City considers bond to finance Brett's redevelopment

The Fernandina Beach City Commission will consider adopting Resolution 2025-111 at its upcoming city commission meeting on Tuesday, a procedural step that would preserve the city’s ability to seek tax-exempt financing including the planned demolition of Brett's Waterway Cafe and the city-owned dock facilities at 1 South Front Street.

The proposal is for tax exempt municipal bonds that are either:

• General Obligation Bonds (GO Bonds): Backed by the full faith and credit of the issuing government, including its taxing power.

• Revenue Bonds: Repaid from specific revenue sources (e.g., tolls from paid parking, fees from a utility).

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The bonds do not require a voter approved referendum.

The proposed "Reimbursement Resolution" does not commit the city to incur debt but would allow officials to recoup prior qualifying expenditures through potential bond financing at a later date, according to a summary published by the city.

According to federal tax regulations, municipalities may only reimburse themselves for capital costs from future bond proceeds if they declare that intent within 60 days of the original expenditure. The lease on the city owned Brett's building ends in December and the city wants to begin demolition of the structure in January. Estimated costs just for the demolition of Brett's and the underlying substructure and bulkhead is $2 million. Rebuilding the dock and decking adds another $2 million.

The resolution is being advanced in anticipation of a possible borrowing to finance a range of redevelopment, construction, and equipment investments across the city. City officials said the measure is primarily intended to maintain fiscal flexibility as major capital projects — including the clearance and redevelopment of the city marina’s deteriorating dock infrastructure — move forward.

The reimbursement mechanism for the bond is guided by federal regulations that set strict timelines: expenditures must be reimbursed within 18 months of being incurred — or within three years of the project’s completion — and only if the city declared its intent to reimburse at the outset. The eligible costs include capital expenses, grants, and certain extraordinary working capital expenditures.

City Manager Sarah Campbell recommended the resolution’s adoption to ensure compliance with IRS rules governing tax-exempt municipal bonds, which could offer the city substantial savings if financing is pursued.

Advocates of this type of city financing said while the financial impact of the resolution remains undetermined — and will ultimately depend on city commission direction — adopting the measure ensures the city can retain access to one of its most efficient funding tools for future improvements.

If approved by commissioners, the resolution will serve as an official declaration of intent, allowing the city to later issue bonds that reimburse earlier project costs without jeopardizing their tax-exempt status.

The dock at Brett's Waterway Cafe has been a focal point of recent infrastructure discussions. Structural deterioration has rendered it unsafe, and city officials have targeted it for demolition in upcoming months as part of a broader waterfront revitalization effort.

The City Commission meets Tuesday at City Hall to vote on the resolution. Public comment will be accepted.