A Circuit Court judge last week granted a motion of foreclosure brought by Capital City Bank against the Port St. Joe Port Authority.

A Circuit Court judge last week granted a motion of foreclosure brought by Capital City Bank against the Port St. Joe Port Authority.

Judge John Fishel granted the bank’s request for a final summary judgment, setting up a process that could see the Port Authority’s 60-plus acre parcel fronting the Intracoastal Canal auctioned on the steps of the county courthouse in the coming months.

Capital City Bank was charged with preparing a final order of foreclosure detailing the Port Authority’s debt.

Within 45 days or so the judge will file a final order, said Port Authority attorney Tom Gibson.

At that time the Port Authority could appeal the ruling. If the Port Authority does not appeal, the property would be auctioned on the courthouse steps, Gibson said.

If the sale price exceeded the debt, the Port Authority would owe nothing more.

Where any court appeal would be heard is unclear.

Gibson said because the central issue in the case is a constitutional question, any appeal could be heard before the Florida Supreme Court rather than the First District Court of Appeals.

Gibson said the Port Authority’s Tallahassee-based attorneys handling the foreclosure believe there is a viable appeal based on the judge’s decision, which they assert was in error.

What the cost would entail and whether the Port Authority would choose to mount an appeal will likely be decided in the next several weeks, Gibson said.

The foreclosure lawsuit was the result of the Port Authority’s default on a $7 million line of credit drawn in 2006 and subsequent 2010 loan of approximately $350,000.

The current debt has been estimated in recent Port Authority meetings at $4-$5 million, though Capital City Bank will provide final figures in its order of foreclosure to the Circuit Court.

The primary issue, Fishel noted in his summary judgment order, was the contention by the Port Authority’s attorneys that the mortgages in question were void because the mortgaging of public property without a public referendum was unconstitutional.

Fishel concluded a “referendum was not required” and noted that the Port Authority’s legal stance was contrary to the “representations made by and on behalf of the Port Authority” when the loan transaction took place, as detailed in a resolution passed at the time by the Port Authority.

The Port Authority mortgaged public property to borrow money for a public project, noting that the Port Authority’s resolution stated the original note “satisfied a paramount public purpose” and therefore was not unconstitutional.

“The Port Authority found that for the benefit of its citizens, it was necessary for the continued preservation of the health, welfare, convenience and safety of the Port Authority to acquire, construct and erect the intended project,” Fishel wrote in his order.

The parcel in question was upgraded with millions in state and federal dollars, including the clearing of land, installation of an access road, construction of a barge bulkhead and uplands improvements.

Fishel also found that a voter referendum was not required since the Port Authority can not assess ad valorem taxes and the debt did not constitute a “general obligation” for any political entity – the state, county or city of Port St. Joe – that would compel taxation to meet the debt.

Attorneys for the Port Authority argued that while there was no legal obligation for the state, county or city, there was “implicit coercion” that those entities might feel the need to levy taxes to prevent foreclosure.

Fishel said the Florida Supreme Court had dismissed a similar argument in a similar case.

Johanna White, a current member of the Port Authority and the lone member who served at the time the loan was taken on – and was employed with Capital City Bank at the time – said last week that she objected to the argument about coercion.

“We all thought that it was a good deal at the time,” White said.

While the barge bulkhead would be, as Port Authority chair Leonard Costin said last week, “gravy” for an operational port, it is not central to the current effort to establish a deepwater facility.

The dredging of the ship channel and efforts by the St. Joe Company to market the Port of Port St. Joe are tied to the old mill site bulkhead and the federally-authorized shipping channel and turning basin.

The Port Authority also has unencumbered possession of the old Arizona Chemical site, which provides a rail link and utility infrastructure.

“Our charter is to generate jobs,” Costin said. “We are all trying to create jobs and get our port going. 

“We lost this battle but we are going to win the war.”