Proposed PILOT Deal: A Park for the Debt

Fernandina Beach City Commissioner Chip Ross is pitching a lawsuit settlement with the Ocean Highway and Port Authority (OHPA) in which the district would give the city a wooded parcel of property it owns in exchange for the money the city claims it is owed.

The city and OHPA have been engaged in a three-year lawsuit over $50,000 annual Payment in Lieu of Taxes (PILOT) the city says OHPA has failed to pay for more than four years. The PILOT payments are in exchange for city services provided to the Port of Fernandina such as police, fire, medical emergency, etc.

The city and OHPA thus far have incurred nearly $200,000 in legal fees on the lawsuit.

Ross outlined the terms of his proposed settlement during a shade meeting of the city commission last week. Shade meetings allow city commissioners to receive legal advice, deliberate on confidential matters, or strategize on sensitive issues without public interference. They are restricted to authorized participants, such as commissioners, attorneys, and essential staff, and are not open to the general public or media.

Because of the confidential nature of the shade meeting, Ross said he could not comment about what transpired in the meeting.

In a supporting document of facts, Ross said "OHPA commissioners have made no written settlement offer to the city."

His document stated "(In) March 2023, the court ordered parties to confer on a trial schedule. No trial date has been set."

Ross is proposing OHPA give the city about a third of an acre parcel near the intersection of North Second and Escambia streets. OHPA currently has plans to list the property for sale to raise money to pay its legal bills.

Ross' settlement proposal places the value of the land at $300,000, which would in turn pay for five years of PILOT payments to the city. His proposal would convert the property to a city pocket park for the public.

OHPA Chairman Danny Fullwood said he had not received the proposal from Ross and would not comment. He referred all questions about the PILOT lawsuit to the OHPA attorney.

According to the Ross proposed settlement document the city of Fernandina Beach will dismiss Case 2020 CA 284 with prejudice contingent on the following:

1. The Amended Port Proposal – September 3, 1993, will remain in effect.
2. The Ocean Highway and Port Authority and the city will be responsible for their own legal fees and other costs of litigation.
3. OHPA will pay the city $100,000 for the 2019 and 2020 payments.
4. The city will use the $100,000 payment to repave Dade Street from the railroad crossing to North Third and North Second Street from Calhoun to Dade Street. Any money left after that would be used to improve the parking area on the west side of North Second Street between Broom and Calhoun streets.
5. The city will abandon the Escambia right of way between lots 6 and 67, which is the right of way west of the current chain link fence currently being used by OHPA for a retaining wall and storage.
6. OHPA will quitclaim deed lots 15, 16, 17 & 18 of Block 6 to the city, valued at $300,000 for settlement purposes. The city will pay for any necessary survey.
7. The City Commission will present to the Planning Board Advisory Board a recommendation to change the zoning from MU-1 to Recreation to create a passive pocket park on the lot and a buffer for the historic district.
8. Payments – for the 2021 to 2026 payments the city will credit OHPA for $50,000 for each year from the value of the preceding lot transferred to city ownership – no other payment will be required for those years. Subsequently, starting July 2027 OHPA will resume cash payments due on July 1 of each year.
9. Payments of at least $50,000 per year will continue as long as the city continues to provide city road maintenance, fire and rescue services and police services and OHPA continues to own the Port. If OHPA or its operator is required to pay the property tax, the payments will cease when the property tax begins.
10. After July 2026, a new yearly payment rate or minimum payment can be renegotiated by mutual written consent and approval of a super-majority [4 of 5 commissioners] of both OHPA and the city.
11. As per Ordinance 2022-29, OHPA will apply for and the city will grant a permit for encroachment into the city right of way by the warehouse building entrances on the west side of North Second Street between Calhoun and Dade streets. OHPA will complete and sign a Release and Waiver of Liability Right-of-Way agreement as required by Ordinance 2022-29. OHPA further agrees to remove, at OHPA’s expense, the encroachments if the city, at its sole discretion, determines the encroachments must be removed to facilitate utility work in the right of way.
12. The parties agree that jurisdiction is to remain with the court to resolve any disputes arising from this settlement.
13. Attorney’s fees in the event of dispute: If any legal action, dispute, or other proceeding arises or is commenced to interpret, enforce or recover damages for the breach of any term of this agreement, the prevailing party shall be entitled to recover from the non-prevailing party all of its fees and costs in connection therewith, including, without limitation, its attorneys’ fees and costs and costs of suit. Further, the parties agree that this agreement and its contents, and any and all statements, negotiations, documents and discussions associated with it, shall not be deemed or construed to be an admission or evidence of any violation of any statute or law or of any liability or wrongdoing or of the truth of any of the claims or allegations asserted in this action or any other action or proceeding.

OHPA stopped making the PILOT payments four years ago and maintains the agreement has an expiration date.

The most recent court ruling came last March when Judge Eric Roberson denied OHPA’s motion to consolidate the city lawsuit with a lawsuit brought against OHPA by the Nassau County Property Appraiser.