OCEAN SPRINGS, MS (GC Wire) – Alderman-at-Large Matthew Hinton issued a warning to Ocean Springs residents on Tuesday, stating if the City does not sign a lease agreement with the owners of the downtown parking garage this month, taxpayers will be on the hook for the $8 million in grant money already disbursed through the Gulf Coast Restoration Fund (GCRF).
Ocean Springs applied to the Mississippi Development Authority (MDA) for the GCRF grant money in partnership with OHOS Development LLC, the owners of the hotel / condo project located 1515 Government Street.
Hinton’s warning came by way of a Facebook post titled Community Update.
“If that lease is not completed by June 30, 2026, the MDA will seek to claw back more than $8 million in grant funding,” Hinton wrote. “The grant agreement is clear that a lease agreement between the parties must be finalized.”
But questions remain about the accuracy of that announcement.
On the same post, Hinton was asked by residents to pinpoint exactly where in the grant agreements it states the City is required to enter into a lease. Despite previously stating the contract was “clear,” Hinton failed to answer.
Instead, he deflected, claiming “the state auditor did an audit of the parking garage.”
However, Communications Director Charles Woods of the Office of the State Auditor stated that he was unaware of any audit matching Hinton’s description.
“I’m not sure what document or audit he’s referring to,” Woods wrote in an email to GC Wire.
“There’s no ‘stand alone’ audit from our office on the Ocean Springs parking garage,” he added.
In another comment beneath his post, Hinton pointed to excerpts from a broad March 2026 auditor report criticizing the statewide GCRF grant process in its entirety. In that report, Auditor Shad White briefly singles out the Ocean Springs parking garage as a localized case study, stating that “since the completion of the project, there has been confusion over the final ownership of the garage.”
White’s case study also echoed administrative information provided to his office by MDA, which — like Hinton — claims the agreements mandate a lease to be signed by the June 30 closeout date.
But the actual legally binding contracts tell a completely different story.
None state that failure to sign a lease would result in a requirement to repay the grant funds.
Contradicting Legal Advice
Multiple official sources have directly contradicted Hinton’s Facebook claims — revealing that officials have publicly given conflicting descriptions of whether the City is required to enter into the lease.
For example, Alderman Hinton’s public post is vastly contradictory to official legal advice given to the Board by City Attorney David Harris.
During a live-streamed October Board meeting, Ward 1 Alderman Steve Tillis specifically asked if the city was “locked into” signing the agreement. “In other words, do we have to opt into this contract, or is that something that’s optional, or we don’t have to do that?” he added.
City Attorney Harris responded flatly, “There’s no… you don’t have a legal requirement to enter into it.”
Tillis followed up by specifically asking, “So, if we want to leave 1515 Government Street, let them do their own parking, let them change whatever they want to do, they can do that on their own?”
Harris doubled down, “They could.”
GC Wire has requested that MDA identify the specific section, paragraph, annex, or amendment that it believes requires the City to execute a lease by June 30, 2026. The agency did not respond prior to publishing.
The Actual Paper Trail
Through a series of public records requests, the City has provided several versions of the grant agreements:
- Phase 1 2022 GCRF-20-09 Grant Agreement
- Phase 2 2022 GCRF-21-09 Grant Agreement
- Phase 1 2023 GCRF-20-09 Amended and Restated Grant Agreement
- Phase 2 2023 GCRF-21-09 Amended and Restated Grant Agreement
- Phase 2 2024 GCRF-21-09 Second Amended and Restated Grant Agreement
None state that failure to execute such a lease requires repayment of all grant funds. Instead, the June 30, 2026 deadline appears in each version of the Phase 2 agreements as a project completion and public-use deadline.
Annex A of those documents include the “Metrics” of the agreement. There are only two:
- The parking garage portion of the project will be open to public use by June 30, 2026; and
- The Entity will complete construction of all the project facilities by June 30, 2026 (“Performance Metric Commitments”).
Those requirements are immediately followed by the clause:
“In the event that the Entity fails to satisfy the Performance Metric Commitment, then the Entity shall repay the State any expended grant funds.”
According to multiple City officials and related media reports, those commitments have been accomplished.
The ‘Ownership Confusion’
Auditor White’s reference to confusion about ownership didn’t come out of the blue.
In every version of the grant agreements, the City and its OHOS partners certified that factual statements made in the grant applications were “true and correct” at the time of submission and remain true and correct at the time of executing the final grant agreements.
In 2019, two applications were submitted to acquire grant money, one asking to fund Phase 1 of the project and the other for Phase 2. The City and OHOS made strict promises if they were to be awarded the funds:
“OHOS Land, LLC has entered into an agreement in which it will transfer ownership of the parking garage and amenities to the City upon completing construction.”
And on separate pages:
“The City of Ocean Springs is in full support of the project… and will be the owner of the proposed parking garage.”
Those promises became legally binding when the City and OHOS certified in multiple grant agreements that those statements were true and correct.
Section 6g of each agreement states:
“The Entity certifies that all of the material information contained in the Application is true and correct as of the date of the Application and the date of this Agreement.”
The very next clause states:
“The Entity acknowledges that MDA, in making the Grant, is relying upon the truthfulness and correctness of the material information contained in the Application. The Entity further acknowledges that MDA must account for the proper use of funds based on the information in the Application.”
Yet, somewhere along the way, the City abandoned those legally binding promises.
Shifting Language Changes Direction of Deal
In 2021, newly elected Mayor Kenny Holloway’s first order of business is to tell the Board the garage deal has been “reworked” and it would now be owned by OHOS with the City leasing and paying for all maintenance costs.
In August 2021, the Board approves a Memorandum of Understanding (MOU) laying out the framework of the proposed leasing arrangement. But the document describes itself as a letter of intent and non-binding, stating it is merely “preliminary” discussion meant to guide future negotiations toward a possible lease agreement.
Meanwhile, state grant makers were still relying on the terms promised in the grant applications – that if they awarded the $8 million, the City of Ocean Springs would own the parking garage.
On May 17, 2022, Holloway announced the grants had been approved and presented the Board with the first set of grant agreements. These agreement versions made no reference to the MOU discussing a lease structure, yet they did include Section 6(g) certifying the truthfulness of the City ownership claims in the applications.
The Board voted to authorize the mayor to execute the agreements. All parties signed in August of 2022.
Versions of those 2022 agreements provided by the City have the lease MOU stapled to the back as Annex B, but the executed agreements contain no operative language pointing to the existence of that Annex or the MOU.
Phantom Agreements Begin to Appear
GC Wire has found no Board minutes provided by the City reflecting approval of any parking garage-related grant agreements after May 17, 2022. Yet, several new versions were later executed.
Some of those future amended versions contained added language pointing to Annex B, the MOU that discusses a possible lease structure. Others still only referenced Annex A, which contained the grant metrics.
Despite not having Board approval, then-Mayor Holloway signed all amended versions and certified to the State that he had been given full authorization by the Board of Aldermen.
Last November, City Attorney David Harris addressed this issue in a written memo provided to the aldermen.
The memo contained a timeline of actions taken by the Board in regards to the parking garage grant. He began by stating the Minutes Rule.
“All official actions of the board of aldermen – including votes, contracts, ordinances, appointments, authorizations, and expenditure – must be explicitly recorded in the official minutes,” Harris wrote.
He continued, “If the board approves a contract, the terms of the contract and the board’s approval must be clearly stated in the minutes. If the minutes do not reflect the action, the contract is not enforceable against the municipality.”
Harris’s timeline of Board actions followed. There was no entry showing approval of amended grant agreements.
Even if the State were to acknowledge the amended agreements as being authorized, it still would not eliminate the ownership clash. All versions of the grant agreements certify through Section 6(g) that the downtown parking garage would be owned by the City, as promised in the grant applications.
Missed Targets and the True Risks
At the center of Alderman Hinton’s warning is a simple claim: if the City does not execute a lease agreement by June 30, 2026, Ocean Springs taxpayers will be forced to repay more than $8 million in GCRF grant funds.
Yet despite repeated requests, neither Hinton, the City, nor the Mississippi Development Authority has identified the specific provision of any grant agreement that imposes such a requirement.
The City’s own attorney publicly advised aldermen that they had “no legal requirement” to enter into the lease. The Office of the State Auditor says no stand-alone audit of the parking garage grant exists. And the executed grant agreements reviewed by GC Wire tie repayment obligations to project performance metrics and completion requirements — not to the execution of a lease agreement.
What the documents do reveal is a different and far more complicated problem. For years, the City and its development partners repeatedly certified to the State that the parking garage would be owned by the City of Ocean Springs. Later amended agreements, some of which do not appear in any Board approval reflected in the minutes, attempted to move the project toward a lease structure instead.
Whether that conflict ultimately creates legal consequences remains to be seen.
But based on the documents currently available to the public, the looming June 30 deadline appears to raise a much different question than the one posed by Hinton:
The issue may not be whether the City must sign a lease.
The issue may be why the State was promised City ownership of the garage in the first place — and how that promise changed after millions in public funds had already been awarded.
Thanks for all that you do Brian! Keep digging! We all appreciate your efforts!!!