That's gonna leave a mark

Two decisions cost County taxpayers millions

In politics, there’s a theory called “The Friday News Dump.” It’s the practice of releasing bad news or documents on a Friday afternoon in an attempt to avoid media scrutiny. In sports, there’s a strategy called “running out the clock.” It’s a move to use as much time as possible to maintain a winning position, usually by delaying the opposition from taking action.

Three weeks ago, CC Watchdog emailed two questions to county leaders who had intimate knowledge of the finances regarding the Towne Road Levee Project. That email was ignored. A follow-up email was ignored as well. The third email went to the three commissioners, their clerk, the county engineer, the director of community development, the county biologist, and the CFO. It stated that an article was scheduled for this Sunday, and if the County didn’t respond, the article would say, “The county declined to comment.” That email was ignored until Friday at 3:26 pm when County Administrator Todd Mielke responded to the questions, which were:

1. How much did it cost the County when the Jamestown Tribe removed the old Dungeness River dike ahead of schedule?

2. How much did it cost the County when the commissioners halted the completion of Towne Road in February 2023?

Administrator Mielke shared some interesting figures.

Breach of trust

In spring 2022, Clallam County was partnering with the Jamestown Tribe to restore salmon habitat to a section of the river beside Towne Road. The plan was for the County to build a new levee and relocate Towne Road on top of it. Once the new levee was in place, the Tribe would remove the old 1963 dike, and the river would gain an extra 112 acres of floodplain.

The Jamestown Tribe began removing the old dike before the County built the new levee. The County realized that levee construction wouldn’t be complete by the looming 2022/2023 flood season, and the Dungeness community was in danger of flooding. The county suggested an economical solution: building a temporary dike to prevent flooding for one season. However, the Tribe said that solution would present a “deep equity/justice issue,” and they demanded that the County build the Towne Road Levee faster.

The Tribe sent a blanket email to county leaders and the Peninsula Daily News suggesting that if the County chose the less costly, temporary dike option, neighborhoods would flood, and “news helicopters would circle the devastation and speculate on the number of dead.”

After the Tribe notified the media that the County’s decision could create havoc and destruction and cause a mass-casualty event, Clallam County caved to their demands and decided to construct the Towne Road Levee faster.

How much did it cost us?

According to County Administrator Todd Mielke, the County developed an “Engineer’s Estimate” of what it believed responding to the breach would cost. That estimate was $10,581,472.90.

The work was put out for bid, and the ‘lowest qualified’ bid was $13,817,360.82. That bid was ultimately rejected because it was over $3 million higher than the estimate. $13.8 million is significant — it’s more than the entire County’s general fund. Instead, the County decided to oversee the construction of the levee and relocation of Towne Road.

“For the County to take on this project,” explained Mielke in Friday’s email, “it required Working Capital – monies transferred into the Lower Dungeness Floodplains Fund to provide financial support to the fund as it pays for costs and then submits for grant reimbursement.  The Fund has paid all but $670,118.27 back of the $5,421,118.27 loaned by the General Fund throughout the process.”

The shell game of shifting money from one account to another, swapping grant funds for county funds, and tracking reimbursements is too complicated to glean from an email sent 90 minutes before the close of business on a Friday afternoon. However, it doesn’t change the fact that the aftermath of breaching the dike early costs taxpayers a lot of money.

Accelerating the construction meant more trucks made round trips to the gravel pit, and more workers had to be recruited. Those resources raised the cost substantially. Usually, the County would have sent the project out for a competitive bid. When multiple contractors bid on projects, it lowers the cost for taxpayers. However, the County didn't have time — fall rains were coming in late 2022, and the flood threat was approaching. The commissioners “declared an emergency” with Emergency Resolution 83 to circumvent the competitive bidding process.

It made sense to pay the current contractor, who was already on site, to accelerate levee construction. Scarsella Bros. had been working at the normal, contracted pace to build the new levee and already had crews, equipment, and time to accelerate levee construction. The County was in no position to negotiate. All they could say was, “We need this built faster, name your price.”

The County paid an additional $4,162,212.50 to Scarsella Bros. to accelerate the construction of the Towne Road Levee. Another cost that would have been avoided if the Jamestown Tribe hadn’t breached the dike.

This year, on behalf of residents, the County commissioners sent a letter of apology to the Jamestown Tribe for not communicating better.

Surfacing Towne Road

A year after the Jamestown Tribe breached the dike and caused Towne Road’s unexpected closure, County Engineer Joe Donisi presented a plan to the commissioners to finish the project. In January 2023, Donisi said his plan would take $800k from the road fund and $600k from the Real Estate Excise Tax (REET) fund. The remaining funds would come from outside the County — a combined $1M in grants from the Department of Ecology (DOE) and the Recreation and Conservation Office (RCO) would bring total funding to $2.4M — enough to surface the 0.6 miles of two-lane road with four-foot shoulders on top of the levee.

The road that was never intended to close for even one day had found a path toward reopening.

The following month, in February 2023, Donisi arrived with even better news for the commissioners. The County was going to be able to complete Towne Road with very little (if any) funds coming directly from the Roads’ Budget and zero funds coming from REET — incredibly, in one month, the County had gone from being liable for $1.4 million to, quite possibly, not paying even one cent.

This windfall, made possible by grant funding, could have saved County taxpayers over a million dollars. However, it came with one caveat: Donisi stressed that this path forward depended on using the DOE grant before it expired on June 30th, 2023, and he outlined a tight timeline for making that possible.

Then Commissioner Ozias started talking. Surprisingly, his focus centered on a property owner with an active business licensee for a 300-guest wedding venue on Towne Road. “Specifically, I’m interested in, for example, the driveway access to the Eberles’ and what their expectations and needs are.”

Donisi replied that he preferred to provide access to the landowner’s driveway via a paved county road, as the County had done for decades, even though the landowner had gone on record as wanting the county road closed to the public.

Ozias added that he had received hundreds of signatures and multiple petitions calling for the road to remain closed. Public records show just two petitions were received, with only 98 signatures calling for the road’s closure — these were predominantly collected from a neighborhood that saw a drastic reduction in traffic once Towne Road was closed.

By the end of that work session, the commissioners had decided to halt the completion of Towne Road. The opportunity to finish the project without using a penny of County dollars was lost forever. Four months later, days before the grant expired, Commissioner Ozias orchestrated that the final $330,000 in DOE grant funds be funneled to his campaign’s top donor, the Jamestown Tribe.

How much did that decision cost us?

Despite Commissioner Ozias’ continued interference, an activated community base supported by the majority of commissioners eventually began pushing the completion of Towne Road forward. It was up to Engineer Donisi to figure out how to pay for it with County money.

The $800k in road funds came back into play, and so did $400k in REET funds. $1.65 million remained in grant funding from the RCO, but that was the only non-county money available. Additionally, Ozias insisted that the project cost be increased by $120,000 to install a 6-inch curb to separate the trail from a 0.6-mile segment of the road.

The County planned to install stormwater mitigation measures according to DOE specifications, but the Tribe demanded a technology that far exceeded requirements. This drove up the cost and made that section of Towne Road the state’s most stormwater-mitigated stretch of county roadway.

Meetings about additional water treatment measures were held behind closed doors on the Tribe’s sovereign nation in Blyn, and details were not made available to residents. The public had to pay for it but could not participate, and the cost was unknown. The consultant who navigated permitting and redrafted plans every time the commissioners changed direction was paid an additional $532,005.80.

That’s $1.8 million in county funds unnecessarily spent after the county engineer provided a plan to complete the project for $0. When added to the cost of addressing the Jamestown Tribe’s early breach of the dike, it’s over $6 million.

There are likely other undiscovered costs, and there could be other offsets. For example, the Tribe offered $500,000 if the County agreed to draft the emergency declaration without blaming the Tribe. Commissioner Ozias suggested that those negotiations be settled outside the boardroom and away from the public. The matter was arranged over phone calls after midnight between the Tribe and the County’s risk manager, but it’s unknown how much the Tribe paid.

For months, CC Watchdog has been asking Clallam County to provide the Towne Road Budget — a basic accounting of monies in and out. No department, engineer, project manager, or elected official has been able to provide a budget. At times, a stack of invoices has been shared, or the terms of a grant have been provided. Department of Community Development Director Bruce Emery is still working on compiling some data, but he needs more time.

At some point, we may discover that Clallam County embarked on a massive infrastructure project proposed to cost $20 million, with additional cost overruns of $10 million, and they did it without ever having a budget.

Some perspective

$6 million is a lot for an economically depressed County with a GDP on life support for over a decade. Especially when the County is axing jobs, raising fees for residents, and cutting services in the face of a $4.2 million deficit.

When looking at the county’s general reserves, the “unrestricted reserves” portion is the most liquid. It keeps checks from bouncing and can be used for any project. For years, the commissioners have relied on unrestricted reserves to bridge the gap between their spending and income. This pattern of relying on unrestricted reserves to backfill the deficit has drained that amount from over $9 million in 2021 to under $2 million today.

On the graph below, in 2021, the County had over $9 million in unrestricted reserves. In 2022, when the Jamestown Tribe breached the dike and forced the county to accelerate levee construction to protect residents from flooding, unrestricted reserves plummeted by over $5 million. Unrestricted reserves are represented by light green (the top color).

Regarding the substantial drop of over $5 million from 2021 to 2022, during the recent preliminary budget presentation, CFO Mark Lane said, “This is when we had to deploy dollars in support of the Lower Dungeness Floodplain Restoration Project. Those numbers rebounded to $4.7 million in 2023 as a lot of the funding was returned.”

The amount in a county’s general fund can be used to leverage financing. In other words, municipal bonds can be issued for big projects like sewer systems or constructing a jail if the county has enough money in the bank. It’s like showing your bank statement before financing an auto loan, and it allows lenders to calculate risk.

When general fund reserves drop below 25% of total annual expenditures, lenders can deny issuing loans (or bonds) because the risk of default is too high. If lenders do decide to issue bonds to a county with a general fund below 25%, the interest rate could be higher to factor in the added risk. Borrowing money could cost Clallam County and its taxpayers additional money in interest.

Being a poor county is a problem that compounds.

During the preliminary 2025 budget, general fund reserves were forecasted to drop below 20%.

The county recently unveiled its six-year Transportation Improvement Plan, and more projects are in the “unfunded” category than “funded.” Although the general fund and road fund are separate, when commissioners passed up the opportunity to finish Towne Road with state dollars, it meant that $1.8 million that could have completed other county infrastructure projects was spent on a 0.6-mile section of Towne Road.

The McKinley paper mill, one of the highest-paying private sector jobs in the county, just closed, leaving nearly 200 employees without work. One factor thought to have contributed to the mill’s closure was the need to replace the aging, leaking pipe that carried water to the mill.

$6 million dollars could have replaced that pipe with $2 million left over.

The road ahead

County commissioners routinely lament that property taxes can only be raised by 1% annually. They say the County’s expenses are growing by more than 1% each year. If the County has a habit of making multi-million-dollar mistakes, it will take more than furloughs and raising fees to make up for it. Rampant county spending is exacerbated by another problem — the tax base that funds these projects and services is shrinking.

This week, commissioners received another Department of Interior letter alerting them to a proposed parcel being converted into tribal trust land. 65 Nello Place, a property adjoining the Tribe’s “Cedars at Dungeness” golf course, is poised to be converted into trust land. This move would save the Jamestown Tribe nearly $1,000 in annual property taxes but will further defund our struggling schools, hospitals, and fire districts. It will shift that tax burden onto other county residents.

Last year, the Jamestown Tribe converted 258 acres into tribal trust land. The Department of Interior has invited the commissioners to comment on the proposed acquisition’s impact on the county.

The current trajectory

Clallam County is entering an era of uncertainty. Other counties have a healthy tax base and leaders who prioritize public interests. Clallam County has neither.

Towne Road continues to teach us that political interests (the Tribe is Commissioner Ozias’ top campaign contributor and wanted Towne Road closed), special interests (several environmental organizations pushed for converting the county road into a park), private interests (98 people who wanted a county road to become a cul-de-sac), and personal interests (a family who wanted a road to become their private driveway) are being prioritized over public interests.

Not only are we funding these whims, but the public has lost its representation and has become the only entity without a seat at the table.

This pattern of a shrinking tax base and impulsive spending is unsustainable. On the current trajectory, taxes will be raised, residents will leave in search of affordability and prosperity, and the County will go bankrupt.

Maybe that’s the plan.

Our leaders have been spending our money irresponsibly, and now they want more. Please consider attending the County’s only public budget meeting later this month. There will be a short presentation followed by an opportunity for the public to comment and ask questions.

Wednesday, October 23rd, 5 pm, budget town hall, Commissioners’ Boardroom, Clallam County Courthouse, Port Angeles.