(GC Wire runs on donations by residents like you. Please click to help us keep reporting.)
OCEAN SPRINGS, MS (GC WIRE) – Ocean Springs aldermen are being asked to approve a long-term lease for a downtown parking garage under the threat that millions in state funds could be clawed back if they don’t act by June 30, 2026.
But the agreement that governs those funds contains no such requirement.
What follows is a timeline of how a project that was presented to the public — and to state grant makers — as a city-owned asset evolved into something very different, and how a lease that was never required by contract is now being treated as the key to a “sign it or pay big bucks” ultimatum.
So how did it get to this point?
The answer appears to involve unauthorized actions by the former administration, a lack of transparency from the current administration, and the same small group of names that continue to surface across multiple controversies in Ocean Springs.
A Bold Claim to State Grant Makers
In July 2019, the Board of Aldermen approved a resolution authorizing the city to apply for a grant from the Gulf Coast Restoration Fund (GCRF) to fund a joint venture parking garage at 1515 Government Street. The GCRF program is administered by the Mississippi Development Authority (MDA).
The Board’s resolution was short. It stated the city will join “OHOS LLC” as co-applicant for the grant. The only city contribution beyond that was to “allow for the development of a parking garage on the property.”
Erich Nichols, an attorney for OHOS, wrote and submitted the application. But that application contained verbiage that went beyond what the resolution had authorized. In the application, Nichols wrote:
“OHOS has entered into an agreement in which it will transfer ownership of the parking garage and amenities to the City upon completing construction.”
Nichols doubled down on the city ownership language later in the application, stating:
“The City of Ocean Springs is in full support of the project as evidenced by the attached resolution and the fact the City is a co-applicant and will be the owner of the proposed parking garage.”
City Minutes do not reflect the Board of Aldermen was ever presented with a copy of that application and was seemingly unaware Nichols had made such a bold promise to grant makers.
First Mention of a Long Term Lease
In October 2019, the City Attorney informed the Board that the application had “made it through the first round of selection for funding.” He then added something new:
“We are working with the developer… for a possible long-term lease.”
This was the first time any form of City control — whether by ownership or lease — appeared in official minutes.
At that same meeting, Nichols told the Board they were “still figuring out the last of the [lease] details.”
But despite telling the Board the plan was to lease the garage to the city, Nichols then submitted another grant application for a second round of funding – again telling grant makers the city and its taxpayers would be the owners of the garage if they gave him the money.
A New Mayor, A New Push
One month after Kenny Holloway took office as mayor in 2021, he and Nichols gave an update to the aldermen. Nichols told the Board the developer now had funding to build the garage. Mayor Holloway said the deal had been “reworked.” Nichols added that the “city will maintain the parking garage.”
Alderman Ken Papania stated that after meeting with local developer Joe Cloyd, he believed the revised deal was “a good deal.” Cloyd has multiple business ties to Nichols and was also connected to the hotel / parking garage project.
A Memorandum of Understanding (MOU) was then presented to the Board. The document described the lease as “effectively transferring” the garage.
The Board then voted unanimously to authorize the mayor to sign the MOU on August 17, 2021.
A review of the document shows that it was more of a letter of intent, rather than an actual agreement. It laid out possible terms of a future agreement, including the city’s role of providing maintenance, security, and utilities to the garage.
The final paragraph described the MOU as nothing more than “preliminary negotiations.”
An Unauthorized Agreement
By 2022, construction was underway, and it was time to execute the formal grant agreement for the first round of funding with MDA.
That agreement governs reimbursement of construction costs. It also places the City on the hook to repay the funds if project conditions are not met, despite the fact that none of the money went to the City.
The first iteration of the agreement was signed by Holloway and notarized on August 12, 2022. Curiously, it was also signed by Joe Cloyd as the attester on behalf of the City of Ocean Springs, a spot usually reserved for a municipality’s city clerk. Oddly, he also signed as the attester for OHOS.
Mr. Cloyd held no official role with the executive branch of the city government and held no authority to sign agreements on behalf of the city.
Cloyd did have another connection. He and Erich Nichols were listed as the officers for a corporation called 413 Ward LLC, the company that owned the rental house Mayor Holloway resided at for most, if not all, of his tenure as mayor. Shortly after Holloway left office in 2025, that house was transferred to a trust bearing Holloway’s name.
As for the MDA agreement Holloway and Cloyd signed, it was never authorized by the Board of Aldermen. Nor were the three other versions Holloway subsequently signed. State law requires all contracts and agreements to be authorized by the Board of Aldermen.
Upon review of city minutes, GC Wire found many instances where GCRF and other grant agreements were presented and voted on by the Board – giving the state mandated authorization for the mayor to execute them.
But not this one.
In fact, to this day, there is no evidence any of the agreements have ever appeared in a meeting agenda packet for the aldermen to review.
So, What Was in the Agreements?
All four versions of the agreement contained a clause explaining the grant was award based on the grant application and that the city must certify all statements and claims made in the application were “true and correct,” both on the day the application was submitted and the day the grant agreement is signed.
These certifications referred to the same applications that stated the city would be the owner of the garage. The very next clause stated any untrue information in those applications could trigger a claw back of the money from the city.
The first agreement with MDA reimbursed OHOS for construction costs of $2 million if property acquisition and certain construction milestones were met. The second agreement reimbursed OHOS $6 million. The milestones for that agreement included two metrics:
- 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.
Both of those metrics have been met ahead of their respective deadlines.
Also included in the agreements were two annexes that included a copy of the lease MOU and an agreement to pay Erich Nichols a lump sum payment of $800,000, which would come out of the grant award.
City’s Public Records Shenanigans
GC Wire made several public records requests relating to the parking garage. Most were met with strange, if not incorrect, responses from the city.
The Ownership Agreement: Both grant applications – one from 2019 and the other submitted in 2020 – contained a line stating OHOS had entered into a formal agreement to transfer ownership of the garage to the city. We requested that agreement. The city responded by telling us the agreement referenced in the 2019 and 2020 applications was the lease MOU. But that MOU did not exist until 2021, two years after a reference was made to an ownership agreement. Despite a follow-up email explaining the discrepancy, the city stuck to their original answer.
Authorization to Sign: State law requires the Board of Aldermen to formally authorize a mayor to sign contracts. We requested any documentation showing that the Board authorized Holloway and Cloyd to sign the MDA contracts and bind the city. The city responded by providing the resolution allowing the city to apply for a grant. This is very different than authorizing the mayor to enter a complex final contract. The only thing that resolution authorized was the city to apply for a grant.
Letter from School Board: Both grant applications reference an attached letter of support for the project provided by the Ocean Springs School Board. At the time of the applications, Joe Cloyd served as School Board President. Mayor Holloway’s cousin, Brad Patano, served as a Board member. His firm would later get the contract to design the 1515 Government Street project. GC Wire asked through a public records request for that letter, but the city stated they were unable to find it. A request to the school district resulted in the same.
Direct Appeal to an Alderman: GC Wire reached out to Alderman-at-Large Matthew Hinton, asking if he could shed light on the matter. We asked Hinton if he knew of any authorization granted by the the Board allowing the mayor to sign a contract making the city responsible for $8 million grant to a private developer. Hinton responded by texting us to look at an October 11, 2022 OHOS Development LLC Public Hearing. We did. On that day, the Zoning Board heard arguments by OHOS “requesting a front yard setback variance, a dumpster enclosure setback variance, and a drive aisle width variance.”
To rule out a possible date error, we also checked the Board of Aldermen minutes from October 4. The only mention of the property was in the consent agenda: “Authorize the Mayor to execute the Temporary Dedication of Land for Public Use with OHOS Development, LLC at 1515 Government Street for 2022 Cruisin’ the Coast.”
Neither meeting resulted in authorization for Holloway to sign an $8 million contract.
Does the Contract Really Force the City to Sign a Lease?
Aldermen have been told they have until June 30, 2026 to sign a lease agreement with OHOS. But even if the city successfully argues that the mayor somehow had authorization to sign the MDA contract, the contract itself makes no such demand.
The grant agreement — the only binding document governing the project — never requires the City of Ocean Springs to enter into a lease with OHOS or any private entity.
Instead, it lays out straightforward conditions: the project must be completed, funds must be properly spent, and required reports must be submitted. If those conditions are not met, MDA can stop funding or terminate the agreement. But nowhere does it say a lease is required to receive or keep the money.
Even the sections outlining default and termination focus on misuse of funds or failure to comply with the agreement, not on whether the city signs a lease.
The only place a lease appears at all is in a separate Memorandum of Understanding attached to the agreement. That document describes a proposed structure for how the parking garage might be handled, including a long-term lease arrangement. But the MOU itself makes clear it reflects preliminary negotiations — not binding requirements.
Despite that, a February 10, 2026 letter from MDA introduces a new directive. In that letter, MDA states that executing the lease is “the final step required to close out the project” and says the city and OHOS “must finalize and execute” the lease by June 30, 2026.
That demand does not appear anywhere in the signed grant agreement.
In simple terms, the contract says: build the project, follow the rules, and account for the money.
The letter says: sign the lease or the project isn’t complete.
Those are not the same thing.
And that’s where this falls apart.
- The project was sold to the state as a city owned parking garage.
- The contract never required a lease.
- The garage has already been built and paid for, with all stated metrics met.
Only now — after the money is gone — is the lease being treated as mandatory.
The documents say one thing. State and City Officials say another.
The question is why – and who is going to care?
Private developers received millions in public funds to build an $8 million asset. Now the current Board of Aldermen is being told to sign a long-term lease—or risk paying that money back.
In other words, the developers got the benefit. And, strangely, the city may be left holding the bag.
