PORT TOWNSEND — Fort Worden Hospitality is ceasing operations and laying off nearly 50 employees, effective today.

“This is not a pause,” said Natalie Maitland, director of operations. “Fort Worden Hospitality is ceasing business and closing as an organization.”

Maitland said Fort Worden Hospitality (FWH) is not insolvent and that the year ahead looked good for finances, but the organization has been hampered by the Public Development Authority’s legal proceedings.

In late September, about a week before the PDA’s dissolution hearing at City Council was planned, Kitsap Bank requested from Jefferson Superior Court that a receiver be appointed. The court appointed Elliot Bay Asset Solutions as receiver, per the banks request.

The PDA owes the bank $6.2 million in bonds.

The 47 employees currently on staff include on-call workers, Maitland said.

“They’re all losing their jobs,” she said. “This isn’t a furlough, everyone is being laid off. They are being paid in full for the time that they’ve worked and we are providing resources to help them in this transition.”

A Dec. 20 Jefferson County Superior Court ruling vacated an earlier ruling which granted the receiver, Elliot Bay Asset Solutions, an extension on its deadline to assume or reject the PDA’s master lease, held with State Parks.

The lease was rejected when the court vacated the order because the original time frame for deciding on the master lease had passed.

The rejected lease did not make the lease disappear. State Parks would need to pursue termination of the lease to resume control of the fort.

Following the decision, FWH initially was optimistic that progress toward a workable path was being made, Maitland said.

Late last week, following legal counsel, FWH leaders came to the conclusion that the rejected lease, which has yet to be terminated, put their contract into question.

“Because that lease is in legal limbo,” Maitland said, “we basically don’t have a valid agreement to move forward with being able to operate.”

Maitland said FWH had hoped State Parks would offer a contract, but there is too much to sort out legally.

“We’re not in good faith going to continue booking, not knowing how legal proceedings are going to unfold and knowing at this time Parks isn’t able to offer us any sort of contract for concession services,” Maitland said.

FWH began operations in 2022 after it became clear the PDA could no longer maintain hospitality services, Maitland said.

Celeste Tell, former interim executive director of the PDA, said it’s complicated. FWH was formed out of the PDA, she said.

“The intention behind spinning off FWH as a separate business was to distribute both revenue and liability functions across multiple, smaller entities, ostensibly to create a more agile organizational structure, with FWH focused on day to day hospitality operations and the PDA on overall campus management and planning,” Tell said.

Since it’s formation, FWH has been responsible for providing lodging, food and beverage services and managing a number of campus venues.

Maitland said an important part of the FWH’s formation was the desire to keep hospitality’s leadership local.

“People won’t be able to rent the houses, there won’t be any restaurant, fast casual food services occurring at the park and the group events and weddings and all those things won’t be able to happen here at the park,” Maitland said. “There’s no timeline for when (State) Parks might be able to move forward with being able to bring that back to the park.”

FWH is working with State Parks on the potential that it might support current groups in having use of venues, Maitland said.

“Parks has a special activity permit process,” she said. “We are working with parks to determine what of the currently contracted venue rentals we have might be able to be transferred to their special activity permit.”

The transfer might not make sense for groups which also need housing, Maitland said.

FWH has managed the Wheeler Theater and McCurdy Pavilion, two venues that Centrum, an arts non-profit, uses extensively, said executive director Rob Birman.

“In January 2024, we were asked by hospitality and the PDA to take under our lease both the Wheeler Theater and McCurdy Pavilion,” Birman said. “We agreed to do that, but the PDA never acted on it.”

Birman said he has been in conversations with State Parks, and officials there know Centrum would favor bringing those venues under its management.

Birman said Centrum was formed along with Fort Worden State Park and that it was formed by the state during winter 1973.

“Centrum was here for 40 years with State Parks, before the PDA was created,” Birman said. “We have this incredible long-standing relationship with State Parks.”

A State Parks representative provided a statement about FWH’s closure via email.

“We recognize this was a difficult decision for Fort Worden Hospitality and appreciate their efforts throughout this complex process,” communications manager Sarah Fronk said. “We’re thankful for the years of service they provided to the Fort Worden campus and the community. We will start engaging in planning for this transition and next steps. We recognize the Fort Worden Campus is a beloved part of the community. That will be at the forefront of our discussions as we plan for the future of the park.”

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Reporter Elijah Sussman can be reached by email at elijah.sussman@sequimgazette.com.