OCEAN SPRINGS, MS — The City of Ocean Springs has paid thousands of dollars to the private owner of its downtown parking garage for products and services that either do not appear to exist or are not being performed by the company receiving the payments.
Since July, city financial records show multiple monthly payments of several thousand dollars to OHOS Development LLC, owner of the OS1515 parking garage at 1515 Government Street. The payments are consistent with fees spelled out in the City’s lease agreement and represent services that are supposed to be carried out by OHOS.
But an investigation by GC Wire has found many of those services are not being provided, despite consistent monthly payments made by the City.
Missing Security System
The agreement, approved by the Board of Aldermen in June, is not ambiguous. It assigns specific monthly dollar amounts to specific services OHOS is to provide in exchange for taxpayer funds.
In accordance with the agreement, Ocean Springs has made several payments to OHOS. In July, the City paid the nominal $10 annual cost to lease the garage. The City also paid OHOS $7,200 for electricity expenses that predated the lease by one year and made the first of what would become recurring $4,000 monthly payments.
Those monthly payments are divided into four specific allocations:
- $660 for security cameras
- $600 for electricity
- $500 for elevator maintenance
- $2,240 for building maintenance and cleaning.
Specifically, Ocean Springs agreed to pay monthly for OHOS to “provide, install, maintain, and operate” security cameras at designated locations within the leased portion of the garage. OHOS is required to provide the City access to the cameras and footage and bear all costs associated with installing, maintaining, and operating the system.
Exhibit B of the lease agreement states that the recurring camera fee was calculated using the average of four proposal estimates. The document identifies three Flock Safety estimates and one from a company called Grand View.
To date, City financial records show four months of payments under the agreement, meaning taxpayers have paid $2,640 in monthly fees for the security-camera component alone.
However, during a recent videotaped inspection of the facility, GC Wire could not locate a single security camera inside or around the garage.
$8k Swept Away
The maintenance payments raise additional questions.
Exhibit B contains the cost assumptions used to establish the garage’s maintenance expenses. It estimates that using City resources would cost $1,893.50 per month for Public Works maintenance and another $1,500 per month for mechanical street sweeping once per week. The document uses a prescribed FEMA rate to calculate the cost of the street sweeper operation.
The exhibit then lists the OHOS maintenance proposal at $2,240 per month and states that the “proposal combines these costs.”
After four months, Ocean Springs has paid $8,960 for this service. But according to OS1515 General Manager Taylor Thorpe, OHOS isn’t mechanically sweeping the garage.
“We don’t do any street sweeping or anything,” Thorpe told GC Wire Tuesday. “That would be the city.”
Thorpe said the only sweeping performed by OHOS is done manually by a maintenance employee.
“The only thing is we have a maintenance man that comes through and sweeps, but it’s not with a machine or anything,” she said.
That statement raises questions about what taxpayers are receiving for the $2,240 monthly maintenance payment. The agreement makes OHOS responsible for “all cleaning,” ties the monthly payment to the costs identified in Exhibit B, and Exhibit B specifically identifies mechanical street sweeping once per week as a $1,500 monthly maintenance cost.
Since the lease agreement was approved, the city has paid $2,640 toward a camera system and $8,960 under a maintenance contract funded heavily by mechanical sweeping—without receiving either proper service.
The latest payments were approved this week by the Board of Aldermen.
GC Wire emailed City Hall asking why the City continues to pay for services it has not received. The City did not respond prior to publication.
Questionable Promises Led to Lease Approval
The signing of the parking garage lease agreement with OHOS was not an easy path. Nearly a year of contentious debate led up to the final Board approval.
The garage was built with $8 million in public funds granted jointly to the City and OHOS by the Gulf Coast Restoration Fund, a grant program facilitated by the Mississippi Development Authority.
Aldermen Karen Stennis and Shannon Pfeiffer repeatedly argued the state was relying on documents produced by former Mayor Kenny Holloway that did not reflect what the previous Board of Aldermen actually approved. They both maintained the actual approved documents show the garage should be owned by the City, not OHOS.
Alderman Steve Tillis led the push to sign the lease at a June 22 special called Board meeting. During a lengthy prepared speech, Tillis told the public reasons he believed the City would benefit more from allowing the private company to own the garage and the City signing the proposed lease.
He said if the city were to own the parking garage outright, taxpayers would be responsible for insurance coverage, routine maintenance, major structural repairs, elevator upkeep, and security systems.
However, Tillis did not mention the lease agreement he was pushing puts those issues on the shoulders of taxpayers anyway.
According to the agreement, the City of Ocean Springs is responsible for insurance coverage, the City pays OHOS more than $26,000 a year for maintenance and cleaning, is responsible for repairs caused by guests, pays $6,000 a year towards elevator issues, and nearly $8,000 a year for a security system.
Despite the City taking on the very burdens Tillis said taxpayers would be shielded from, Aldermen Kevin Wade and Rob Blackman praised Tillis’ speech by stating they were in agreement.
The motion to accept the lease passed 4-3 with Aldermen Stennis, Pfeiffer and Julie Messenger voting against.
What Happens to the Money Already Paid?
The question now facing Ocean Springs is why the City continued making payments without verifying if the services it was paying for were actually being provided.
State law has systems in place for ensuring public money is properly spent. The Mississippi Office of the State Auditor is authorized to investigate suspected violations involving the purchase or use of services, equipment, and other property by public offices. State law also authorizes the Auditor to seek recovery of public funds determined to have been improperly withheld, misappropriated, or otherwise illegally expended.
The facts surrounding the garage situation do not, by themselves, establish that the payments to OHOS were illegal or that anyone committed a crime. But the situation does shine a light on the responsibility municipal officials have to determine what taxpayers received in exchange for the money that was paid.
The City’s own lease provides a mechanism for doing exactly that.
Under Section 9, if either party fails to perform its obligations under the agreement, the other party may provide written notice specifying the default. The party then has 30 days to cure it. If the default is not corrected, the agreement allows the non-defaulting party to terminate the lease and pursue other remedies available under law.
The City also specifically reserved the right to inspect the parking garage for maintenance services.
So far, taxpayers have paid $2,640 toward a security-camera system that GC Wire could not locate and $8,960 for maintenance and cleaning under a cost structure that specifically contemplated weekly mechanical street sweeping — a service OS1515’s general manager says OHOS does not perform.
Together, those payments for services not received total $11,600 in just four months.
The City now has several questions to answer:
Whose job is it to verify that the contracted services are being provided before the payments are approved?
Where are the security cameras taxpayers have paid to install, maintain, and operate?
Why is mechanical street sweeping not being performed by OHOS when it was specifically included in the cost analysis?
And will the City seek reimbursement, credits, additional services, or invoke the default provisions of the lease for any services it determines taxpayers paid for but did not receive?
Those questions are particularly relevant because the lease itself gives Ocean Springs the authority to inspect the work and address a failure to perform.
What remains to be seen is whether the City will use it.
