Special Reports

PDA still contentious but accepts state rebuke

The public agency that's developing a huge business park in Grays Harbor County still disagrees with the state auditor on the scope of its powers but promises not to repeat its offenses.

Auditor Brian Sonntag released his final audit of the Grays Harbor Public Development Authority on Tuesday, detailing problems with the agency's actions in 1999 and 2000. He found that the agency, which is turning the never-completed nuclear plant in Satsop into a business park, violated state law in several areas, including the loaning of its credit and failure to abide by laws requiring competitive bidding for projects.

"There's a number of places where they recognize that mistakes were made," Sonntag said. "Whether they agree or disagree, they know we don't think it's a good idea. We're solid in our opinion, and that's confirmed by our advice from the Attorney General's Office."

PDA Chief Executive Tami Garrow said the agency understands the auditor's findings and will not make the same mistakes again.

"I feel like it's fair. It's honest. And we accept it," Garrow said.

Sonntag said he is pleased that the agency has made changes to comply with the state constitution. The PDA changed its practices to make sure it thoroughly documented its expenses, contracts and investments.

Still, both parties disagree on whether the agency is bound by laws that apply to the local governments that create PDAs.

The Grays Harbor agency has asked the auditor's office to clarify the rules that govern the public corporations.

"There are several instances where clarification of powers and authorities, both general and specific, would be very helpful to not only the Grays Harbor PDA but to PDAs throughout the state," the agency said in its written response to the audit.

If clarification is needed, it doesn't appear that the state's other PDAs are looking for it. Twenty-one of the state's 24 other known PDAs reached by The News Tribune agreed that they must follow the same rules as the governments that create them.

An article in The News Tribune published earlier this year disclosed several problems with the Grays Harbor Public Development Authority's relationship with a fast-growing Internet start-up called SafeHarbor.

The PDA misrepresented SafeHarbor's finances in federal loan documents and rewrote contracts when the company fell behind in lease payments, according to financial records, e-mails, loan applications, invoices and interviews. Two PDA board members had contracts to do work for SafeHarbor, and some of the PDA board members and staff members were offered a discount on SafeHarbor stock when the company went public, which has never happened.

Sonntag's more-limited audit examined the PDA's finances and contracts. The audit found that the development authority did not comply with state bid laws and had poor control over projects when it was constructing two office buildings for SafeHarbor, which provides online "help desk" services. By circumventing these laws, the agency did not ensure it received the lowest price. That cost the PDA at least $225,000 in extra fees, according to the audit.

The PDA also loaned its credit to two private businesses, placing public resources at risk and violating the state constitution, the audit found. The agency guaranteed a $3.8 million construction loan to build offices for SafeHarbor. It set up a credit line that allowed SafeHarbor to buy office equipment and then pay back the PDA.

The report also found that the PDA paid a private company $1 million and could not show that any goods or services were ever received.

The audit also found the Grays Harbor development authority improperly invested public money in out-of-state banks and did not have adequate benefit policies. Both of these issues have been fixed.

Garrow made it clear Tuesday that although the agency has asked for more information, it does not intend to loan its credit or construct any large buildings.

Grays Harbor County Commissioner Dennis Morrisette said he hopes the audit puts the issues to rest.

"A lot of lessons have been learned, and now it's business as usual," Morrisette said. "I believe that all the PDA members have the best intentions of the organizations at heart."

Garrow took over the PDA a year ago and requested help from the auditor's office to make changes. Morrisette said Garrow has improved the financial accounting for the organization and addressed concerns that many had about some of the PDA's business deals.

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Marcelene Edwards: 253-597-8638


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