Port Property Tax? - An opinion

Submitted by Phil Scanlan

November 25, 2014 7:45 a.m.

It seems more than a bit ironic that, while Fernandina Beach was returning loans that had been aimed at improving the waterfront for residents and tourists the Nassau Port has borrowed much more to invest a waterfront which will infringe on wetlands and the Historic District, begin shipping toxic materials, and significantly increase truck traffic on 8th St. Adding to the irony, the Port has included the possibility of implementing a new Port Property Tax in their proposed 10 year plan to help pay for their loans and future investments.

The community has rightly been focused on community issues in the proposed Nassau Port 10 year plan. There are also very serious financial issues at the port that need to be addressed prior to a port plan approval.

For example, the Port Master Plan states a new Port Property Tax may be used to fund port plans.

From the Port’s Plan - Section 7, Found at “7.4.2 Ad Valorem”

“Ad Valorem taxation may be a funding mechanism available to the Port of Fernandina.” “The Tampa Port Authority is the only Florida port with a dedicated ad valorem tax. Their current assessment, $0.1750 per $1,000 of property valuation, is used to fund capital improvements.” (See page 7-8)

It seems pretty clear that the state law is intended to have the port use bonds and port revenues as their funding sources, as well as some state grants, and not create a Port Property Tax. Apparently the Port does not agree, since they have put the possibility of using a Port Property Tax in their 10 year plan, and they have mentioned one Florida Port (Tampa) that has already done so.

As of 9/30/13, the Port had a $14.5 million bond debt and the port had also a loan of about $4.5 million (2 or 3 years of anticipated future revenues) from Kinder Morgan (Nassau Terminals). This $19 million debt for our small port was created while we all seemed to be focused on the issue of the City of Fernandina Beach borrowing $1.8 million to improve the city. Much of that $1.8 million loan was given back because the city commission did not want to have that much debt. Comparatively $19 million seems like a lot of debt for a small port which now has declining revenues and is having trouble meeting their planned loan repayments.

In 2013 our port fell $750,000 short of its “planned” loan payments, according to the 2013 audit report Note 4 Long Term Debt (page 18). The port paid $0.5 million vs. a plan to pay $1.25 million to Kinder Morgan (Nassau Terminals). The 2013 audit indicated this lack of full payment was not a financial problem because Kinder Morgan (Nassau terminals) is “flexible” on when the port repays their loans. Why is that?

On 11/12/14 the Port Authority decided to pay none of their planned $1.25 million 2014 planned loan repayment to Kinder Morgan, apparently due to significantly reduced port revenues. Port revenues have declined from $2.8 million in 2012 to $1.5 million in 2014, a 47% decline. Do we really want our Port Authority to have to ask Kinder Morgan, their contractor, for favors because the port cannot repay a loan from them as planned? It seems to me a problem if the port is now considering a new Port Property Tax to help them pay their loan balances.

Who borrows and spends years of future revenues from their contractor, while also having a very large bond debt to service? Why has the port borrowed future anticipated revenues from Kinder Morgan (Nassau Terminals) and spent those funds in advance of earning these future revenues?

Without revenue improvements the port will probably have continued difficulty making planned loan repayments in future years. Our small port does not have a credible 10 year plan to compete with the nearby mega ports (Jacksonville and Savannah) that are making huge investments to serve future mega ships. It appears that these port financial and competitive problems, along with the desire by other port cities to have Kinder Morgan reduce toxic shipments in their ports, is what is driving our little port to push for a port toxic shipping plan here in Fernandina Beach. However, that plan conflicts with the fact that the Amelia Island and Fernandina Beach economy is now primarily based on tourism and real estate. Amelia Island is about 3% of the land mass in Nassau County and contributes about 50% of the property taxes, while the Nassau Port contributes nothing in property tax, and is actually considering implementing a Port Property Tax to fund another $16 million in expenditures in their 10 year plan and to help pay for their lack of ability to repay past loans.

Our small port already lost about half their revenue to Jax Port because our port does not have sufficient shipping destination options. For example, Rayonier must truck their output to the Savannah port for shipment to Europe.

The Mission of the Nassau Port is to serve the community by providing shipping transportation that supports locally produced goods. It appears the port 10 year plan is instead focused on serving Kinder Morgan while becoming a port focused on shipping toxic materials not wanted by other port cities.

I believe the port financial issues need be addressed as part of a port plan review, by city, county, and state representatives.

Phil Scanlan

Editor's Note: Phil Scanlan retired to Amelia Island from AT&T in 1999 and had been the AT&T Corporate Quality VP for his last dozen years during which time three company units won US quality awards, more than any other company.  Since moving to Amelia Island Phil has been involved in organizing and leading teams to help improve the quality of life on Amelia Island.