POULSBO — Efforts to open a new marine science center in the now-closed Marine Science Center hit a potential minefield Wednesday night as the city council got its first look at the legal possibilities.

The recently formed Poulsbo Marine Society Incorporated, which has been spearheaded by Bight of Poulsbo founder Bill Austin and a host of community leaders, had asked the city for permission to use the building as quickly as possible.

However, with City Attorney Jim Haney and Bond Counsel Nancy Neraas in attendance, Finance Director Nanci Lien informed the council and mayor of two major restrictions on the use of the building.

“There is a 10 percent limit for non-governmental use and it also has a joint operations agreement with Kitsap County because of the shared debt,” Lien said.

Kitsap County Director of Administrative Services Ben Holland told the council that one of the conditions of the agreement was that the building be used “as a marine science and environmental education center available to educational groups and other members of the public.”

While the city is technically in breach of that agreement, the county is in no hurry to shutdown funding for the building, Holland said.

“I think we’re asking for some kind of viable plan on how to operate that,” Holland said, noting that the county is prepared to make its next debt service payment in February.

The county is interested in keeping the building as a marine science and environmental education center, he said.

“How it’s done is up to the city and I think there are people who are interested in working on it,” Holland remarked.

Neraas then addressed the restrictions imposed by the bonds used to construct the building and clarified the 10 percent non-governmental use issue.

For a non-governmental entity such as a non-profit organization to use more than 10 percent of the building, the city would have to secure enough cash to pay off an equal percentage of the bonds, Neraas said.

Even though the city can’t pay off the bonds until 2011, that money would be put in a separate account upfront and would be used to make future payments on the bonds, she said.

“The original principal amount was $650,000 and we would have to find out if there was any private use up to this point,” she said, noting that the private use would factor into how much the city would be required to pay to allow a non-governmental entity to use the building.

“That opens Pandora’s box,” commented Councilman Ed Stern. “I think in the public’s mind what was previously there or the Bight of Poulsbo is not under your definition of governmental.”

While such organizations are very legitimate and do something the government could do, they aren’t governmental, Neraas responded.

“The city has about $175,000 left and it’s likely not much of the bonds will have to be defeesed,” Neraas said.

In order for a non-profit to make it work, the county and city would have to come up with the money upfront, Stern said.

“In the public’s mind, the city and county own it, it’s the people’s facility, the people deserve it and want good people in it,” he said, asking if the city could underwrite the $200,000 yearly lease on the building.

City Attorney Haney responded by citing a Washington State constitutional statute that prohibits cities from making any gift of public funds or property to private entities with one exception — that the private party is going to perform a service the government would otherwise provide.

With the legal restrictions on the table, Stern took aim at the Oct. 19 deadline suggested by Mayor Donna Jean Bruce for proposals and business plans for the building.

“I really appreciate being fair and open-minded to all groups,” he said. “A real business plan takes considerable time and effort and I don’t think that’s sufficient.”

Bruce responded by stating she was trying to expedite things and offered to postpone the workshop until November.

However, at the end of the discussion, councilmembers agreed to keep the workshop on Oct. 26 to allow the public its first opportunity to express their concerns and desires for the center.