Tensions Boil over at Port of Fernandina Meeting as Leaders Clash over "Distrust, Villains and Bankruptcy"

OHPA Commissioners from left Scott Moore, Ray Nelson and Miriam Hill.

By Mike Lednovich/Editor

The long-simmering conflict between Ocean Highway and Port Authority commissioners and port operator Relay Terminals escalated sharply Wednesday, with disputes over a controversial warehouse and the port’s operating agreement exposing deep divisions — and raising warnings about potential insolvency.

During a contentious three-hour meeting, both sides accused the other of intransigence, with officials openly acknowledging a breakdown in trust.

“There is a lot of distrust in this room,” OHPA Chair Ray Nelson said, warning that the ongoing standoff threatens the port’s future.

At the center of the conflict is a 22,000-square-foot fabric warehouse that has been the subject of repeated disputes for more than a year.

The structure was installed without required city of Fernandina Beach permits, outside its originally approved location, and without a fire suppression system — conditions that have fueled both regulatory concerns and friction between the operator and the board.

Relay Terminals President Ted McNair acknowledged the original placement by the previous port operator was flawed.

“That was a huge mistake,” McNair said.

But he remained firm in rejecting the board’s directive to relocate the warehouse in a north–south configuration in the port’s northeast corner, arguing that such a layout creates safety hazards.

“If you have a fire in this building… how are people going to get out? You want them jumping into the marsh?” McNair said, citing concerns about limited ingress and egress and conflicts between forklifts and container equipment.

Instead, McNair has pushed for an east–west orientation — a position commissioners have repeatedly rejected.

Tensions escalated further when McNair reiterated that he could dismantle the tent structure entirely rather than rebuild it under the board’s preferred configuration.

“I’ve made it very clear… we’re not going to construct the building in north-south arrangement,” he said.

At one point, McNair pushed back against criticism from commissioners.

“Just because I disagree… there’s no reason to villainize me,” he said.

Commissioners, however, warned that removing the warehouse without rebuilding it would have long-term consequences.

“Taking it down and not putting it back up is not an option,” Nelson said. “If we take it down and don’t put it back up, it will never be put back up.”

The board ultimately voted again — for the third time — to require relocation of the warehouse in a north–south configuration in the northeast corner.

Relay Terminals proposes an east-to-west configuration for the warehouses.

The dispute has been compounded by permitting and regulatory issues.

According to meeting materials, the operator has obtained a demolition permit to disassemble the structure, but reconstruction would require a separate permit and full development review, including engineered, stamped drawings and city approvals.

Commissioners described the two-permit process as a “red flag,” expressing concern that the building could be removed without a guaranteed path to reconstruction.

The warehouse has also exceeded the 180-day threshold for temporary structures, triggering requirements for fire suppression and additional regulatory oversight.

OHPA members also cited broader process failures, noting the building was installed without required approvals and in a location that did not match prior plans — fueling what several described as “substantial distrust.”

Running parallel to the warehouse fight is a growing dispute over the port’s operating agreement with Relay Terminals — an issue that could carry far greater financial consequences.

The conflict stems from a recent court ruling siding with the Nassau County Property Appraiser that the port may be subject to property taxes because it is operated by a for-profit company. That decision is under appeal.

If upheld, the tax liability could reach millions of dollars, with annual exposure estimated in the hundreds of thousands.

Port Comptroller Pierre Laporte delivered a stark warning to commissioners.

“If you lose this case… the port goes bankrupt,” LaPorte said, noting that any tax payments would have to come directly from port revenues.

Under the current valuation framework, the property appraiser is taxing both land and improvements — estimated at roughly $26 million combined — though officials said limiting taxation to improvements alone could significantly reduce liability.

The looming tax issue has prompted OHPA to seek changes to the operating agreement, which commissioners described as “one-sided” and lacking sufficient public oversight.

A draft amendment — now in its fifth version — seeks to clarify key provisions, including:

• exclusivity rights,

• access to port business information without nondisclosure agreements,

• revenue-sharing language,

• operational control and invoicing procedures (including Section 6.1),

• and enhanced safety and oversight authority.

Documents included in the meeting packet show the two sides are also negotiating a memorandum of understanding tied to the operating agreement.

The draft MOU would allow Relay Terminals to enter into a third-party service agreement while remitting 10% of gross dockage revenue from that business to the port authority.

The agreement also affirms the operator’s ability to conduct such business without triggering a default under the existing operating agreement, while limiting the authority’s ability to challenge those arrangements.

It further includes confidentiality provisions restricting disclosure of contract terms — an issue that aligns with commissioners’ concerns about transparency and access to information involving public assets.

The operating agreement and related negotiations remain an active agenda item for the board as officials weigh potential changes.

But negotiations have stalled.

Relay Terminals has declined to renegotiate while the tax appeal is pending, and legal counsel for both sides disagree on whether amendments can proceed without approval from bondholders and a trustee tied to the port’s financing agreements.

Even if such approvals were obtained, port attorney Tammi Bach noted that changes cannot be imposed unilaterally.

“The very first question… is does the operator agree?” she said. “If the operator does not agree, then we’re in the same place.”

Commissioners expressed frustration with the continuing impasse.

“We can’t negotiate with ourselves,” Commissioner Hill said, while others signaled the board may eventually consider issuing a new request for proposals (RFP) for port operations if negotiations fail.

Beyond the legal and contractual disputes, commissioners voiced broader concerns about financial exposure, legal costs, and long-term governance of the port.

Meeting materials cited potential liabilities “in the millions” and warned of possible insolvency or receivership if tax obligations are imposed and unpaid.

At the same time, the warehouse dispute — though smaller in scale — has become a symbol of the deteriorating relationship between the port authority and its operator.

“And I think that’s what we’re going to do (take action). We’re at that point,” Commissioner Hill said of the escalating conflict.

With the tax appeal unresolved, the operating agreement in limbo, and the warehouse issue still unsettled, both sides appear locked in positions that could shape the port’s future for years to come.