Entities involved in the Port of Fernandina are not strangers to litigation, making the Nassau County property appraiser’s decision last week to sue the Ocean Highway and Port Authority (OHPA) one more headache in a metaphorical shipping container full of them.
Property Appraiser Michael Hickox previously tried to get local ad valorem taxes on the property before. While it’s owned by the OHPA, which is a public special district, it’s used by Nassau Terminals, the for-profit company that runs the port. Nassau Terminals’ deal with the OHPA is a lease, according to the property appraiser, which means the company needs to pay those taxes.
“The property owned by the Ocean Highway & Port Authority of Nassau County was being used by a private, for-profit entity — Nassau Terminals LLC — for the purposes of generating business profits through its operation of the port facilities pursuant to the ‘Operating Agreement’ dated Oct. 19, 2018,” according to the document from the property appraiser denying the tax exemption in June 2021.
“Such a proprietary use of the property requires taxation under sections 196.199(2)(a) and (4), Florida Statutes, which provide that property owned by certain governmental units — including authorities — but used by nongovernmental lessees are exempt only when the lessee performs governmental, municipal or public purposes.”
The Florida Constitution, according to the denial language, also requires taxation when not used exclusively by the entity itself but instead by a for-profit corporation using the property for proprietary purposes.
The OHPA counters that the deal isn’t a lease, but an operating agreement that preserves the tax exemption for governmental agencies. The authority appealed the June 2021 exemption denial in the 4th Judicial Circuit, which ruled in its favor in December. The authority’s property taxes for 2021 were estimated around $26.2 million.
The decision to sue came after the city of Gulf Breeze lost a case in the 1st District Court of Appeal in which judges reversed the circuit court ruling and reinstated property taxes for a golf course run by a private entity.