Port Budget: Short of Money and, So Far, Ideas

By Mike Lednovich

The Ocean Highway and Port Authority (OHPA) begins tackling its 2023-24 budget Wednesday carrying over $120,000 in unpaid attorney fees and $141,700 in salary for its executive director.

A draft of the 2023-24 Port of Fernandina budget also includes $120,000 in OHPA commissioner salaries.

OHPA accountant Pierre Laporte has sounded the alarm over port expenses warning that once port funding from the American Rescue Plan, a federal program designed to help public and private organizations to recover financially from the COVID-19 pandemic, runs out in 2024 the port will fall off a financial cliff.

The future of Port Executive Director David Kaufman’s position came into question at the June OHPA meeting after Savage Industries, which operates the port, hired Matt McPhail to serve as senior commercial developer for Savage to develop new business.

Finding new revenues for the port is also the responsibility of the executive director, which brought into question why two executives would be needed to drum up business for the port.

“We have a fiscal responsibility. I can’t see the necessity to have a port director on our side when you have a commercial director on Savage’s side. To me that’s just a redundancy,” Commissioner Ray Nelson said.

OHPA Chairman Danny Fullwood noted the urgency in finding new revenues for the port.

“Our finances will dictate whether we can keep him (Kaufman) or not. We’ve got enough (ARPA funds) to go one more year, but after that, unless we get revenue, it’s all over,” Fullwood said.

Just as distressing are the port’s mounting legal fees, which Laporte said are $140,000 –twice the amount that was budgeted for 2022-23. The enormous legal bills are a result of continuing lawsuits against OHPA by the city of Fernandina Beach over Payments in Lieu of Taxes (PILOT) that OHPA claims it cannot pay and by the Nassau Property Tax Appraiser, which maintains that OHPA’s port operator Savage should pay ad valorem property taxes because it is a for-profit contractor.

But the draft 2023-24 budget to be discussed only includes $30,000 for legal fees while carrying over $120,000 in unpaid attorney fees.

To offset part of those debts, OHPA decided to sell three parcels located on the perimeter of the port’s operational footprint in the city’s historic district. The sale of the properties should generate more than $1 million for OHPA.

“The issue is legal spending. We can sell the land. I’m not sure there is any other near term (solution). We have the ARPA funds, and part of the budget is when the ARPA funds run out. Basically, at our current spending level … essentially the lawyer has been put on notice that there will be no more funds available to pay his fees. There may be other revenue opportunities. We don’t want to sell land to pay legal fees. That would be a horrible decision. I don’t see any near term revenue opportunities. The legal spending has been an issue for a year and a half at least,” LaPorte told commissioners at OHPA’s May meeting.

Not listed in the budget discussion are any revenues to use for upgrading the U.S. Customs house at the port. Customs has threatened to leave the port unless its facilities are upgraded to meet its operational needs.

The draft budget lists $565,000 in revenues leaving OHPA with a forecast of $963 breathing space.

The Budget Workshop will be held at FSCJ’s Betty P. Cook Nassau Center, 76346 William Burgess Blvd., Yulee in the David Yulee Room A-114 from 3-5:30 p.m.