Part 2 – Brinnon Resort’s unpaid bills to Jefferson County

In the first part of our short series, we explored the issue of the Statesman Group, an international developer out of Canada, and it’s unpaid bills to Jefferson County for work the county did for them on behalf of approving the Pleasant Harbor Resort. The resort, a large Master Planned Resort (MPR), has been the issue of contention since it was unveiled back in the early 2000s. The County gave a green light to develop, with numerous requirements to be met. In exchange, the County, because of the lack of employees due to the financial aftermath of the real estate crash of 2008-09 offered to do a great deal of work to expedite the approvals in exchange for being paid agreed upon sums for the work. It was a reasonable thing to do, given the financial situation the County was in at that time. Though the County did do a great deal of work it was paid for between 2008 and 2016, starting in 2016 Statesman started challenging the invoices. For some reason, this dispute has gone on for 6 years, totaling over $190,000, money the County can ill afford and a situation most of us would never be allowed to do as individuals or small time developers.

Since this dispute started, Statesman has received permission by the Department of Natural Resources to log the property, and according to my sources, they have. This logging activity most likely generated revenue for Statesman.

The County has been involved in negotiations with the Statesman group for many months now, records revealed through Public Records Act requests have shown that County attorney Philip Hunsucker and County officials have been going back and forth for years seeking to receive payments from Statesman. Mr. Hunsucker has stated the following in letters to Stateman’s attorney in May of 2021:

  • “Your client previously paid without question invoices with the same sort of detail in the so-called “block bills” he is now complaining about.”
  • “…when the County tried to get your client to pay invoices in January 2017, he refused”
  • “Some of the work the County did with tribes also was necessary to address your client’s missteps with the Port Gamble S’Klallam Tribe (PGST).”
  • “Significant work was required by the County to ensure that all MOU’s and environmental reports required by Ordinance No. 01-1028-08 were completed, including the Water Quality Management Plan and the Wildlife Management Plan. This issue also coincides with the need to coordinate with tribes. The PGST provided detailed and substantive comments to Water Quality Management Plan and the Wildlife Management Plan that had to be addressed”

Mr. Hunsucker also offered a 5% discount on the bill if they paid immediately.

The question that has been asked by many in the opposition to this MPR, is “What other business in Jefferson County would be allowed to not pay hundreds of thousands of dollars owed to the County for work done over six years and then offered a discount to pay these late bills?”

A logical follow up to this question is, “Why can’t the County issue a stop work order to Statesman until these bills are paid?

This reporter reached out to former County Commissioner John Austin, who was one of the commissioners that approved this MPR in the first place. His comment was, “It’s very distressing to me that they have not followed their agreement with the County.” He went on to state that he would likely have been reluctant to approve this MPR if he knew that this would have been the outcome.

It would be informative to get an official statement from the County as to why they have not issued a stop work order on this development until bills are paid. On Page 62 of the 2017 agreement with Statesman, it states:

(11) Violations and Penalties. The administrator is authorized to enforce the provisions of this article whenever he or she determines that a condition exists in violation of this article or permit issued hereunder. All violations of any provisions of this article, incorporated standard or permit issued. pursuant to this article are made subject to the provisions of Chapter 18.50 JCC, which provides for voluntary correction, notice and orders to correct the violation, stop work and emergency orders, and
assessment of civil penalties
(emphasis added).

https://test.co.jefferson.wa.us/weblinkexternal/ElectronicFile.aspx?dbid=0&docid=1899761&AspxAutoDetectCookieSupport=1

Additional investigations by the Brinnon Group have found the following brochure put out by Statesman. It raises the specter that Statesman does not have the financial resources to complete this project.

A redflag on Statesman finances was raised back in August, 2016, when the company distributed a flyer that proposed public financing of the Pleasant Harbor development…. Statesman proposed a $2,000,000 “Recreational Community Grant” from Jefferson County. A transfer of about 30 acres of the Pleasant Harbor site to the state for another Recreational Community Grant in the amount of $9,250,000 was proposed (a cost of over $308,000/acre of undeveloped, vacant land), as well as a $26,500,000 loan from the state. These requests totaled almost $38,000,000 in corporate welfare to Statesman. During this time in 2016, while Statesman was asking for public money for its project, it was not paying its bills to Jefferson County.

From email provided by The Brinnon Group

Additionally, according to a letter sent earlier this month to the County, raises the issue of whether the County is crossing a legal line by allowing this situation to continue. And at what point is it considered bad debt and written off?

Article 8, Section 7 of the Washington Constitution states: “No county, city, town or other municipal corporation shall hereafter give any money, or property, or loan its money, or credit to or in aid of any individual, association, company or corporation . . .” (emphasis added).

From email provided by The Brinnon Group

The Brinnon group is asking that the County take steps to ensure that Statesman can finance this project. They ask, quite reasonably it would seem to most individuals here, that the County require financial security or a bond for payment to the County, such as an irrevocable line of credit from an established financial institution. The question also might be asked, “Why hasn’t the County already done that?”

How much longer are the taxpayers of this county expected to wait before the bills that are due them are paid? Who else would get this kind of kid glove treatment by county officials?

A great deal more background on this can be found on the website of The Brinnon Group, the citizens who have been opposing this development since the beginning. http://www.brinnongroup.org/

State fines Brinnon boat owner more than $16,000 for spill after sinking; DNR presents $123,446 bill for vessel’s recovery – PDN

An unfortunate set of events, both for the owner, and taxpayers that had to pay to have it towed away and dismantled.

The state Department of Ecology has fined the owner of Avalon, a 1929 wooden purse seiner, $16,244 after it sank and spilled diesel near Brinnon on Sept. 14. The owner, Randall Schleich, 56, of Brinnon, said he plans to partially contest the ruling, although he said he doesn’t have the resources to hire legal counsel and accepts responsibility for the spill. “I am going to contest it because I can’t afford to pay it,” he said. Charlie Bermant reports. (Peninsula Daily News)

http://www.peninsuladailynews.com/article/20150816/NEWS/308169980/state-fines-brinnon-boat-owner-more-than-16000-for-spill-after

Cautionary Tale Related to Pleasant Harbor Resort Plans

Given the latest articles done on the Pleasant Harbor Resort plans in Brinnon, we see another large resort fail to raise money for a sale.

2/3 Bellingham Herald
Sale of Semiahmoo Resort falls through; tribe not seeking buyers

JOHN STARK / THE BELLINGHAM HERALD

BLAINE – A pending sale on the Semiahmoo Resort hotel and golf course has fallen through.

Harry Chesnin, attorney for the majority owner Upper Skagit Indian Tribe, said the would-be buyers could not come up with the cash.

“It all boiled down to funding,” Chesnin said. “The potential buyer was unable to produce the funding in the time they felt allowed them to go forward.”

More at
http://www.bellinghamherald.com/2011/02/04/1850019/semiahmoo-resort-sale-falls-through.html

Meeting the Mann- Garth Mann of Statesman

The PT Leader asked if I wanted to come to a meeting with Garth Mann, the head of Statesman Group, which has been attempting to build the Black Point development in Brinnon over the last decade. Some of you might wonder if putting a developer in close proximity with an ‘environmentalist’ might cause some kind of bad chemical reaction they could document, but actually it was a pleasant day. For those of you unfamiliar with the project, Black Point is the controversial resort and golf course being planned for a beautiful promontory that sticks out into Hood Canal south of Brinnon. The location, which includes the picturesque Pleasant Harbor Marina, also makes up the north shore of the Duckabush estuary. You can see the forested area to the bottom right of the point, which is where the golf course and luxury resort is planned. Other parts of the resort will include a make over of the Pleasant Harbor Marina, (upper center).

Black Point.jpg
Satellite photo by Google Earth

Mr. Mann is what I expected, a developer that got to the top of his field by being professional, calm, and very articulate. He is passionate about his project, as he should be. As many Canadians are, he’s amicable without giving off the air of a hard pitch salesman which so many American resort developers seem to do. While others around him had harsh words for county officials and those who would question the environmental qualities of the project, Mr. Mann was very polite in explaining to the crowd of 10 or so, that Washington State and this location makes it very hard to get a project like this completed.

I asked him about the Shoreline Master Program, which some of his folks, prior to his arrival, had said had that had caused an enormous amount of problems to the project. Many of the supporters of this development actively opposed the SMP changes, which were developed over a four year process, and include 150′ buffers from the shoreline. From his people, you would have assumed that the project was on the ropes *because* of the SMP. But it was clear from Mr. Mann that nothing of the sort was happening, and that in fact, it only affected a small part of his project plan.

“We have already planned on establishing a 240′ 200′ (according to a correction sent in by the developer)setback from the shore of the point” (which you can see in the bottom right of the photo), he said.

“Additionally, we have planned state of the art environmental technology for the project” which he went on to list, along with the fact that the project is going to be Platinum LEED (for low impact development). They plan to catch Hwy 101 water run off, mix it into their sewage treatment system at the marina, pump it all uphill to the main waste water treatment system for the resort, and reuse the water on the golf course. They also plan to use the water that will be stored in the lake being created out of the glacial moraine on the site, to help heat and cool the buildings. There are many more very advanced ideas being planned for the development. He is very proud of this, and frankly, I wish that all developers were willing to be so forward thinking. Yes, they have, on paper, a plan to be as environmentally friendly as possible. That is all very good news.

When asked about what changes the new SMP (which is not yet approved by Ecology) will have on the project, Garth said, ” Not much. We had to change the marina project, which is going to be the first phase. We had plans to demolish the buildings in the marina, and replace them with a multistory building that would have shops on the first floor, and condos above it. (to see an artists’ rendition of what was planned at the harbor, go to the Statesman group website http://statesmancorporation.com/main/index.php?id=resorts&content=pleasant) That can’t happen now, but our plans are to move the condos up the hill alongside Hwy 101, and simply remodel the existing shops on their footprint.” The SMP would allow for some buildings that are housing water dependent businesses to continue, but new condos would not fit that criteria.

It is important to note, that there has been a great deal of misinformation fomented about the SMP, and here again, we find that the stories that people have been saying to the public about how much economic damage the SMP has and will have, are not in line with reality on the ground. Mr. Mann’s project will be hardly affected at all by the new SMP. He has relatively easily worked around the newer regulations and implemented a new design that will work for him, and help protect the shore.

Mr. Mann went on to say that funding is his biggest problem. He had hoped to create a rural regional version of the US Government program that allows foreign nationals, such as Chinese and India citizens apply for green cards to come to the US if it helps create jobs, if they bring funding with them, but this unusual approach was turned down recently. He stated that he had also turned down an offer by a Chinese company to buy all the timeshare units, which would have essentially turned the project into a retreat for the Chinese. There was no independent information offered to prove that claim. But it would not likely have been popular in Jefferson County.

To see how hard it will be for Mr. Mann to sell these approx. 240 housing properties, we only have to look north a short ways to Port Ludlow, a similar Master Planned Community with a golf course and resort. Port Ludlow currently has 73 houses for sale, with a median (not average) time on the market of 281 days. The 37 homes that did sell in the last year, took over 370 days to sell. So you could say that Port Ludlow has a two year inventory to sell. Clearly, it is going to be extremely hard to find buyers with financing in this market.

So the real problem is not environmental regulations, or the SMP, as some would have you believe. It is the incredibly deep economic downturn, and a lack of bank funding for projects like this one. The New York Times ran a story last summer about failures across the country by high profile developers. Projects sitting empty, partially completed, and/or abandoned. Counties and taxpayers forced to deal with the left over developments, never completed.

Recently, People For Puget Sound, wrote a letter in opposition to Black Point. The letter was based on the assumption that county officials have already expressed their approval of this project going forward. It is likely that Mr. Mann, may yet see his project completed. And if he does, it is likely to bring best environmental practices to bear. However, it is important to not end up with a project that destroys the environment with the best of intentions of creating something good, and due to the economic climate, leaves the taxpayers of the county with a destroyed landscape that may never recover it’s value, either financially or environmentally. People For Puget Sound, asked the county to impose strict bonding of the various phases of development, so that if something goes wrong, Jefferson county taxpayers won’t be the ones footing the bill to rehab the land. The Statesman Group has a number of other projects under way, in Las Vegas, Disney Land, Banff, etc. Mr. Mann alluded to the fact that none of these projects are apparently completed. When asked specifically how many sites could someone go to if they signed up for the timeshare program he is selling, he said “by the end of 2011, four”. (editor’s note: Mr. Mann mentioned  a total of six projects: Banff, Las Vegas, Orlando, Arizona, Hawaii and Pleasant Harbor). In looking at their web site, there are only three listed, and one cannot tell which are completed, which are planned and which are underway. The Black Point project would be thought to be completed by looking at their web site. The reality is that it’s years from completion with nothing currently built. That should be of great concern to anyone hoping for the best outcome on this project. While marketing is all about helping fuel dreams, it certainly can be considered a bit deceptive to be promoting something that isn’t built yet as being completed.

There are many other issues that “The Brinnon Group”, the formal opposition to Black Point, have brought up, and are beyond the scope of this article. If the reader is interested in looking into these other concerns, we point you to their web site, http://www.brinnongroup.org/

It is certainly true that south Jefferson County could use economic help. It is disappointing that our elected officials have not been able to do more for the people wishing for more opportunities. And this publication wishes Mr. Mann success in his ventures. But it seems that without serious formal oversight and a structured set of gates that the county put in place prior to the groundbreaking on this, county taxpayers should just demand our planning department protect us from what could be a very costly white elephant.

Ruling OKs Brinnon resort, but opponents consider appeal – PDN

6/10 Peninsula Daily News -By Jeff Chew-Peninsula Daily News

BRINNON — The attorney representing residents opposed to a 252.6-acre master-planned development at Black Point and Pleasant Harbor Marina improvements — the Brinnon Group — said Tuesday that he and his clients will consider appealing a Thurston County judge’s decision rendered Friday.

Thurston County Superior Court Judge Richard Hicks supported Jefferson County and Canadian developer Statesman Group in ruling the public and the Brinnon Group were granted ample time to participate in the Hood Canal development’s planning process.

More at
http://www.peninsuladailynews.com/article/20090610/news/306109984

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