City to Vote Tonight on $7 Million Line of Credit Tied to Paid Parking Revenue

The Fernandina Beach City Commission will decide today whether to approve a $7 million line of credit to finance downtown waterfront and capital improvement projects — a short-term loan that city officials intend to repay largely through paid-parking revenues collected in the historic district.

If the full $7 million is drawn, the annual interest cost would be about $350,000, assuming interest-only payments in the early phase. A full three-year payback would require about $2.5 million per year, while a five-year repayment schedule would need roughly $1.6 million annually.

The financing agreement with Pinnacle Bank authorizes issuance of the City of Fernandina Beach Capital Improvement Revenue Note, Series 2025. The proposed non-revolving credit would provide the city access to funds “not to exceed $7 million” to cover costs such as demolition and redevelopment of the former Brett’s Waterway Café property at 1 South Front Street, riverfront flood resiliency construction, and other downtown capital projects.

Under the terms of the agreement, the city pledges to use non-ad valorem revenues —income sources other than property taxes — to repay the debt. That includes user fees, service charges, leases, fines, and, most notably, the city’s forthcoming paid-parking program downtown and at the marina. Those revenues would be deposited into a newly created Debt Service Fund to make principal and interest payments on the note.

“The Non-Ad Valorem Revenues on deposit in the Debt Service Fund, plus any earnings thereon, shall constitute Pledged Revenues which are pledged for the security and repayment of the Note,” the agreement states.

The credit line would run through November 1, 2028, with a variable interest rate tied to the one-month Term SOFR benchmark plus 0.54%. Based on current market conditions, that equates to roughly 5% interest.

City staff have indicated that paid-parking revenues could serve as the primary source of repayment. At those projections, the city would need to generate $2 million to $2.5 million annually in net parking revenue to retire the debt within three years.

The financing is structured as a special obligation, not backed by the city’s property tax base. The agreement explicitly states that “neither the faith and credit nor the taxing power of the city” is pledged to the loan, meaning it will not affect millage rates or property tax bills.

Instead, the city is required to “budget and appropriate” enough non-ad valorem revenue each fiscal year to cover debt service. Commissioners could designate other sources —such as lease income, franchise fees, or parking fees — if paid-parking proceeds fall short.

The credit line would fund projects central to the city’s long-range riverfront plan, including demolition of the storm-damaged Brett’s Waterway Café, flood-wall construction, and site redevelopment. The debt is expected to bridge short-term financing needs until the city secures long-term voter approved bonds or potential state/federal grants for permanent infrastructure work.

Commissioners are expected to debate the loan’s structure, interest rate, and repayment plan at tonight’s meeting, which begins at 6 p.m. in City Hall. If approved, the agreement would authorize Mayor James Antun to sign the Non-Revolving Credit Agreement with Pinnacle Bank allowing funds to be drawn as early as this month.

The vote comes amid ongoing controversy over the city’s downtown paid-parking rollout — a policy that has divided residents and triggered a citizen petition drive to ban paid parking citywide. The city will also vote to approve a paid parking management contract with One Parking to run the program.