By Mike Lednovich
Fernandina Beach claims each year that the Ocean Highway and Port Authority owes the city $50,000 in exchange for services provided such as police, fire, medical emergency, etc. The city says the Payment in Lieu of Taxes (PILOT) has no expiration from the time it was established.
OHPA stopped making the PILOT payments four years ago and maintains the agreement does have an expiration date.
A lawsuit ensued, and to date, both sides have spent a combined $200,000 in legal fees advocating their positions in court.
Next Tuesday, the Fernandina Beach City Commission will conduct what is called a shade meeting to discuss legal matters pending against the city including the PILOT lawsuit.
Shade meetings allow city commissioners to receive legal advice, deliberate on confidential matters, or strategize on sensitive issues without public interference. They are restricted to authorized participants, such as commissioners, attorneys, and essential staff, and are not open to the general public or media.
OHPA Chairman Danny Fullwood has said as recently as Wednesday’s OHPA meeting that he believes a settlement with the city to the PILOT lawsuit is in sight.
However, OHPA Attorney Patrick Krechowski said there was “nothing new” to report on the PILOT lawsuit at that meeting.
OHPA Vice Chairman Miriam Hill said, “I just want to reiterate my willingness and eagerness to settle our dispute with the city.”
In response, Fullwood said, “We should be hearing something about that soon,” noting the city’s shade meeting next Tuesday.
OHPA conducted its own shade meeting on May 24 in which the PILOT lawsuit was discussed. No details from that meeting have been disclosed.
The city commission shade meeting agenda includes:
“Request for direction – Case Number 2020-CA-284 City of Fernandina Beach Vs. Ocean Highway and Port Authority of Nassau County. City Attorney Tammi E. Bach seeks city commission direction regarding Case Number 2020-284.”
The most recent court ruling came last March when Judge Eric Roberson denied OHPA’s motion to consolidate the city lawsuit with a lawsuit brought against OHPA by the Nassau County Property Appraiser.
OHPA is a special district established by the Florida Legislature in the 1940s to spur economic development of Nassau County. As such, it is not accountable to local government.
In the 1980s OHPA embarked upon a major initiative to develop a modern port within the geographic boundaries of the city of Fernandina Beach. This project brought the city and OHPA into discussions over conditions and requirements of both parties. OHPA is tax-exempt, due to its special district status. The city demanded a PILOT payment to cover services such as police, fire, emergency and roads.
While the records are not clear, it appears that at some point the parties came to agree on a PILOT of $50,000 per year. This amount was never included in a contract signed by both parties. However, the city accepted the agreement as part of a development agreement, later deemed a Development of Regional Impact (DRI) adopted by COFB Resolution 962 (1989).
OHPA did not make payments for the first two years following adoption of the DRI. However, with some exceptions, it has paid the city at least $50,000 annually during subsequent years.
But the business of the Port of Fernandina has fluctuated greatly during the 30 years following the implementation of the DRI. Nassau Terminals, the port operator, has changed hands, most recently in late 2018 when World Wide Terminals took over the operations from Kinder Morgan. As part of their agreement to assume port operations, World Wide Terminals also took on significant debt that OHPA had run up over the years.
As a result of the assumption of this debt and the need to attend to major infrastructure repairs and improvements ignored by Kinder Morgan, World Wide Terminals issued $27.6M in public bonds, thus relieving OHPA of any debt.
Last year, Savage purchased World Wide Terminals and has been operating the port for more than a year.
Due to space constraints (20 acres of land in Fernandina Beach) and environmental concerns, the port is not able to expand its operations to attract larger vessels, which are serviced by other area ports. However, the port competes with other area ports to attract business from smaller ships and to handle break-bulk cargo.
Suanne Thamm contributed to this story.