City sues OHPA for annual payments

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  • The city of Fernandina Beach filed a lawsuit in the Fourth Judicial Circuit Court this week asking the court to determine if the Ocean Highway and Port Authority should continue to give the city $50,000 per year in Payments in Lieu of Taxes. OHPA will ask the court to dismiss the case, according to their attorney. JULIA ROBERTS/NEWS-LEADER
    The city of Fernandina Beach filed a lawsuit in the Fourth Judicial Circuit Court this week asking the court to determine if the Ocean Highway and Port Authority should continue to give the city $50,000 per year in Payments in Lieu of Taxes. OHPA will ask the court to dismiss the case, according to their attorney. JULIA ROBERTS/NEWS-LEADER
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The city of Fernandina Beach has filed a lawsuit in the Fourth Judicial Circuit Court against the Ocean Highway and Port Authority asking that the port be required to continue making Payments In Lieu Of Taxes (PILOT) that the port is refusing to pay.

The lawsuit, filed Oct. 27, asks the court to rule whether OHPA committed to perpetually making the payments in 1989 when it asked the City Commission to approve a Development of Regional Impact. In exchange, the city required, among other conditions, that the Port of Fernandina, which OHPA oversees, pay the city a minimum of $50,000 per year in lieu of taxes on a large swath of property that was removed from the city’s tax rolls. Half of that annual payment was to be used “toward a capital acquisition or development for downtown parking” and half for “development of a community civic center” during the agreement’s first five years, and then the payment could be renegotiated each year, with the amount never to dip below $50,000.

Over the years since then, various OHPA commissioners, including the currently seated board, have insisted the port is not obligated to make the annual payment in perpetuity. Current OHPA board members have said the port will make the 2019 and 2020 payments if the city ends what some would call a practice and others an obligation.

City commissioners contend the city furnishes fire and police protection to the port as well as street maintenance leading to the facility, all of which the PILOT helps fund, but OHPA has countered that the port has its own security and fire services and that the city does not maintain streets within the gated complex. OHPA commissioners have also said the port provides an “economic boon” to the city because its employees pay local city taxes and fees and spend money in the city.

The matter has gone back and forth between the two bodies, both in public meetings and through negotiations between City Attorney Tammi Bach and OHPA Attorney Jeb Branham. Earlier this year, OHPA commissioners and the City Commission met in a seven-hour mediation overseen by a professional mediator, but the two bodies could not come to an agreement.

A 2018 agreement between port operator Nassau Terminals and OHPA says, “The operator agrees to contribute to the Port Authority the amounts of $50,000 in 2019 and $50,000 in 2020 … due from the Port Authority to the City of Fernandina Beach … no later than July 21, 2019 and 2020.” The lawsuit notes that OHPA began experiencing “financial difficulties in or around 2017” and began asserting after making a PILOT payment in 2018 that the contract providing for those payments “is invalid and unenforceable, or alternatively it was limited to a 30-year term and has expired.”

According to the lawsuit, OHPA says the contract is unenforceable because a law enacted in 1986 prohibited governments from “conditioning development orders for a Development of Regional Impact on requiring a contribution or payments for land acquisition or expansion of public facilities.”

In the lawsuit, the city accuses OHPA of breach of contract and asks for a declaratory judgment.

“The relief sought is not merely the giving of legal advice or the answer to questions propounded from curiosity, but rather is necessary to resolve an actual, current, justiciable controversy between the city and the Port authority regarding respective legal rights and obligations between them,” the suit reads.

Branham told the News-Leader the city is wrong to ask for a declaratory judgment and the port will ask the court to dismiss the lawsuit.

"The city's allegations in the complaint do not establish that a binding contract exists between OHPA and the city,” Branham said. “Declaratory judgments are available to resolve true legal doubts about actual controversies. The city's declaratory judgment claim basically just repeats the breach of contract claim. They are not supposed to be used for that.”

Bach declined to comment on the lawsuit.

The PILOT payments are only one issue between the city and OHPA, along with the erection of a fabric warehouse proposed by port operator Worldwide Terminals Fernandina. The city maintains the port needs to obtain a building permit in order to ensure the building is not a hazard, but the port says its charter exempts it from having to adhere to the ordinances of local government. The City Commission is slated to approve a resolution that would allow the city attorney to notify the Florida Department of Transportation, which supplies funding for the port, that the port is not adhering to local ordinances, a requirement of several grants from FDOT for which OHPA has applied.

jroberts@fbnewsleader.com