As Legal Fees Evaporate, Cash Flow is Key for Port

The Ocean Highway and Port Authority (OHPA) proposed 2024-2025 budget will rely on diligent management of cash flow but no longer will be weighed down by crushing legal costs.

OHPA commissioners reviewed a draft budget Wednesday that showed legal costs dropping by $100,000 in 2024-2025 as the burden of two major lawsuits has been alleviated going forward.

But as the expense of attorney fees will decline, port revenues will take a hit as well as money from the American Rescue Plan Act (ARPA) grant ends in October. ARPA is a federal program designed to help public and private organizations recover financially from the COVID-19 pandemic.

According to port documents, OHPA took in $232,000 in ARPA funds through May of this year. The forecast is for OHPA to receive one final ARPA payment of $60,906 in October. The bulk of the 2023-24 ARPA funds were used to pay legal fees and the salary of the since terminated port director's position.

"Managing legal fees (going forward) will be a key issue because the ARPA funds have allowed us to fund our legal expenses but we won't have the money to fund those for too much longer," said OHPA accountant Pierre Laporte. "I promise I'll tell you when we run out of money. Hopefully, we've peaked on that (legal fees), and all that is behind us. We don't have those unlimited (ARPA) pockets any more."

Recent developments on the OHPA legal front have removed the hardship of attorney fees.

Legal expenses over the Nassau County property appraiser’s lawsuit against OHPA to pay property taxes are now being assumed by the port operator Savage/Nassau Terminals. OHPA has spent about $20,000 thus far defending the lawsuit, Laporte said.

Earlier this month, the city of Fernandina Beach and OHPA reached a tentative agreement about the port authority’s $50,000 yearly Payment In Lieu Of Taxes (PILOT), which had not been paid for five years. OHPA spent roughly $100,000 in legal fees fighting the PILOT obligations.

While the PILOT agreement removes future legal expenses, the settlement means OHPA will be required to pay the city $137,000 owed on Oct. 1. The port operator is paying $100,000 of that amount.

Also due on Oct. 1 is a new PILOT payment of $50,000. Laporte said in the future the $50,000 would be generated by increased port fees. He pointed out that since only two months remain until the payment is due, there is not enough time for any increased fees to accumulate the $50,000.

Laporte explained that the $37,000 past due and the $50,000 new PILOT payment means OHPA will need to pay the city $87,000 on Oct. 1.

"That money needs to be paid on that date," Laporte said. "Therefore, that money is going to come out of our pocket."

The $87,000 eats into OHPA's cash balance in the bank.

"My forecast for 2024-2025 is that on October 1 we will have $116,000 balance forward. The $60,000 ARPA money will be added to the bank account," Laporte explained. "As the balances get lower, obviously we have to be careful about cash flow, making sure we have money to pay the salaries each month and the audit fees when they come due. It (cash flow) will become more critical as we use this money. The less money we have carrying forward, the tougher it (cash flow) becomes."

Significant OPHA operating costs are $120,000 in commissioner salaries, $54,000 for legal services, $31,000 for the annual audit, $18,000 for insurance and $15,500 for membership in the Florida Ports Council.

Projected income from port operations is $318,000, which is an increase over 2023-2024 due to a 3% hike due to an annual inflation adjustment.

OHPA will vote on the budget in September.