Port Property Tax Dispute Headed to Mediation

The years-long legal battle over whether the Port of Fernandina should pay annual property taxes is set to take a pivotal turn this fall, as a Nassau County judge has ordered both sides to enter mediation ahead of a potential court ruling.

The case, now stretching well into its third year, stems from a March 2022 lawsuit filed by the Nassau County Property Appraiser. The suit challenges the Ocean Highway and Port Authority’s (OHPA) longstanding claim of tax exemption, claiming the publicly owned port property is being used by a private, for-profit operator and should therefore be subject to annual property taxes.

Much like the Amelia River Golf Course, a profit-making business that leases land from Fernandina Beach and pays property taxes, the Property Appraiser is using that argument to press its claim.

“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,” the Property Appraiser's office stated at the time, referencing the 2018 Operating Agreement between OHPA and the terminal operator.

Circuit Judge Marianne Aho recently ordered both parties to participate in mediation no later than October 17 in an attempt to resolve the dispute without a trial. If mediation fails, Aho is expected to rule on dueling motions for summary judgment during a hearing scheduled for October 27.

At issue is whether OHPA, a state-created special district that owns the port, should continue to receive a tax exemption while leasing its facilities to Nassau Terminals LLC — now operating as Relay Terminals — which manages day-to-day port operations.

In denying OHPA’s exemption in June 2021, the Property Appraiser cited a key precedent set by Florida’s First District Court of Appeal. In that case, a private company operating a golf course on public land in Gulf Breeze was deemed liable for property taxes. The appraiser argues the Fernandina port’s arrangement is comparable.

A favorable ruling in favor of the Property Appraiser could carry significant financial consequences. OHPA has struggled in recent years with mounting debt and limited revenue. A substantial tax liability, possibly including back taxes, could threaten its solvency since the port operator would be responsible for the property taxes.

OHPA Chairman Justin Taylor requested to schedule a shade meeting (private) to discuss the case details prior to the mediation hearing.