Submitted by Suanne Z. Thamm
Reporter – News Analyst
January 30, 2018 9:06 a.m.
The Ocean Highway and Port Authority (OHPA) of Nassau County met in Special Session on January 29, 2018 in the county Tax Collector’s conference room. There was only one item on the agenda. OHPA Attorney Clyde Davis presented for OHPA consideration Resolution 2018-1 with a long title: A Resolution … regarding the defeasance of the existing bond debt incurred for port infrastructure for the Port of Fernandina, amending Resolution 2017-11 and thereby specifically including authorization for execution of instructions to the Trustee and Joint Written Requests within the instructions to the Trustee and having an effective date.
After close to an hour of vigorous discussion, debate and sometimes heated public input, OHPA approved the Resolution on a 3-1 vote with Commissioner Robert Sturgess (District 1) opposing the measure. Commissioner (District 5) Lissa Braddock, who also serves as Board Secretary, did not attend the meeting.
Passage of this resolution would appear to clear the way for the transfer of port operations from Kinder Morgan to Worldwide Terminals Fernandina, LLC. Christopher Ragucci, Worldwide’s President and CEO, was in attendance. He indicated after the meeting that the final details of the transfer would take place by the end of the week. He expected that Worldwide Terminals and Kinder Morgan would issue a joint press release with more details upon culmination of the deal.
Although the agenda did not provide for public input, Chair Adam Salzburg (District 3) expanded the agenda and invited people to speak. Frank Santry, a retired attorney and member of the city of Fernandina Beach’s Planning Advisory Board, spoke first. Santry urged OHPA members to postpone action on the item, citing concerns over the lack of information available to the public as required by law. He suggested that approving the measure before them was “putting the cart before the horse.” He said that there were too many missing documents from the back up material for a complete understanding of the action being proposed.
Santry said, “In its present state, you cannot establish that [the defeasance] is in the best interest of OHPA because there are too many missing items from the document. You have a fiduciary responsibility. Postpone this matter until all the relevant information is available to the public.”
Cindy Jackson, Fernandina Beach News Leader reporter and resident of Amelia Island, said that the community needs to know more about Mr. Ragucci.
Attorney Clyde Davis responds
Davis recapped earlier actions relating to the defeasance process, including documents discussed last fall. He explained that defeasance was a way to retire the OHPA debt, and that the transaction under consideration was between Kinder Morgan and Worldwide Terminals. With the transfer of port operations to Worldwide Terminals, OHPA’s assets would no longer be attached to cover debt. He said that there has been an exchange of multiple written requests between OHPA, BBVA/Compass Bank and the parties to the transfer, some as late as that morning. He added that the transaction was scheduled to close with the bank the following day, January 30, 2018.
Davis’ explanation was interrupted several times by Santry, Jackson and Fernandina Beach City Commissioner Chip Ross. Speakers called for public access to all information contained in documents relevant to the transfer. Santry claimed that OHPA was “wandering into malfeasance,” citing unanswered questions with respect to the loan that Worldwide Terminals is negotiating with BBVA/Compass Bank for the purchase of the operating contract from Kinder Morgan.
Davis told his board that the situation was “not as it’s being presented from the floor.” He emphasized that in fact the financial deal was between two private parties—Kinder Morgan and Worldwide Terminals. With Worldwide Terminal’s agreement to pay off the OHPA bond debt, the term of bond indenture would be cancelled in the operating contract, which remains in effect. Davis said that the terms were laid out in OHPA Resolution 2017-10 passed two months ago.
Davis said that should Worldwide Terminals default on its end of the agreement, the bank would step in and take over. In no case would the debt revert to OHPA. “Under the agreement,” Davis said, “the port facility will be released from debt obligations – like paying off a mortgage. The port facilities will then become unencumbered assets.”
OHPA Commissioner Robert Sturgess weighs in
After listening to Davis as well as Santry’s opposing arguments, Sturgess expressed his discomfort with moving forward at this time. He agreed that there were legal requirements for information to be made available to the public. He said, “I believe that there are reasons to postpone this matter, not to ignore Florida Statutes.” Sturgess expressed his displeasure with receiving what he characterized as changing legal opinions during the course of the day from Davis. Sturgess, a lawyer himself, characterized the resolution as inconsistent and difficult to understand. He also said that he would prefer receiving documents in advance of a meeting rather than at the meeting itself.
Davis attempted to clarify, saying that the original Resolution had been modified to reflect that OHPA was pledging its operating agreement, not pledging any security interest in OHPA cash. Davis said that Sturgess was comparing apples and oranges.
Sturgess said, “I’m not sure that all our commissioners share an understanding. Maybe you [Davis] and Adam [Salzburg, Chair] know more. But I get different signals from counsel.”
Chair Salzburg tries to bring order
Salzburg stopped public comment, refusing to recognize additional interruptions. He asked Davis to confirm that no port assets were being used as collateral for the Worldwide loan, which Davis did. “Can we sign this Resolution as presented?” he asked Davis. Davis replied, “Yes. Compass Bank should agree. OHPA has already authorized you and Board Secretary Commissioner Lissa Braddock to sign the agreement. You can execute the agreement as amended.”
In response to Salzburg’s question, Davis said that the lender requested the document. “You are not collateralizing anyone else’s loan,” he said.
Christopher Ragucci provides input
Salzburg asked if failure to pass the resolution would hold up the process. He invited Ragucci’s input. Ragucci said that the bank would accept the Resolution in its present form. He said that negotiations with Kinder Morgan have gone on for 16 months and that closing on the deal is set for this week. Should OHPA balk at this point, Ragucci said that his group would walk away from the deal.
Sturgess asked why, if the deal had been in progress 16 months, OHPA only learned about it in November. Ragucci, backed up by Davis, said that this had been a negotiation between two private parties bound by conditions of confidentiality imposed by Kinder Morgan. But that the operating agreement, negotiated between OHPA and Kinder Morgan, was required as a pledge by the lending institution.
Sturgess said that he understood confidentiality agreements but “We should not have been left out of the loop It was our business. It is really confusing and dangerous.” He then moved to postpone the item until OHPA could receive more clarification and more public input.
Chair Salzburg called three times for a second to the motion, which did not materialize.
Motion to approve
OHPA Commissioner (District 4) Carrol Franklin said, “All we are doing is giving Worldwide Terminals permission to buy [port operations]. There is nothing hidden. I move to adopt Resolution 2018-1.” Commissioner Danny Fullwood (District 2) seconded the motion.
Fullwood directed comments to the audience. He said, “We’ve had a couple of months to look over this matter. Mr. Santry has previously cited the threats [to the port’s future] caused by our bond debt. I fear that if we don’t sign this today, we may lose the purchase. For the last 2-5 years OHPA has heard only complaints from the community about Kinder Morgan. Now’s our chance to get rid of them and bring in another firm to help us. We’ll have no more bond debt. If something happens down the road, we’ll deal with it. But we are taking this action for the benefit of the community.”
Before calling for the vote, Salzburg said, “I urge you to vote because you believe you are doing the right thing.” The motion passed on a 3-1 voice vote with Sturgess dissenting.
Following adjournment, Ragucci said that he expected the deal to close by the end of the week. “I am not leaving the island until it does,” he said.
Editor’s Note: Suanne Z. Thamm is a native of Chautauqua County, NY, who moved to Fernandina Beach from Alexandria,VA, in 1994. As a long time city resident and city watcher, she provides interesting insight into the many issues that impact our city. We are grateful for Suanne’s many contributions to the Fernandina Observer.