PORT CONFLICT OF INTEREST SPOTLIGHTED

Gifting a public asset to a private entity?

Port Director Dobson's "Sweetheart Deal" Exposed

EXCERPTS FROM: LETTER OF CONCERN
(Letter obtained [redacted] via Public Information Request)

From: ███████████
Subject: Letter of Concern
To: "Jay Hupp", "Tom Wallitner", "Jack Miles"
Date: Sunday, April 10, 2011, 6:36 PM

Dear Commissioners,

It is with a heavy heart that I come to you, and only after exhausting my unsuccessful attempts to correct an apparent conflict of interest that puts the Port of Shelton in jeopardy. A conflict of interest that has existed for the duration of my time at the Port of Shelton but which recently has reached an alarming state. What began as apparent subtle gifting of public funds* has now been lowered to outrageous and egregious abuses of authority, power, the public trust and gifting of public funds.

The Port of Shelton’s Executive Director is in the final stages of preparing what I fear to be an “under the radar” (out of the Commissioners view) gift of a public asset to a private entity, at a substantial financial cost to the Port of Shelton as well as at a loss of unlimited profit potential. I can not, in good conscience, keep these details from you as Commissioners, nor can I enable or participate in what I perceive to be less-than-ethical and less-than-legal behavior. I must bring these facts into the sunlight for you, the Commissioners, to see.

This letter concerns the fairground property. The Port of Shelton currently has commitments from various entities for approximately $40,000 in rental use fees for May through October of this year. (I do not presently have access to the files and specific figures, but rather am working from memory.) Director Dobson’s intention is to give that approximate $40,000 revenue away for $3,000 per month, or the equivalent of $18,000 for this six-month period.

In addition to gifting (?) $22,000 in revenue directly off the top, we are also investing thousands of dollars for the benefit of a private entity, an entity established and managed exclusively by the close personal friends of Director Dobson, John and Rachel Hansen.

Director Dobson takes the position that we will be saving on expenses related to maintaining the fairground property, but the evidence supports otherwise. For example, Director Dobson is planning on installing a new road**, at a cost of tens of thousands of dollars, investing in fixing the wiring for thousands more, investing thousands of dollars in Port staff time, committing to invest in roofing, and committing to continuing to invest staff time and resources throughout the year to maintain the extensive grounds within the fenced area between the main gate and the fenced-in building area.

This Port of Shelton investment for a private entity is not standard operating procedure, in my experience. Typically, we rent our properties “as-is”. In the event the Port of Shelton does invest in property improvements for the tenant the cost of such improvements are usually recovered via repayment from the tenant to the Port of Shelton (Examples are Sims Vibration Laboratory, Shearer Brothers, and so on)......

However, the immediate profit loss to the Port of Shelton and profit gain to this private entity, which would seem to be a governmental gifting, under this arrangement is inconsequential compared to the overall long-term big picture and unlimited potential revenue lost to the Port of Shelton. The actual situation involves large losses.

By the Executive Director’s own calculations, the fairground facility stands to generate over $500,000 the first year it is opened up for special events with a projected profit of $200,000 - 300,000. Revenue generated by renting the facility is a small fraction of the overall total. The primarily source of revenue will be special events.

These events, events that the Port of Shelton has spent months talking about sponsoring for these same benefits, i.e. making large profits that could then be reinvested in the Port of Shelton. This is money that could go toward building a new special event facility, toward funds for build-to-suit for new and existing tenants, toward the cold storage facility the Executive Director has planned, and toward so many other worthwhile endeavors that are consistent with the goals and objectives of the Port of Shelton, namely, to create jobs, promote industry, and foster the local economy.

Last year, the Port of Shelton’s first year running the fairground facility, Director Dobson’s argument was that the Hansens were “the only ones” who could “save the fair” and successfully run a special event.

As things currently stand, this immense profit potential will be going to this private entity for years to come as dictated by Director Dobson, who stated emphatically no less than 4 times in a staff meeting Friday, 4/09/11 with myself, Al Frey and Wendy Smith, “I want to help build a business for John and Rachel”, with a pronounced emphasis on “I want”. He makes it very clear that this is a very personal endeavor for him, not a business decision.

Director Dobson also stated during this same meeting that the goal was to eventually have a new event center in which the Hansens would be part owners in a public-private partnership he and the Hansens are working on putting together. Director Dobson referred to this as a “sweetheart deal” he is using to get the Hansens’ business started......

Given that the fair generated $11,000 in profit last year with the Hansen’s at the helm, the official figure according to Director Dobson (truly $6,000 if you deduct the $5,000 the Port of Shelton gave to them), while Oysterfest, also a single weekend event, generated somewhere in the neighborhood of $400,000, according to Director Dobson, clearly putting all of our eggs in one basket with John and Rachel Hansen would not appear to be a financially sound business decision for the Port of Shelton, even if there were no “sweetheart deal”......

It has been my position all along that we, the Port of Shelton, should be organizing and running special events (which is not a unique business model with other governmental agencies, as I understand it), in addition to leasing out the facility to special interest groups who are interested in doing such.

All along, until well into our meeting last Friday, Director Dobson has led us to believe this was a possibility. Even on Friday early on in our meeting Director Dobson asked , "Do you want to do it?" to which I responded, as I had each and every time when this question had been asked previously, "Yes!" (Not only I but other members of the staff feel that is should be done in-house as well, not outsourced).......

When asked why he does not want the Port to manage our own special events, Director Dobson’s response is twofold (1) “I don’t want to be in the fair business” to which I have responded that it is not the “fair” business, it is the “special event” business which is a goldmine and one that he is not willing to allow us to do but yet is willing to give away, all the while acknowledging the huge profit potential it has, and (2) “we don’t have the staff”.

Admittedly, initially the cost of additional staff would have to be funded outside of the profits, until such time as we have an event, however, that would be short-lived. Once we are up and running, the facility will be self-supporting, even according to Director Dobson's own calculations. Director Dobson then added another twist on Friday, saying during our meeting “the commissioners are telling me to get rid of the fairgounds”, to which I responded, “Do they have all the facts? I don’t believe they do.”

My ongoing position has been why give this valuable asset away for a pittance? We do not need to outsource this; once again, doing such has no value to the Port of Shelton and will be at a huge cost to the Port of Shelton.

At a time when businesses are closing, to the tune of approximately $300,000 annual loss in revenue to the Port of Shelton from Olympic Fabrication alone, downsizing and barely hanging on, now is the most opportune time for the Port of Shelton to be maximizing its assets and focusing on maximum revenue generation to the best of our ability.

I believe the evidence outlined in this email supports the position that Director Dobson has a conflict of interest due to his close and personal relationship with John and Rachel Hansen, and that he is not able to make sound, objective business decisions for the welfare and benefit of the Port of Shelton, the community and the taxpayers, all to whom we have a fiduciary responsibility.

I believe the evidence supports that Director Dobson, rather than looking out for the overall health and well-being of the Port of Shelton, is gifting away valuable Port assets, as well as gifting unlimited profit potential to his friends.

At an absolute minimum, please consider having Director Dobson recuse himself from any and all interaction between the Port of Shelton and John and Rachel Hansen, Northwest Event Organizers, Inc. and all entities they may create or be involved with now or in the future.

Somehow Director Dobson’s compass seems to have lost the ability to define magnetic North, the navigational system has completely malfunctioned and it feels as though he has us heading toward a looming mountainside in a dense fog. Together we can recalibrate and restore the system, correcting the course to lead us back to the safety and serenity of good stewardship and responsible government. Please join me in working toward this goal.

To summarize, it is my belief that the Port of Shelton’s ethical standing and financial well-being is in jeopardy of being tarnished and all involved being pulled into the insidious vortex created by Director Dobson’s choices.

The Executive Director is planning on leasing the fairground facility to close personal friends in what he blatantly calls a “sweetheart deal” to get them “started in their business”. This would be at a great financial loss to the Port of Shelton while at the same time an unlimited profit potential for his personal friends, John and Rachel Hansen. There are no plans that I am aware of which would open this up to the public process, allowing other entities to compete for the same opportunity......

Please be aware that signing of the contract I am referencing between Director Dobson and John and Rachel Hansen aka Northwest Event Organizers, Inc., is imminent therefore quick action is required.

Thank you very much for your time, consideration and anticipated timely action.

Best Regards,

███████████

Photo by Christine

SHELTON BLOG NOTE:

Link to complete letter pdf and other related items:
http://myweb.hcc.net/pkands/docs/PortLetter.pdf

Letter pdf also in blog "Reference Documents"

Shelton Blog invites Port Director John Dobson, John and Rachel Hansen, as well as any one else named in this letter to make a statement if they so wish.