Ocean Springs will owe millions unless parking garage lease signed, auditor says
AI-generated summary reviewed by our newsroom.
- Auditor says Ocean Springs needs a long-term lease on parking garage or $8M must be repaid
- Developers say they retain ownership despite grant applications saying transfer to city
- Board delay and legal limits risk breaching grant and repayment
Ocean Springs is on the hook for $8 million unless developers of OS1515 Downtown lease a parking garage to the city long-term, the state auditor says.
The city and partners in the mixed-use development OS1515 Downtown worked together to secure the $8 million in grant funding from the Legislature. The money was granted to the city and spent on the development as a public-private partnership.
State Auditor Shad White said as part of an audit released earlier this week that the long-term lease needs to be signed before the project closes out in June or the city will have to repay the money. The audit covered millions in Gulf Coast Restoration Funds that the state Legislature is doling out, including the parking garage grants.
One lease the city considered in June 2025 would rent the garage to the city for the nominal fee of $1 a month for 40 years. The Board of Aldermen decided against signing the lease because a new administration was about to take office.
A new long-term lease has been prepared by the developers’ attorney and sent to the city, OS1515 partners Jim Hardin of Biloxi and John Oporesa of Ocean Springs told the Sun Herald. The new lease proposal is also for 40 years at a nominal fee, as required by the grant agreement, Oporesa said.
“We’re just waiting on the city,” Hardin said.
White is generally critical of how the BP money is being spent. It was intended for economic recovery from the 2010 BP oil spill, a catastrophe that crippled the Coast economy.
“In fact,” the auditor said in a Facebook video, “a lot of money is being doled out to politicians’ pet projects.”
Ocean Springs needed downtown parking
White singled out the parking garage in the audit report’s executive summary, saying: “This project garnered support from many local government agencies. However, since the completion of the project, there has been confusion over the final ownership of the garage.”
Neither Mayor Bobby Cox nor the city’s attorney, David Harris, responded to the Sun Herald’s voicemail messages to discuss the garage lease. The city’s public affairs officer, Laurri Garcia, responded with a statement Thursday morning that said, “We provide documents with a public records requests, but the issue is with the attorneys at this time.”
The Sun Herald has filed a records request for the proposed lease, but a response can legally take up to seven working days.
One issue is that boards of aldermen and city councils, whose members serve four-year terms, are generally prohibited by state law from binding their successors to contracts, including long-term leases, two attorneys who represent municipalities told the Sun Herald. A specific state statute must allow the longer term.
The city of Gulfport established a separate agency to enter leases, the Gulfport Redevelopment Commission. Ocean Springs briefly had an urban development agency, but dissolved it.
Hardin and Oporesa, both general contractors with separate companies, are 50/50 partners in OS1515 Downtown. The development consumes a city block fronting Washington Avenue. The parking garage is tucked behind three buildings that house OS Hotel, Lofts1515 condominiums and Crave Food Hall. The multi-story development opened in the spring of 2025.
Needing more downtown parking, Ocean Springs formed a public-private partnership with the developers to help fund the garage. The Legislature approved grants totaling $8 million for the project in 2020 and 2021.
Oporesa said 75% of the three-story garage is available for public parking. The parking garage has 226 spaces.
Does a long-term lease suffice?
“If you ask me, they should be leasing it from us because we should have the ownership of this garage and it hasn’t happened,” said Karen Stennis, one of four new members on the seven-person Board of Aldermen. “I don’t know if that will ever happen, to be honest.”
Stennis and another new board member, Shannon Pfeiffer, met with an attorney and technical employee in the auditor’s office in January at the auditor’s request, Stennis said. The meeting came after questions were raised in November about the garage and lease on the website gcwire.com.
The applications OHOS filed to request grant funding, which list OHOS attorney Erich Nichols as the contact, say: “OHOS has entered into an agreement in which it will transfer ownership of the parking garage and amenities to the City upon completing construction. This private-public partnership will truly benefit the city now, as well as provide the means for the Ocean Springs downtown to expand.”
Oporesa said the transfer agreement, a memorandum of understanding, gives the city a long-term lease on the garage — not ownership — for a nominal fee. Auditor White also indicates a long-term lease will suffice.
The MOU is incorporated in the grant agreement with MDA that all parties had to sign before receiving grant funds. The grant agreement also says MDA relies on the “truthfulness” of grant applications. When the agreement is breached, it allows MDA to demand reimbursement of grant funds.
Nichols did not respond to a message about the garage from the Sun Herald. Oporesa said he does not know why the grant applications say ownership of the garage will be transferred to the city, but OHOS has been aboveboard in all its dealings with the city and MDA. He said at no time was there any discussion of garage ownership being transferred to the city.
“We own the garage and always intended to own the garage,” Oporesa said, verifying that OHOS put up the garage as collateral on a loan for the development. “There was never an agreement to transfer ownership to the city.”
