OHPA scurries to meet Feds demand for $1 million repayment of failed Tugboat/barge service grant

The U.S. Department of Transportation Maritime Administration (MARAD) is pressuring the Ocean Highway Port Authority (OHPA) for $1 million it is owed as repayment for a failed grant that was used to purchase the tugboat Fort Clinch.

"We need to do something. They're (MARAD) waiting for us to respond as to how we're going to move forward with this," OHPA attorney Patrick Krechowski. "We need to give them (MARAD) an answer on how we're going to handle this."

OHPA voted in early February to sell the Fort Clinch in order to repay federal grant money that was originally intended to bring a tug-barge business with ports like Savannah and Charleston. After three years, the program never got off the ground.

It's been more than three months since that decision and MARAD wants to know when the agency will get its money back. OHPA's purchased the 70-foot long Fort Clinch and other equipment in 2021 with some of the $1.2 million in MARAD grant funds.

"The two options are to liquidate the equipment and reimburse them based on the formula where MARAD gets 85 percent of it (the sale proceeds) or, reimburse them fully for what they paid out for the grant and terminate the grant. Terminate is a strong word, I want to remind the board we did discuss with MARAD would our terminating the grant hurt us in the future for applying or qualifying for additional grants and they answered no, it would not. It's not like a credit hit," Krechowski said.

OHPA discussed selling the Fort Clinch to the port operator Nassau Marine Terminals/Savage for $1 million and then in turn paying MARAD with the proceeds.

But another option exists with another potential buyer McAllister Towing based in Jacksonville. The company has requested inspecting the Fort Clinch next week. OHPA commissioners voiced concerns that if McAllister Towing purchased the tugboat that the company would relocate the vessel to Jacksonville.

Commissioner Ray Nelson told commissioners that McAllister had contacted him about looking at the Fort Clinch next Monday.

"I don't see any harm in McAllister inspecting it. We may get some information from people that do this (operate tugs) day after day that we don't have right now," Nelson said.

To date, OHPA has not received an "opinion of value" of the tugboat.

OHPA chair Miriam Hill asked commissioners if they wanted to proceed with McAllister's request to look at the tugboat "so we have a sense of value (of the tugboat)."

Nelson advocated to allow McAllister to proceed.

"At least we're opening that door of transparency. We are going to eliminate a piece of equipment and we gave others an option to look at it and make a proposal if they want to purchase it. Let them (McAllister) tell us how much they want to give us for it," Nelson said. "We don't know what they're going to offer us and we don't know if they even want it."

Commissioner Danny Fullwood agreed that McAllister could inspect the tugboat, but said "the first thing I'd ask them is are you going to leave the tug here or take it with you? If they're going to take it, no deal. I'm not sure I care what they're going to offer us for it. We need a tug here at this port."

Consensus was reached to allow McAllister's visit.

Hill urged commissioners that OHPA needed to move quickly on the issue.

"I think we need to focus on the MARAD piece," said Chair Miriam Hill. "And, getting that done in expedient fashion because right now we have a good situtation, a good relationship and that may change. MARAD has been pressing for status updates and for action."

Krechowski advised OHPA to draft a sale agreement with Nassau Marine Terminal that would include a stipulation that the Fort Clinch be committed to service based at the Port of Fernandina.

"What I want to do is move forward with Savage (buying the tugboat)," said Commissioner Jason Taylor.

Next steps are for Krechowski to advise MARAD of OHPA's intention to repay the funds and terminate the grant. Meanwhile, Nassau Marine Terminal/Savage will draft two agreements for OHPA to consider to acquire the Fort Clinch.