Last Thursday, Mayor Ashton Hayward’s recommendation concerning Offshore Inland failed to gain approval after the motion died for the lack of a second, even though the Pensacola City Council discussed the agenda item for over 69 minutes.
Mayor Hayward wanted the Council to approve a partial deferral of Offshore Inland’s rent for Warehouse #9. Several council members were concerned about how local subtractors hadn’t been paid for work done on Offshore Inland’s joint venture, DeepFlex. See rent-deferral.
The mayor didn’t attend the meeting. City Administrator Eric Olson didn’t do much to defend the recommendation. Port Director Amy Miller was left at the podium to answer council questions, while City Attorney Lysia Bowling, in a rather awkward fashion, tried to analyze for the Council the legal issues regarding Offshore Inland and DeepFlex during the meeting.
Miller said that she saw Offshore Inland has the City’s partner, a partner that needed some temporary concessions during the current downturn in the offshore industry. Councilman Brian Spencer took exception to Miller’s remarks.
“When I hear someone I respect, Ms. Miller, refer to this tenant as our business partner, I get visibly upset,” said Spencer. “We are a creditor tonight.”
The councilman, who is shareholder of SMP Architecture, talked about how his firm had to deal with the real estate recession a few years ago.
“I have to tell you as someone that was in the bullseye of the recession, the architecture industry, the construction industry–they have said it is unparalleled in modern day history how decimated those industries were–as an architect, as an architecture firm, our industry overnight lost everything,” said Spencer. “Our banks didn’t become our partners. Our consulting engineers that worked with us on the team that we pay, they didn’t say … We weren’t granted concessions and this was in the private sector.”
Spencer was upset that the City of Pensacola hadn’t sent Offshore Inland a letter of default, which he believed would help the City work out payment for the local subcontractors who did work on the Deepflex project at the Port of Pensacola. He pointed that Council had been given very little information before Thursday and hadn’t been consulted on the negotiations with Offshore Inland. He offered a substitute motion that “our city to send this tenant a default letter.”
The Council had been given several documents on Offshore Inland by city staff since the agenda review. None of those documents have been posted on the city’s “Transparent Pensacola” page or released to the media. Apparently, the documents included a list of 13 lien holders and the receivables balance of Offshore Inland, which the Council was told last mother was more than $700,000. Inweekly has made a public record requests for the documents and will post them when received.
Spencer said, “We haven’t done the simple important housekeeping to put these tenants on notice and to call them our business partner at this point after we have heard month after month after month, more than a year and a half these people are going to get paid that we’re going to catch up…”
Miller said that she knew that some of the lien holders had been satisfied. She pointed out that significant portion of the receivable was allowed because Offshore Inland had done work at the Port that was supposed to be reimbursed by a state grant. However, the state won’t release the grant funds until the work is completed.
The port director said that she believed that offshore industry would recover next year. She pointed out how other ports were making investments to accommodate the industry when it rebounds.
City Attorney Bowling said that Offshore Inland has other leases with the Port and may not be in default with all of them, which complicates the letter of default.
An Offshore Inland official said that the company had already reduced its outstanding receivables by 10 percent. He said Deepflex had declared bankruptcy, and Offshore Inland was not responsible for any liens against Deepflex.
In the end, Spencer’s substitute motion failed, and no one on the Council offered to second the motion for Mayor Hayward’s rent deferral recommendation.