KITTITAS COUNTY, Wash. — Kittitas County commissioners on July 16 approved Resolution 2025-149 to move forward with large-capital lodging-tax awards but voted to strike two awards and return those capital-grant questions to the Lodging Tax Advisory Committee (LTAC) for further review amid concerns about the City of Cle Elum’s Chapter 9 bankruptcy.

The action follows LTAC’s recommendation to award $10,000,000 for tourism-related, municipally owned infrastructure projects after a competitive application process. LTAC clerk Lisa Begney told the commissioners the committee considered seven applications and recommended funding for projects including Rosslyn cemetery irrigation and signage, the Washington State Horse Park, the Kittitas County Event Center, rodeo grandstand reconstruction, and the City of Cle Elum’s Upper County Community Recreation Center. Begney said the County of Ellensburg field-house project and one documentary-film request did not fit the committee’s scope.

The board’s move matters because two recommended awards relate to projects on land owned in fee simple by the City of Cle Elum, and county commissioners expressed concern that municipal bankruptcy proceedings could place those properties or associated investments at legal risk. “Under chapter 9, there’s going to be a plan of adjustment for the city of Cle Elum and that it should be status quo and business as usual, and any earmarked funds, which these taxes are earmarked, should be safe. I can’t guarantee that,” said Stephanie Hartstein of the county prosecutor’s office, who advised the board that bankruptcy outcomes remain uncertain and that specialized bankruptcy counsel has been consulted.

Why the county returned two awards

Commissioners cited uncertainty about how a Chapter 9 plan of adjustment could affect city-owned property and whether an infusion of lodging-tax dollars into property listed in bankruptcy could be impaired. One commissioner moved to approve Resolution 2025-149 but to strike the awards listed under agenda items 3 and 5 and “return the capital grant funding questions and the eligibility for further exploration.” The motion was seconded and ultimately approved. The transcript does not record a roll-call tally; commissioners directed that any amended awards be returned to LTAC and noted that final action on an amended resolution must comply with the statutory 45-day comment period before the board can take final action.

LTAC process and fund balance questions

Jessica Pericker, a LTAC member and lower-county representative, described how the committee arrived at the $10 million total. Pericker said staff and an auditor presented three spending scenarios (about $8 million, $10 million and $12 million) and that the $10 million option was selected as a conservative middle path that would preserve a working fund balance and obligations such as an armory bond. “We have been sitting on this money for six years,” Pericker said, noting the committee adopted, for the first time on capital grants, a scoring rubric and that municipalities were asked to provide planned completion dates and operational/maintenance plans as part of applications.

Pericker and other committee members said concern about the Fieldhouse application included a lack of a clear maintenance and operations plan and uncertainty about long-term sustainability. The board discussed prior informal support for the field house — commissioners have previously discussed supporting as much as $3,000,000 toward that effort — but LTAC members said the field house application did not provide the operational detail the committee sought.

Legal guidance and next steps

County legal staff told the board that, while lodging-tax statute limits the board’s authority to award funds to recipients recommended by LTAC, an Attorney General opinion from 2016 and county counsel’s interpretation allow the board to adjust award amounts if it follows required procedures, including returning the matter to LTAC for comment and observing specified waiting periods. Hartstein advised that the board could approve some awards and send others back, but any change that constitutes an amendment would require the 45-day period before final action.

Commissioners directed county legal staff to seek assurances from Cle Elum’s bankruptcy counsel about whether earmarked lodging-tax awards to projects on city-owned property could be protected in the municipal bankruptcy process. The board also instructed LTAC to revisit the returned awards and provide further information to address the commissioners’ concerns. The amended resolution was approved; the transcript records the motion, second and a statement that the motion “passes,” but does not contain a detailed vote tally.

The board and LTAC said they intend to follow up with Cle Elum and its attorneys, and to reconvene LTAC as needed. Because the board amended the resolution, any final action on the amended awards will be subject to the statutory 45-day comment period before the board can adopt a final decision.