The Ocean Highway and Port Authority’s attorney and accountant are working with the Florida Auditor General regarding the district’s unpaid legal bills and whether they constitute a “financial emergency” according to state law.
OHPA currently has a current outstanding balance of $115,577 in legal fees owed to OHPA’s law firm, Balch & Bingham as a result of two ongoing lawsuits filed by the city of Fernandina Beach and the Nassau County Property Appraiser’s office. A financial emergency exists according to Section 218.503(1), Florida Statutes, which states that local governmental entities shall be subject to review and oversight by the Governor when any one of several conditions, including:
Part (b) Failure to pay uncontested claims from creditors within 90 days after the claim is presented, as a result of a lack of funds.
Fernandina Beach City Commissioner Chip Ross told OHPA commissioners at their June meeting that the district was not complying with the state statute by not reporting its financial situation to the Auditor General.
After reviewing the state law, OHPA Attorney Patrick Krechowski notified the Auditor General’s office.
“Last month we were accused of having a financial emergency at the port, would anyone like to address that?” OHPA Chairman Danny Fullwood asked at OHPA’s meeting last Wednesday.
“I’ve reached out to the Auditor General’s office. The individual I’m supposed to talk with, we’ll discuss the status of the outstanding legal invoices and some progress that has been made recently on that,” Krechowski said. “I’m going to describe to him the situation and what the next steps are.”
OHPA accountant Pierre Laporte said the state statute can be defined in many ways.
“It’s a very fine reading of what a financial emergency is,” Laporte said. “We’ve agreed to payment terms with the law firm that allow us to take the time we need to make the reimbursements. The lawyer has not made any claims against us for payment. Yes, we have invoices that are outstanding, but none of those invoices have claims for payment. What the law says is that if you have a claim that is 90 days outstanding and can’t pay that, that’s a financial emergency.”
Under a flag of a financial emergency, the law provides assistance from the state to provide funds to cover the unpaid costs. Laporte said he doesn’t believe OHPA is in a financial emergency, but “obviously they’re (Auditor General) are going to err on the side of when in doubt, (you should) report it.”
The law requires that government entities report their financial status in a “management letter” to the Auditor General.
“We were in a financial emergency prior to the acquisition by Worldwide Terminals. This port was in financial emergency for 10 years before that because we had negative equity,” Laporte added. “But each year we would report that yes, it’s technically a definition of a financial emergency. No, we don’t need any additional resources from the state to pay these claims.”
Laporte said OHPA is not going to incur costs that it can’t pay. “But when you ask the state and say ‘we think,’ they’re going to (come back and) report it,” Laporte said. “That’s where we are right now.”
Just last month during OHPA’s budget workshop, Laporte told commissioners that OHPA could not continue to be able to carry the burden of adding more legal fees from the lawsuits. “The legal fees are killing you,” Laporte said. “These legal issues need to come to a close.”
Laporte also told commissioners that once American Rescue Plan Act funds expire next year, OHPA will not be able to pay its lawyers.