Port OKs temporary KRDC funding

By ROGER MORRIS Western News Publisher

The Port Authority board of directors voted unanimously Monday night to continue its administrative relationship with Kootenai River Development Corporation for at least three more months while a subcommittee considers its options, specifically a proposal from the county to provide $100,000 a year.

The port will pay KRDC $10,000 a month for administrative services provided by director Paul Rumelhart and his administrative assistant Debbie Davidson. The Port only has $35,000 available.

At least three Port board members indicated during discussion that they were not in favor of re-contracting with KRDC to provide administrative services. They cited accountability issues and the need for more direct economic development expenditures than hiring someone to do it.

Pat Pezzelle of the KRDC board presented a proposal to the Port board Monday for administrative services costing $100,000 a year. He noted that issues of accountability have been raised.

"I don't feel our board has an accountability problem," he said. "I would like this accountability issue to just die; it's a non issue. I think we've had a very good working relationship over the past few years."

Mike Henry, a Port board member from Eureka said the he didn't think it was a question of responsibility but more what his board was getting for the money they pay KRDC.

"Almost everything that has happened over there (at the old mill site) is a result of KRDC," Pezzelle said. "You know that. You sit on that board. I feel that I'm swimming upstream, Mike."

"I guess you are," Henry said.

"You've already made up your mind," Pezzelle responded.

Port board member Stan Kargol said he wanted to buy economic development directly but not through another organization.

And Lincoln County Commissioner Marianne Roose, who represents the county on the Port board, submitted a draft proposal for funding a county-wide position for economic development. The option includes $100,000 a year funding for a minimum of two years and "provides better public accountability that we (the commissioners) believe was somewhat lacking in other proposed requests for funding from the county."

Roose said the draft addresses some of the concerns that the commissioners have heard but allows everyone to move forward on accomplishing the shared goal of a better economy in the county.

Both Roose and fellow commissioner Rita Window said the draft proposal does not exclude KRDC from providing the administrative services.

Amy Guth, acting board chair, noted that the Port only had $35,000 in its budget and couldn't consider KRDC's request for $100,000.

"How are we supposed to vote on $100,000 a year?" she asked Pezzelle and Rumelhart. "It would be irresponsible for the Port to vote on something we don't have."

Guth offered the motion that the Port fund KRDC with the $35,000 available. Board member Dan Larson seconded the motion.

But Roose said, "I don't think we should be dumping $35,000 into the KRDC budget and we should know how it is spent."

She suggested the Port board consider the draft proposal from the county which is open to discussion.

There was a suggestion on the Port board to form a subcommittee to study options.

Russ Barnes, also a Port board member, questioned the wisdom on not allowing KRDC to continue.

"Who's going to take over during the next three months?" he asked. "KRDC closes its doors at the end of this month."

Presently, KRDC is the only 501(c) 3 organization available to apply for and receive economic development grants. Rumelhart has been working with the U.S. Economic Development Administration on a $2.5 million grant to improve the electrical infrastructure at the old mill site. He's working on another grant for $300,000 to fix the rail tracks on the property, he's working on bringing utilities to a proposed 12-acre commercial subdivision along U.S. Highway 2; he working on upgrades to the mill site's sewer lagoon system so it can be turned over the city; he's working on a proposal to replace the existing truck scale which will cost $70,000 and he's working with Vaagen Brothers Lumber Company, the U.S. Forest Service and outside environmental groups to establish a small-diameter mill at the industrial park. There are additional efforts under way to secure another $500,000 to $1 million in various grants that benefit the industrial park and its tenants.

Rumelhart urged caution.

"Do we really know what impact will be if we don't have a 501(c) 3 organization?"

"My honest recommendation is the person who can tell us how to proceed is Tony Priete, head of the Montana Department of Commerce," Rumelhart said.

Priete helped develop several successful industrial parks and economic development organizations in High Line communities before working for state and federal economic development organizations. He was named director commerce in the Schweitzer Administration.

"What I would like to see is I think economic development is the most important thing to this committee," Kargol said. " I do like accountability and I like to see objectives set."

"We're not the CEO's," Guth said. "Paul and Jim (Mayo) are out there doing the work. We were dumped by our chairman who did more work than you can imagine."

Mayo submitted his resignation via e-mail on Friday, Jan. 6, to the county commissioners.

"This accountability thing blows my mind," said Port board member Ardell Filler. "You can go down there anytime and look at the books."

Bill Patten, the CEO at St. John's Lutheran Hospital, offered his observation from the audience.

"There are a lot of interpersonal issues underlying this discussion but not coming out," he said. "I'm not privy to it so I don't understand this."

He said as a CEO his priority is to have well-defined objectives which come from discussions with his board of directors.

"You need to define what they do first," he said. "You need to look at the trade-offs of being government-related or a not-for-profit organization."

Barnes proposed a motion amending Guth's motion to give KRDC the $35,000 available. He proposed to give KRDC $10,000 a month. It was seconded by Larson. Then Barnes proposed forming a subcommittee to "delve into this more." Roose seconded that motion.