PORT ANGELES — Is the relationship between the city and Port Angeles Downtown Association thawing?

Members of the downtown association met with City Manager Dan McKeen last week in an attempt to address issues the city has with how the business group is spending its funds.

Tensions appeared to ease between the two sides.

McKeen and downtown association President Bob Lumens said in separate interviews that the 2½-hour session Thursday was productive.

The meeting was preceded by a series of letters back and forth this summer penned by McKeen, City Attorney Bill Bloor and downtown association lawyer Richard Shattuck of Silverdale related to the city’s concerns over business-and-occupation (B&O) tax funding and mandatory parking assessments managed by the city and routed to the business group.

Suspended funding

The city suspended funding to the group July 24 after asserting the downtown association had breached its funding agreement with the city by not fulfilling requirements such as adequately maintaining parking lots the group manages and tepidly pursuing business development in the downtown core.

There are 4½ years left on the funding agreement, McKeen said Thursday.

“I would characterize it as a very positive meeting,” he said of the meeting earlier that day with PADA board members that spanned lunch.

“Hopefully, the downtown association will be coming back with a more detailed response to the city’s letter with the hope that we can collectively make some improvements and meet the intent of the City Council to ensure that the downtown association is meeting the intent of the funding agreement with the city,” McKeen added.

“I would expect to get something back within the next couple of weeks.”

Lumens, too, struck a conciliatory tone Saturday barely two weeks after he told the Peninsula Daily News on Aug. 24 that “things have all gone to hell” and that the city had not “left us any room to work.”

He also suggested then that the PADA might go it alone with B&O funding it receives directly from businesses that totaled just $34,000 in 2013, not enough to even pay Executive Director Barb Frederick’s salary of about $50,000 a year.

“We are hopeful all the issues will be resolved,” Lumens said Saturday.

Lumens, owner of Northwest Fudge & Confections, was accompanied at Thursday’s meeting by the PADA members Evan Brown of Brown’s Outdoor equipment store and Jan Harbick, owner of Five SeaSuns Bed & Breakfast.

Brown would not comment, saying Lumens is the PADA’s designated spokesman.

“I don’t want to make any prognostications on where we want to go,” Lumens said, adding that the meeting included “a lot of clearing of the air.”

Reply by month’s end

He said he expects the association will respond by letter to the city near the end of this month.

“I have hope that [funding] will resume if we can take care of the issue and we can move on from there,” he said.

The PADA, composed of 178 to 200 businesses, receives $20,000 in B&O taxes from the city for the Main Street program.

The city paid the group $65,000 in Parking and Business Improvement Area (PBIA) money from mandatory parking assessments on downtown businesses in 2013.

The PADA also got proceeds from parking-permit decal sales and payments from a lease agreement that covers maintenance of the parking lot used by the state Department of Social and Health Services.

Shattuck, who Lumens said is paid with B&O proceeds that the association receives directly from businesses and not from money it receives from the city, asked for mediation of the dispute in an Aug. 5 letter to McKeen.

McKeen, who had raised financial accountability concerns with the PADA in May, said in an Aug. 19 letter to Lumens that the city would continue withholding payments “until PADA shows evidence of performance.”

City’s goals for PADA

In an eight-page Aug. 29 response to Shattuck, Bloor said that according to information provided by the PADA, the group “has done nothing at all” in 2014 to assist business in expanding or to recruit new businesses.

He said the group’s expense reports showed the PADA had done “minimal work” on parking lots it is responsible for, rejected any suggestion that the city would pay additional money to maintain those parking lots and said the PADA knew that 2014 was a trial period for the group to demonstrate that money it received from the city would be spent on “identified beneficial uses.”

“We are well into the third quarter of the year, and at this time, the PADA has produced no notable results,” Bloor said.

“The city is and has been willing to sit down and meet with representatives of the PADA,” he said.

But mediation was out of the question for the time being.

“Under current circumstances, we do not see what there is to mediate,” Bloor told Shattuck.

“Mediation may be a viable process at some point, but in the current situation, nothing appears that is appropriate to present to a third-party mediator.”

Shattuck saw the Aug. 29 letter in a positive light.

“What I take from it is that the city is still interested in sitting down and discussing [the issues], and I think that’s where the PADA is,” Shattuck said last week before Thursday’s meeting.

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Senior Staff Writer Paul Gottlieb can be reached at 360-452-2345, ext. 5060, or at pgottlieb@peninsuladailynews.com.