Submitted by Suanne Z. Thamm
Reporter – News Analyst
January 27, 2020
At the end of a Joint Special Meeting held in Fernandina Beach City Hall the morning of January 27, 2020, the Boards of both the Fernandina Beach City Commission (FBCC) and the Ocean Highway and Port Authority (OHPA) agreed that they were unable to work out their disagreement over whether OHPA is obligated to continue paying the city of Fernandina Beach $50,000 in lieu of taxes (PILOT) in perpetuity upon expiration of the Development of Regional Impact (DRI) executed 30 years ago. This DRI was the basis for the creation of the Port of Fernandina.
The next step is mediation, pursuant to Section 164.1055 Florida Statutes. The parties have opted for public mediation, covered by Florida’s Open Meeting rules. The parties now have 14 days to select a mediator to begin the process. Mediation is not binding on the parties. If the dispute cannot be resolved during mediation, the next step would be Circuit Court.
There has been an uneasy peace between the City of Fernandina Beach and the Port of Fernandina since the port’s establishment thirty years ago. The public record is replete with citizen opposition to the port’s creation and fears that it would encroach on or detract from the city’s Historic District. More recent complaints have involved neighborhood concerns over traffic, wetlands infringement, noise and poor storage of bulk cargo.
In laying out the city’s position in the current dispute, Fernandina Beach City Attorney Tammi Bach stated that the city believes that the DRI and Resolution 962, which formally adopted it, are binding documents. The DRI provided that OHPA would pay the city of Fernandina Beach $50,000 per year for city services such as police, fire and safety and roads. This payment is commonly known as the PILOT payment (Payment In Lieu of Taxes).
OHPA’s position, as put forth by their attorney Jeb Branham is that OHPA is a special district created by the state legislature and is not subject to paying taxes. He claimed that FBCC Resolution 962 did not impose a PILOT payment in perpetuity, and that OHPA would need to agree to make such a requirement binding. He added that there is not a single document indicating that the DRI is an agreement between the parties. Prior OHPA payments and their offer to pay such an amount for the next two years only were voluntary, not legally binding.
The map below outlines in red properties within the City of Fernandina Beach which are owned by OHPA. The total assessed value of these properties is $25,679,780. The theoretical tax obligation is $163,203. It is estimated t hat 51 percent of this total levy — $83,283 — is the amount that covers police, fire, and streets in the city.
Robert Sturgess, who chairs OHPA, said that OHPA would like to find a solution to the dispute. City Commissioner Chip Ross asked OHPA to provide some alternatives. He was initially met with silence.
OHPA Commissioners repeatedly stated that they have no money to continue payments, while acknowledging that the situation could change in 4-6 years, when they begin collecting dockage and wharfage fees from World Wide Terminals (WWT), the new port operator. Sturgess, who is an attorney and mediator by profession, suggested that one way out of the dilemma might be for OHPA to establish a percentage based fee of that income to be paid to the city. City Commissioners remained skeptical, since they have no access to WWT’s business plans to form a basis for anticipated income. WWT President and CEO Chris Ragucci did not attend the meeting.
Port Commissioner Carrol Franklin said that OHPA is exempt from paying taxes because it brings jobs to the community. City Commissioner Phil Chapman countered by saying that if that were the criterion, then Publix and downtown businesses should not be required to pay taxes because they also bring jobs. Chapman said, “We should all be in this together and contribute together for city services used.” He went on to say that the dispute is rooted in the port’s greed.
Sturgess disagreed, stating that OHPA had relied on the legal advice of their previous attorney, Clyde Davis, who said that the conditions of the DRI would expire after 30 years. The requirement for the port operator to pay an additional two years was written into the contract with WWT, the new port operator. OHPA is bound by that contract and on its own does not have the money to be able to continue payments. He appeared willing to concede that OHPA should pay for city services it uses, however.
City Commissioner Chip Ross suggested that money could be found to pay the City the annual $50,000 payment. He said that the current OHPA commissioners had doubled their own salaries to $2,000 per month. If they would forego that increase, they could save $60,000 per year, enough to make payment to the City of Fernandina Beach with some surplus. (OHPA Commissioners meet once per month.) OHPA Commissioner Mike Cole disputed that commissioners had given themselves a raise, stating that the $2,000 payment was authorized under the Special Act. Ross countered, saying that was a maximum allowed by law, not a mandated salary.
OHPA Commissioner Scott Hanna reminded the parties that current boards cannot change the past and should focus on the future. “We cannot pay you if we don’t have the money,” he said.
Vice Mayor Len Kreger, who chaired the city’s team in the absence of Mayor John Miller, seemed sympathetic to OHPA’s plight. He appeared willing to accept two more years’ annual payments of $50,000 with a new, negotiated agreement to determine an arrangement for future years. Other City Commissioners were unwilling to pursue this in light of the uncertainty of future port income.
City Commissioner Ross said, “Our duty is to keep our taxes as low as possible for our taxpayers.”
Fernandina Beach City Commissioners voted unanimously to pursue mediation as the next step to resolve the dispute. OHPA commissioners, bound by terms of the Special Act that created their district, agreed, but were not required to vote.
City Attorney Bach asked if the two bodies wanted to pursue private mediation — one commissioner, City Manager and City Attorney representing the city; one OHPA commissioner and attorney representing OHPA. The boards indicated a preference for full board participation, meaning that mediation would take place in a public setting.
The parties have 14 days to select a mediator. Bach strongly suggested that the parties choose a mediator with land use and legal credentials to facilitate discussions.
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.
Very well written article on an important city issue. WWT needs to pony up.