Fernandina Beach approves roughly $445,000 settlement with hotel developer over permit fees

The Fernandina Beach City Commission on a unanimous vote approved a settlement that resolves a multi-part dispute with Compass Group and Main Beach Sojourn over building permit and plan-review fees tied to two hotel projects on Atlantic Avenue.

City legal staff told the commission the dispute began with construction that started in April 2019 and later resulted in reduced air-conditioned square footage, which triggered non-utility impact-fee refunds and a separate dispute over building permit and plans-review fees. The settlement for the permit/plan-review claim was described in the record as $444,780.82, representing fees and interest calculated at a 5% flat rate from Aug. 27, 2019, through Dec. 1, 2023. City staff said utility impact fees of about $265,000 (water and sewer) were paid and not disputed by the developer.

"This project took two years to complete with several changes to the construction plans," the city attorney said when presenting the item, adding staff had tried to negotiate for 18 months and that taking the case to trial could have added tens of thousands in outside attorney fees to the city's cost exposure. The attorney recommended settlement to avoid the risk and expense of continued litigation.

During public comment, resident Sheila Cokie urged caution and asked why the city was effectively returning a large payment to a firm that repeatedly did business here. "It seems that people I think we're gonna see several things tonight where people are suing the city and it's quite lucrative," Cokie said, urging more transparency.

Commissioners and staff answered a series of technical questions: how impact fees are calculated (based on initially submitted square footage), how refunds are handled when plans are revised, and the effect of recent code updates. One commissioner noted the city had corrected its fee schedule in late 2022 and that the city has largely stabilized building-department staffing since the 2019 matter occurred.

The commission voted to approve the settlement by roll call; the motion passed 5-0. Staff told the commission the funds for the refunds are coming from the building-permit fund (not general-tax revenue). City attorneys also warned that continued litigation over impact fees could potentially increase total costs if the complaint were amended to broaden claims.

Next steps: the city will finalize the settlement documents and proceed with the refund and interest payment consistent with the approved terms.