Early Demand For Downtown Boat Slips Weak
By Carl Wagenfohr
CLEARWATER – If the City of Clearwater thought that its uphill battle to create an active marina on the downtown waterfront was over when the plan was approved at a 2007 referendum, they have another think coming.
Conceived at a time when demand for slips outpaced supply and many working waterfronts were being converted to residential condominiums, the success of the 128-slip project is being threatened by the downturn in the worldwide economy, including an uncertain employment outlook, weak boat sales and high energy costs.
The entire marine industry is suffering. MarineMax, a Clearwater-based boat retailer which contributed $15-thousand to a political action committee that supported Clearwater's downtown boat slip initiative, has reported consecutive quarterly losses, and its stock price has fallen from $16.88 to $1.80 in the last year. MarineMax Chairman William H. McGill, Jr. recently called the current climate “the harshest marine market in decades.”
Slip demand seemed high when news of the downtown marina first spread. Since December 2007, the city has been maintaining a list of people who have expressed interest in the slips. That list, which was non-binding to join, now numbers 687 entries, some 100 of them duplicates.
That apparent demand created optimism among city leaders, but the response by list members to a slip application they were mailed in early September has been lackluster. Unlike the interest list, the application requires a $500 deposit, and to-date only one individual has returned their application with the necessary payment.
Earlier this week, the Gazette conducted an informal survey of people on the city's interested party list; the result confirmed the weakened demand for the downtown slips. Of the 19 people contacted, 13 no longer had interest, 2 were uncertain and only 4 individuals intended to submit an application and deposit. And of those 4, one family will be exchanging a city slip on Island Estates for one downtown.
Most of those no longer interested cited the economy as the only reason for their change of heart. The cancellation of contracts to purchase condos at the nearby Water's Edge complex also eliminated some demand.
One individual took exception to the city's application process, which doesn't allow a change of slip length after the application is submitted and, he thought, could cause him to forfeit the $500 application deposit if his needs change before the city's slip assignment lottery planned for March 2009.
Regardless of the reasons, empty slips could lead to a shortfall in the rental income needed to repay the facility's financing, which is already in place via a 20-year 4.66-percent loan from BB&T. Repayment during the first two years is interest-only at $420-thousand per year, and the remaining eighteen years principal and interest payments are $760-thousand annually.
That loan is backed by city Public Service Tax, a source of General Fund revenue. If rental income is insufficient to fund the loan payments, the city's taxpayers will make up the difference.
Asked his opinion of the early application submission rate, Clearwater Harbormaster Bill Morris, who will be responsible for operating the facility, said, “I'm concerned.” He is also taking action.
Morris intends to take what he calls “a broader market focus”, and plans to use the upcoming St Petersburg Boat Show as an opportunity to promote the downtown slips to potential industry partners, not just individual boat owners.
One of those is the emerging business of fractional boat ownership, in which individuals form a partnership to reduce the purchase and operating costs that would otherwise keep them out of the boat market. Morris said that many of his customers at the Clearwater Airpark use fractional ownership to reduce their cost of aircraft ownership, and that the same concept is applicable to boating.
One market segment that Morris will not be tapping is the boat charter business. Clearwater's 2007 referendum specifically excluded commercial operators from the downtown marina because of potential conflict with the city charter and because city planners did not want to clutter the seascape with the fish entrails and odors that surround charter fishing boats.
Aside from that, Morris said, “I'm going to go after everything I can legally (city charter-wise) go after to fill the boat slips.”
The downtown boat slips are scheduled to open in July 2009, barring any delays due to permitting or litigation. Applications must be postmarked no later than January 31, 2009.
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