With its federal and state funding in jeopardy, commissioners with the Tri-Agency Economic Development Authority have decided to cancel and renegotiate the agency's existing contracts in an effort to save money.

But, according to Executive Director Bill Renfroe, new information from the U.S. Treasury Department has the agency breathing a small sigh of relief.

Due to an outstanding loan from the U.S. Department of Agriculture and a missed loan payment, the Treasury Department can garnish any state or federal funding the Tri-Agency receives, according to Renfroe. Agency officials were also concerned that the Treasury Department could seize any money that the agency had in its operating account. But the Treasury Department has an internal policy that will keep it from going after any funds the Tri-Agency may have in its account, he said.

"What happened is we had a conversation with a spokesperson for the U.S. Treasury Department and explained how the whole treasury offset program was causing extreme financial difficulty for the Tri-Agency," Renfroe said. "She reiterated that yes indeed that is a permissible activity under collections, however she said that the Treasury Department had agreed to a policy where they would not take (funds from) those accounts that are used for operating purposes. They realized if they still got the money the entity would not be able to operate at all."

According to Renfroe, under this policy any other funds the Tri-Agency receives would not be in jeopardy. The Tri-Agency is primarily funded by its member agencies, the city, county and harbor district. However, the Tri-Agency has already received its funding allotment from those three member agencies for the year, Renfroe said.

To solve this dilemma, the Tri-Agency commission announced Wednesday that it will cancel and renegotiate all active contracts the agency currently holds, including the MOUs between the city, county and harbor.

The commission will meet again in closed session next Wednesday to discuss the agency's budget and the renegotiation of its contracts.

"We're trying to figure out, for example, how do we pay the rent next month," Renfroe said. "We don't have any money so what do we do? The purpose of the meeting on Wednesday is to look at contracts and figure out which ones we can live without and which ones we can renegotiate and get a better deal."

Renfroe said his own contract as a Tri-Agency consultant will be up for renegotiation, as well its contract with Karen Phillips, who acts as the commission's clerk.

Tri-Agency commissioners have been questioning whether the agency can continue in its current incarnation after it received a notice of payment acceleration from the U.S. Department of Agriculture in July. The notice was in response to a $17,000 annual loan payment the agency was unable to make in 2011, but instead of requesting the missed payment, the USDA demanded the entire loan balance of $317,000 according to Renfroe.

Tri-Agency officials were further alarmed in September when they were notified that the Treasury Department had seized an expected U.S. Forest Service Resource Advisory Committee grant to pay off the loan. Renfroe's position as executive director was also at risk due to a lack of funds.

Despite its financial woes, the Tri-Agency can continue to function without federal and state funding, Renfroe said. Many of the Tri-Agency's plans for 2012-13 can be accomplished without federal funding. These include working to market and brand Crescent City and Del Norte County, creating a fast-track certificate of occupancy permitting program for developers and updating the agency's website, he said.

Reach Jessica Cejnar at jcejnar@triplicate.com.