2015 Year in Review January 22, 2016

To the Fort Worden Public Development Authority Board of Directors,

For the Fort Worden Public Development Authority (PDA) 2014, was a year of transition; 2015, proved to be a year of rapid growth and stabilization. Building on lessons learned and the accomplishments of the past two years’ it is staff’s goal that 2016 be a year of strengthening strategic partnerships and promoting the Fort’s reputation as a Lifelong Learn- ing Center. This report is intended to review the projects and accomplishments of the past two years of operations and to look ahead at our 2016 initiatives and priorities.

2014 ACCOMPLISHMENTS In 2014, we successfully accomplished all 10 of our organizational commitments. • Establish a new Front Desk and improve the Check-In/Out guest experience • Develop a Strategic Marketing Plan • Design and launch a new website: FortWorden.org • Improve overnight accommodations i.e. Alexander’s Castle, Bliss Vista, etc. • Renovate Building 245 & 270 to serve as “cottage” overnight units • Wi-Fi and broadband internet installed throughout the 90-acre campus • Take over and manage all campus food services (formerly Bon Appetite concession) • Buy-out Port Townsend Hospitality Services (and begin operating housekeeping services in Jan.) • Develop maintenance and capital plans in collaboration with State Parks • Move forward with Building 202 and HTCs

2015 CHALLENGES At the end of 2014, we identified four areas of operations that would represent significant challenges in 2015. • Recruiting and retaining key senior staff • Assessing the functionality of the ATRIO Reservation System • Improving financial reporting • Upgrading technology and desktop support

Staffing Challenge: As with any start-up business, finding the right staff with the right stuff proved to be a huge challenge in 2015. The PDA retained as many state parks employees as we could to ensure a smooth transition—but many left the organization this past year.

Accomplishment: The PDA recruited experienced managers to lead key departments and grew to be one of the largest employers in Jefferson County in 2015, employing 57 individuals in the shoulder season, about 100 employees in the peak season, and maintaining an annual payroll of $1.5 million. In 2015, the PDA recruited: • Todd Gubler, General Manager From Five Star luxury hotels to rustic mountain resorts, Gubler has been engaged in hospitality and customer service for more than 20 years. His resume includes roles on the Olympic Peninsula Visitor Bureau and Olympic Peninsula Tourism Commission as well as numerous management positions.

• Diane Moody, Chief Financial Officer Engaged in rural community economic development for more than 25 years, Moody has lead several successful market on business development initiatives with a strong emphasis on sustainability. She has established product developments and community development finance institutions to support unique small businesses and nonprofit organizations.

• Larry Sammons, Director of Facilities After 24-years of employment with the Woodland Park Zoo in Seattle, Sammons retired as the Director of Exhibits and Facilities. At Fort Worden he now leads a newly restructured Facilities Department.

• Daniele Costello, Director of Guest Services An innovative, flexible “hands on” executive with a background in hospitality, high technology, manufacturing and R&D companies. Costello has over 30 years of diversified experience in human resources, front desk management, strategic planning, people development and organizational development.

The PDA also promoted from within, advancing Kristan McCary to Director of Food Services; Gerda Jorgenson to Senior Sales Manager; and consultant Megan Claflin to Public Relations & Grant Writing Specialist.

ATRIO Reservation System Challenge: The new cloud-based, “tablet-friendly” reservation system ATRIO was supposed to streamline operations and enhance our customer service functions. Unfortunately, due to the original configuration and user errors it did not function as we had anticipated.

Accomplishment: Senior staff met with ATRIO representatives and reconfigured the system from accounting to room types over a couple of months, improved campground reservations, retrained supervisors, and retrained all staff in its use. Consistent SOPs and policy were also reintroduced as part of this roll-out. Todd Gubler immersed himself in this process and became a “superuser” of the ATRIO system. Financial Reporting Challenge: Financial reporting was something of a quagmire in 2014. There was a cascading set of errors due to systems and lack of understanding that compounded the inability to provide adequate billing on time, ensure correct journal entries inputted into ATRIO, and syncing revenues and expenses into two version of QuickBooks.

Accomplishment: With leadership from Diane Moody (as a consultant) and oversight from board member Jeff Jackson our finance department made significant progress in resolving financial reporting issues early in 2015. Diane started as CFO in June, and has re-vamped the entire finance system, reviewed all internal policies and has completed an internal financial audit. Diane has also revised administrative, purchasing and contracting policies to ensure that our policies are consistent with the way we conduct our business. She consolidated Quickbooks and completely rebuilt the Charts & Accounts.

Technology Challenge: One of the biggest frustrations for staff in 2014, was the transition to get new computers and phone systems set up and synchronized. Aging facilities and wiring, combined with slower than expected NoaNet internet and Wi-Fi installation, created significant obstacles while attempting to establish our computer network, and provide consistent IT and desktop support.

Accomplishment: The PDA contracted with NoaNet to complete the computer network configuration and contracted with IntuPlex to provide desktop support. Computer problems went from a daily, constant source of irritation to infre- quent issues. 2015 INITIATIVES In 2015, the Board prioritized six major initiatives. • Business Development Committee • Master Use Plan • Hospitality Facility Assessment • Expanding Food Services • Conduct Energy Audit • Officer Row Renovations

2015 ACCOMPLISHMENTS Business Development Committee The Business Development Committee, led by Norm Tonina, decided that the major goal of its work in 2015 was to work with key stakeholders in a charrette process to identify future programmatic uses across the campus. A team of design, financial and art consul- tants, representing Seattle-based firms Miller|Hull, Sig- nal Architecture + Research, and ELM Environments, staged a two-day planning meeting (Charrette) in April 2015. It was attended by about 40 key stakeholders, including the directors of the 12 partner tenants; a repre- sentative from the Washington State Arts Commission; Port Townsend City Manager David Timmons; and other local citizens. Initial discussions centered on how best to redevelop 10 buildings in Fort Worden’s western campus area that are currently underutilized or used as storage facilities (Buildings 373, 370, 365, 325, 324, 308, 309, 304, 300 and 306).

In June 2015, Charrette participants and community members were invited to attend a public meeting where the con- sultants presented their findings in a "Master Use Programmatic Plan and Investment Strategy," identifying key priority investments, how to grow business in the colder months, how to build in enough meeting spaces for current tenants and how to grow and evolve with the right tenant mix. This collaborative effort has generated a redevelopment strategy for the campus that fosters spaces of learning, recreation, and cultural activities, reinforcing Fort Worden’s position as a unique destination in the Pacific Northwest.

Master Use Plan Utilizing funding from a combination of grants, the PDA contracted with the Charrette consultant team to prepare a master plan for the redevelopment of Fort Worden’s core campus. The resulting document, the Fort Worden Lifelong Learning Center Program Development & Capital Improvement Plan, divides the 90-acre campus area into five study areas and assesses the site analysis and redevelopment strategies and develops overall use proposals and capital improvements priorities for each of the study areas.

Hospitality Facility Assessment As part of the planning process described above, the Fort Worden Lifelong Learning Center Program Development & Capital Improvement Plan involved special studies to further assess our facilities to support long-term growth of Lifelong Learning Center programs. The Plan was expanded to provide several appendices, including phasing recommendations for future capital improvement priorities, a market analysis to maximize Fort Worden’s potential as a destination for visitors and conferences within the context of lifelong learning. The appendices also include detailed studies for transforming existing dormitories into new accommodation units, as well as designs for glamping units targeted at attracting low-budget, leisure travelers (such as tiny houses and tent platforms)—a growing trend in the hospitality industry. Detailed renovation plans were also developed for NCO Row, buildings 272, 277, and a portion of 225.

Expanding Food Services In September 2014, Bon Appetit— which previously managed the contract food service for conferences, the Local Goods Cafe inside the Commons and the Cable House canteen on the beach for Washington State Parks— terminated its contract with Fort Worden and the PDA stepped in to take advantage of the opportunities to expand the array of food and catering services provided at the Fort. The PDA began to explore other food outlet options, including a beach café, pub, dinner club, rolling food cart and the prospect of a culinary arts program. Specific improvements included:

• Canteen at the Beach: In the spring, the PDA made significant upgrades and repairs (totaling over $55,000) to the Canteen to reopen the eatery for business in the peak season and, to utilize it as a remote kitchen while upgrades and repairs were being made to the Café at the Commons and the main catering kitchen in the Commons building.

• Café at the Commons: Minor improvements were made to the Café to increase its appeal as a Fort gathering spot. The café’s menu was significantly revised and its food offerings were greatly expanded in order to serve as a lunch destination for Fort employees, conference and meeting participants as well as community members.

• The Servery: A burst water pipe damaged the flooring in the main servery kitchen. All of the kitchen equipment needed to be removed so the flooring could be replaced. Flooring and kitchen improvements were scheduled in conjunction with this project. Repairs and upgrades totaled over $60,000, which was largely provided by State Parks (approximately $50K) for needed repairs.

• Taps at the Guardhouse: After months of design, construction is well underway at year end. A $187,000 contract was awarded to Ripley Construction to undertake the renovation. The old jail room has been opened up and modified for its new use. The kitchen and bar equipment have been ordered and coordinated with the rough-in connections. The furniture has been delivered and the goal is to be able to have a soft opening by the end of April.

Conduct Energy Audit The PDA hired University Mechanical Engineers to conduct an energy audit of the entire campus that focuses on lighting and building control systems to better address our future energy needs and the investments necessary to create energy efficiencies and cost savings. Final report is to be presented at the January board of directors meeting.

Officers’ Row Renovations Utilizing grant funding, the PDA hired historic preservation architect, Cate Comerford, to design a “pattern book” to guide the renovation of Officers’ Row accommodations to ensure aesthetic consistency and historic accuracy. The “pattern book” also included paint schedules for specific rooms, flooring, lighting and plumbing fixture selections, and layouts for interior design. It includes specific recommendations for restoring historic cabinets, fireplace mantles, banisters and other historic features. Sage grant funding enabled the PDA to hire a “finish crew” that began work in the summer. This fall a focus of their work has been on interior upgrades to Building 16 (the “Bricks Building”), which includes general repairs, new wiring, refinished floors, new carpet and paint. The new crew also renovated the interior of the Seminar Room with new wiring, lights, A/V technologies, carpet, wainscoting, paint and new furnishings. 2015 ADDITIONAL SUCCESSES In addition to accomplishing the six major initiatives laid out at the beginning of 2015, PDA board and staff were also able to accomplish these additional goals:

Discover Pass As required by the terms of the 50-year Master Lease agreement with State Parks, the PDA was required to sell, onsite, at minimum $250,000 in Dis- cover Passes in 2015. By investing revenue into public outreach and print, digital and collateral advertising materials, the PDA exceeded that goal by over $13,000. In addition to the automated pay stations, the Discover Pass is offered for sale at the Puget Sound Coast Artillery Museum, Port Townsend Marine Science Center, Friends of Fort Worden Gift Shop and the front desk in the Commons. The effort of our campus partners and volunteers was crucial to our success. Give the gift of adventure! A Discover Pass is the perfect stocking stu er for the Joint Marketing hikers, kayakers and campers in your family. Co-Op Marketing Give the gi of Washington’s Fort Worden and the City of Port Townsend seek to accomplish similar goals great outdoors with a $30 in attracting new visitors to the area. In regards to special event such as wed- annual pass - that’s less than 8 cents a day! dings, conferences, retreats and meetings, both entities can benefit from pre- Buy a Discover Pass at the senting a consistent and cohesive “pitch” and sharing advertising costs. In Fort Worden Commons, 2015, The PDA contributed $6,500, an investment matched by the City, for a Visitor Information Center, Coast Artillery Museum or total budget of $13,000. City of Port Townsend Marketing Director Christina call (360) 344-4431. Pivarnik has identified five print publications and one social media campaign Buy a Discover Pass at Fort Worden today! in which advertising would result in the greatest return on investment. Fort Worden would partner with the City of Port Townsend in these promotions.

LTAC Funding In 2015, the City of Port Townsend’s Lodging Tax Advisory Committee (LTAC) awarded the PDA $37,500 to aid in our execution of a variety of marketing and advertising initiatives aimed at attracting visitors from outside of Jefferson County to the Fort and the City of Port Townsend. Initiatives were derived from the 2015 Strategic Marketing Plan and included projects that benefited both the PDA, campus partners and key community stakeholders. Marketing initiatives included: • Businesses Listings on User-Review Websites • Customized Listings on PTguide.com • Fort Worden Promotional Video • Development and printing of Fort Worden Pad Map (50,000 copies) • Local Print Media Marketing • Marketing for Weddings • Marketing for Conferences & Meetings • Development of Visitor Packages • Marketing for Culinary Services

Lodging and sales tax revenues showed a significant upward trend in 2015, resulting in the most significant lodging tax funds collected in the history of the City of Port Townsend. Fort Worden is the most significant contributor to lodging tax revenue in Port Townsend and experienced tremendous growth in LTAC revenues—generating $37,419 in 2014 to over $92,000 in 2015. For 2016, the PDA has received a $40,000 grant from LTAC to accomplish three broader strategies: • Digital Marketing & Advertising • Collateral Materials • Community Partnerships & Visitor Marketing Operational Sustainability Organizational Structure By the end of the year, the PDA had successfully recruited a skilled and experienced management team to lead a restructured organization that includes new housekeeping and maintenance departments as well as food services. We have stabilized operations and built a stronger foundation to support our planned growth. We grew from 16 FTE’s at the beginning of our operations in May 2014 to 55 employees (32.5 FTE’s) at the end of 2015, with a peak of 92 seasonal employees (67 FTE’s) in July.

Year-end Financial Position The Board approved an operating budget of $3,504,670. Accommodation revenues (Group Housing and Leisure) generated close to 60% of the gross revenues, which was 100.3% of the budget forecast. Overall revenues were lower than forecasted (in food service), but the PDA expenses were managed to offset the reduced revenues. We ended the year close to budget, $107,000 in the black.

We have adopted new financial procedures and implemented a new payroll service that strengths our internal controls. A key part of our overall operational success this year was the investments we made from the operating budget in the following areas: • Upgrading guest amenities in accommodations, such as linens, pillows, towels, and bath products (over $35K) • Leasehold improvements ($25K) • Normal maintenance and repair ($88K) • Funded new maintenance/finish crew out of operations ($56K) • Fixtures, Furniture and equipment ($30K)

We have made significant progress in building a maintenance team to take on deferred maintenance and capital improvement projects and to be equipped, trained and capable of taking on all normal maintenance and repairs by May 1, 2018, as required by our Master Lease with State Parks.

2015 Net Reserve $107,944.78* Total Revenue $3,504,670.12 Total Expenses $3,396,725.34

*Preliminary 2015 year-end financials Grant Funding Sage Foundation In July 2015, Sage Arts made a $4 million pledge to the PDA, $3 million of which is dedicated to the renovation of Building 305 into an arts and education facility at the heart of the proposed Makers Square. The remaining $1 million is unrestricted funds which has served a variety of strategic planning and capital development projects: • Expanded scope for Program Development and Capital Improvement Plan • Additional design services for renovation of Buildings 203, 272, 277 and 225 • Officer’s Row interior improvements • Guardhouse Pub Renovation

Sage’s leadership and generosity has provided a major boost and forward momentum in our funding efforts and, in October 2015, the PDA leveraged this momentum to attract additional funding.

Camilla Chandler Family Foundation In October 2015, the Camilla Chandler Family Foundation awarded the PDA $1 million to revitalize the underutilized Western-portion of the campus at Fort Worden State Park into a vibrant “Maker’s Square”—an area dedicated to arts, educational and cultural uses— including renovating Building 305, the most predominant and significant building in regards to facilitating new programmatic uses, as it is centrally located in the proposed Makers Square.

Karakin Foundation A $75,000 grant secured through the Karakin Foundation in 2015, will allow the PDA to hire a qualified firm in 2016 to design and construct a prototype unit for a “glamping” unit. This could include platforms tents, traditional glamping structures and/or tiny houses with or without bathrooms. Glamping (recognized as glamorous or luxurious camping) is a new, growing trend in tourism. In recent years a wide variety of social media groups, travel blogs, online forums and glamping websites have added to the momentum of this trend; and cities such as Seattle and Portland are utilizing this tactic to increase affordable, short-stay options for tourist accommodations. Glamping is a recommendation that comes directly from the Fort Worden Lifelong Learning Center Program Development and Capital Improvement Plan.

First Federal The PDA secured a $25,000 grant from the First Federal Community Foundation to assist with the renovation of Build- ing 272 to serve as overnight housing. Renovating underutilized buildings, is crucial to increasing the PDAs capacity to host faculty and artists associated with our campus partners, as well as improving the quality of the facility in which the PDA hosts our partner program participants and to attracting new groups to the Fort. Strategic Partnerships Furniture Program Having secured a $75,000 grant from the Karakin Foundation in 2015, the PDA partnered with the Port Townsend School of Woodworking to establish a furniture makers internship program, serving graduates of the school’s 12-week Woodworking Foundation Course. As a result, a team of two of the School’s woodworkers have designed and crafted approximately 75 pieces of porch furniture for the Officer Row buildings.

Port Townsend School of Arts In June 2015, the PDA entered into a six month lease with the Port Townsend School of the Arts, and recently renewed that lease for an additional six months. The PTSA is the first new campus partner to join the Lifelong Learning Center since the Port Townsend School of Woodworking in 2007. Offering a wide variety of visual arts classes for youth and adults, the school could become a major contributor to the LLC mission.

Film Project Independent film director John Sayles has chosen Fort Worden State Park as the location for his next movie, “To Save the Man.” Robert Redford has signed on as executive producer. The film has an anticipated budget of $9 million. A cast of 40 with speaking parts and many nonprofessional extras— eighty percent of which will be Native Americans— and additional film crew and production team members will be lodging at Fort Worden between May and August 2016, as well as utilizing Fort Worden’s food services. A $37,000 deposit has been secured and the accommodations reserved would generate $377,000 in new revenue. Additional food service revenue is anticipated with this contract.

Community Open House In collaboration with Fort Worden’s partner and community organizations, the Fort Worden Open House has become a free annual event that promotes the Lifelong Learning Center, provides participants the opportunity to engage visitors about their programs and events, allows visitors to rediscover the natural beauty and rich history of the Fort, highlights Fort Worden’s accommodations, conference and meeting spaces, and strengthens relationships between the FWPDA, campus partners and the local community. Attendance each year (2014 and 2015) has averaged 1,000 people. Food and beverages were offered by Fort Worden food services.

Fourth of July Celebration On July 4, 2015, fireworks returned to Fort Worden. The largest new event at Fort Worden and in Port Townsend, the event drew more than 3,000 people to Fort Worden to enjoy a full day of activities on the Parade Grounds and the beach. The event was executed by the Jefferson County Chamber of Commerce and Thunderbull Productions, in partnership with the PDA, State Parks and the City of Port Townsend. Campus partners gave positive feedback about the event in their end of year report and the community feedback was overwhelmingly positive. Initial planning meetings for growing this event in 2016 have begun.