A seven-hour mediation session between the city of Fernandina Beach and the Ocean Highway and Port Authority failed to produce results Wednesday, so the two sides appear to be headed to court over OHPA’s refusal to continue paying the city a $50,000 annual Payment In Lieu Of Taxes.
At the heart of the matter is whether OHPA committed to making the payments in perpetuity when in 1989 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.
Over the years since then, various OHPA commissioners, including the currently seated board, have insisted that the port is not obligated to make the annual payment in perpetuity. Current OHPA board members want to end what some would call a practice and others an obligation after sending the city a check for the 2019 and 2020 payments.
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 that 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.
Commissioners from boards as well as the attorneys were part of Wednesday’s session, which was moderated by mediator Carlos Alvarez, who opened the day by hearing opening statements from both parties before separating them so he could hear each other’s side.
OHPA commissioners and Christopher Ragucci, who holds dual roles as port director and CEO of port operator Worldwide Terminals Fernandina, explained to Alvarez that the port is not in a financial position to continue make payments to the city. When Worldwide took over as port operator in 2019, it assumed millions of dollars in port debt, and in exchange, OHPA agreed to limited or even no income from WTF through 2023 as the company established its operations and financial footing.
After more than an hour of discussions with Alvarez, the OHPA contingency proposed that a study be conducted to determine the port’s economic benefit to the city versus the city’s costs to provide public safety and infrastructure services to the port, that the port pay $100,000 as the 2019 and 2020 PILOT, and that the city defer the 2021 and 2022 PILOT fees. Then, after the port begins receiving income again from Worldwide in 2023, the two boards would reassess the situation.
But the city turned down that offer.
City commissioners said that conducting a study would only delay having any closure in the matter and that the port could make the annual $50,000 payments by cutting the salaries of the five OHPA commissioners or charging fees to ships that use the port. They provided a counter-offer asking that the port pay the 2019 and 2020 PILOT payments within 30 days, that the payment of further PILOT fees be deferred until 2023, and that the port agree to pay the two missed PILOT payments after that.
OHPA commissioners declined that offer, saying it was no different than what the city was initially asking, and presented a second proposal that included breaking up the $100,000 fees for 2019 and 2020 into three annual payments of $33,000 that would be followed by annual payments of $25,000 for 10 years, all of which city commissioners turned down.
The matter will now head to court.