payment to the agency or it runs the risk of defaulting on the loan. Crescent City Harbor's financial advisor said the agency has 120 days to make a loan payment to the U.S. Department of Agriculture or it runs the risk of defaulting on its loan. Crescent City Harbor’s financial advisor said the agency has 120 days to reinstate property insurance for its inner boat basin or its loan with the U.S. Department of Agriculture will be considered delinquent. Reporting to the Harbor District Board following a meeting with USDA officials last week, Sandy Moreno said she and Harbormaster Mike Rademaker hope to get the district’s loan payments reduced, which would improve cash flow. But if the marina isn’t insured within 120 days doesn't make a payment within four months, the USDA will accelerate the claim to the U.S. Department of Treasury “for action,” Moreno told commissioners Wednesday. “We are not uncompliant, we are delinquent,” she said. “If we hadn’t gone and created issues, we would be looking at 120 days minimum if not a year before all of this got addressed. But because of issues that have come up, we’re now on a clock. We’re on a 120-day clock.” Moreno's report also touched on her advice to the Harbor District about three months ago to forego renewing a property insurance policy that covers damage to the inner boat basin from fire and collision. She said Friday that if they "do a good risk assessment" they may allow some leeway on the insurance matter, though she and Rademaker told the Board on Wednesday that they were seeking insurance quotes. Moreno’s report comes to the Harbor District about three months after commissioners took her advice and chose not to renew the property insurance policy that covers damage to the marina docks from fire and collision. At a June 25 meeting, she proposed taking the $181,500 premium the policy would have cost, putting $50,000 of it toward maintenance and using the remainder to keep the Harbor District solvent through the fiscal year. Moreno’s update on negotiations with the USDA also comes after the Board of Commissioners on Sept. 16 censured their colleague Annie Nehmer, stating that she violated district bylaws by contacting the federal agency. The Board also removed her as the Harbor District’s vice chair. On Wednesday, Rademaker said the USDA officials he and Moreno spoke with want a proposed strategy for resuming its loan payments by Nov. 1. If the Harbor District doesn’t meet that deadline “it’s not the end of the world,” he said, but there’s no reason why it couldn’t finalize a strategy by then. Currently, the $260,303.34 in transiency occupancy tax revenue earmarked for the USDA loan payment is sitting in the CCHD’s reserve account with Del Norte County. Under an agreement the Harbor District made with the county after voters approved Measure C in 2018, its top priority is the USDA loan payment, the harbormaster said. Any additional Measure C revenue is slated for maintenance as part of an approved facilities plan, he said. “We went back and looked at what was approved in 2019 (and) there’s like $9 million in projects there,” Rademaker told commissioners. “So, one strategy, and (the USDA) was somewhat agreeable to this, we could make a partial payment.” Instead of making the full payment, Rademaker said he and Moreno suggested making 10% payments — roughly $30,000 — this year and next year. Pursuant to an agreement with Del Norte County, CCHD could use the remaining Measure C funds for maintenance, he said. “That’s going to definitely help our cash flow and our balance sheet,” Rademaker told commissioners. “That’s the main strategy we have right now — to be able to use the TOT money to help shore up our budget until we can get contracted revenue from the RV parks and other development.” The ability to generate revenue through development of Bayside and Redwood Harbor Village RV parks as well as other potential development forms the basis of the district’s efforts to negotiate the terms of its loan with the USDA, Rademaker said. “They want to know how things are going to be different in the future and a major part of that will be an investor who’s signed a contract pledging to make payments,” he said. According to both the harbormaster and the district’s financial advisor, CCHD can make the USDA loan payment this year. But, Rademaker argued, it’s in the USDA’s best interest to negotiate that payment with the Harbor District. “It’s in their interest that we maintain solvency, that we have, you know, a good cash flow going forward and that we can make future payments,” he said. “They’re going to work with us to give us a little bit of breathing room.” Rademaker and Moreno are also looking at insurance quotes — Moreno said she and the harbormaster told the USDA it might take 30 to 60 days to obtain insurance on the docks. She said if the Harbor District can hold on a little bit longer without insuring the docks, its policy costs may decrease. It wouldn’t be $181,000, Moreno said, it could be about $90,000 instead. According to the harbormaster, they explained to the USDA officials the “marginal benefit” of the insurance policy commissioners declined to renew, pointing out that it doesn’t protect against tsunami, water or wind damage. Rademaker said he hopes to convince the USDA that the Harbor District is concerned about protecting the marina, noting that saving $181,000 would have a significant impact on the agency’s cash flow as well. According to Rademaker, in addition to paying $181,000 for the premium, the property insurance for the marina also included a $250,000 deductible. Board President Gerhard Weber said that when he and his colleagues decided against renewing the property insurance policy for the marina, the firm they’re working with came back with a proposed policy cost of $140,000 for the whole year. “If we can stretch it a little bit, for six months max and then get it just before the deadline, this means we are down to $70,000 versus ($180,000) at the first time,” Weber said. “So we saved ourselves $110,000.” Regarding the Harbor District’s RV parks, only one developer responded to a request for proposals CCHD sent out earlier this month. According to Rademaker, the deadline for submissions was Sept. 21. There is interest from other developers, and while how serious they are varies, Rademaker anticipates at least five more proposals for development. Public commenter Linda Sutter, who was a candidate for the Harbor District Board during the 2024 election, asked how the Harbor District’s status of being out of compliance with the terms of its USDA loan would impact its ability to obtain grants. Sutter said she was also concerned that the USDA would levy $500 per-day fines against the Harbor District for being out of compliance. Moreno, citing the USDA official she spoke with, said the Harbor District’s ability to get grants isn’t impacted by its loan status with the federal agency. “To the best of my knowledge, there is no $500-a-day (fine),” she said. “I’m sure they would have told us if there was some kind of $500-a-day. We went into great detail about the issues.” The Harbor District’s loan with the USDA allowed it to rebuild the marina following tsunamis from the 2006 Kuril Islands Earthquake and the 2011 Great East Japan Earthquake. On Wednesday, Moreno pointed out that in addition to incurring unexpected legal expenses as well as expenses associated with a long-time employee’s retirement, the Harbor District also weathered a tsunami on July 30.