State Investigation Into OS Parking Garage Grant Begins; Grant Writer Paid $800K

(GC Wire runs on donations by residents like you. Please click to help us keep reporting.)

OCEAN SPRINGS — The Mississippi Development Authority has formally launched an investigation into the $8 million Gulf Coast Restoration Fund grant awarded to the City of Ocean Springs for the downtown parking garage located at 1515 Government Street.

In an email sent this week to a local resident, MDA Executive Director Bill Cork stated his organization was dispatching the grant administrator to Ocean Springs for face to face interviews and to check on the status of the transfer.

Last week, GC Wire exposed a list of promises made to MDA by the City of Ocean Springs and their private partner, OHOS Land / Development LLC, in hopes of acquiring millions of dollars in grant money for the garage. One of those promises was that the private partner “will transfer ownership of the parking garage and amenities to the City upon completing construction.”

That promise, along with a list of others detailed in our reporting, did not come to fruition.

“We’ve read the file and think we know where we are on this deal,” Cork wrote. “I’m dispatching the grant administrator to Ocean Springs to check on the project and interview folks on the status of the garage transfer.”

In the email, Cork referred to the visit, not as routine follow-up, but specifically as an “investigation.”

This marks the first known state-level inquiry into the project since questions about the application surfaced last week. The on-the-ground investigation is set to begin within two weeks, according to Cork’s November 13 email.

Grant Writer Was Contracted to Receive 10% of the Entire GCRF Grant

A public records request by GC Wire revealed a previously undisclosed memorandum of understanding between OHOS Development, LLC and Nichols & Ash, PLLC, the law firm whose partner, Erich Nichols, has represented the developer throughout the project.

The document reveals that Nichols & Ash was promised 10% of the GCRF grant award, a fee totaling $800,000.

According to the agreement, the fee covered:

• preparing the GCRF application
• preparing additional grant applications
• loan applications
• communication with MDA
• project-related administrative and management tasks

The contract further states that the fee is “payable through MDA Grant funds, if allowed, or through other sources.”

Under Mississippi’s published GCRF rules:

• Soft costs — including architecture, engineering, project management, and certain legal expenses — cannot exceed 10% of the total grant.
• Grant administration, consulting, and grant-writing services are not eligible for reimbursement from grant payouts.

Nichols & Ash’s 10% fee matches the maximum soft-cost allowance by itself, leaving no remaining room for architecture, engineering, or other legitimate soft-cost expenses typically required on a construction project of this size.

Much of the work listed in the Nichols agreement — grant preparation, administrative management, compliance paperwork — falls within categories that GCRF guidance generally treats as ineligible for reimbursement.

Erich Nichols is married to Jackelyn Wrigley, the lawyer representing former City Attorney Robert Wilkinson and political consultant Josh Gregory in Securix related litigation. The parking garage grant application is the very one exposed last week as containing multiple development and ownership promises that were not kept. Mr. Nichols is also the registered agent for OHOS Land LLC and OHOS Development LLC, according to filings on the Secretary of State website.

Are Percentage Contingencies Acceptable?

National nonprofit guidance emphasizes that grant writers are not typically paid from the grant itself, and are not compensated based on a percentage of the award. According to the Foundation Group, a widely used compliance resource for nonprofits:

“No, paying a grant writer a percentage of the funding they help secure is never a good idea. Not only is this discouraged by most funders, but it can also raise ethical and compliance concerns.”

The article further explains that:

“Grants are meant to support future, mission-related projects, not past expenses that arise from your fundraising efforts,” and that grant writers are normally paid hourly rates or flat project fees, not a share of the award.

The MOU’s fallback language allowing payment from “other sources” raises an additional question that state investigators could explore, namely: if the fee was not eligible to be paid from the grant, were project costs structured in a way that shifted or offset money to cover the same expense indirectly?

MDA’s investigation could include reviewing:

• invoices submitted for reimbursement
• soft-cost expenditures
• draw requests
• payments from the developer to Nichols & Ash
• whether MDA funds were passed through before being used to cover ineligible expenses

Nichols personally appeared before the Board of Aldermen on August 17, 2021, the meeting where the City publicly departed from the ownership-transfer promise contained in the grant application. Instead of taking ownership, the City agreed to lease the garage from Nichols’ client and pay most operating expenses.

Key Document Omitted From Packet Sent to Aldermen

Last week, aldermen received a agreements related to the project. The Nichols & Ash agreement was not included in the documents provided to the Board.

What Comes Next for the Garage?

MDA’s upcoming visit will include reviewing project records, interviewing involved parties, and assessing whether the City’s agreements, expenditures, and deliverables complied with GCRF requirements. GC Wire will continue to follow developments as the investigation proceeds.