Lower Marina Rates, Debt Buy-Down Proposed
By Carl Wagenfohr
CLEARWATER – It didn't take long for Harbormaster Bill Morris and Finance Director Margie Simmons to respond to the market conditions that drove the Clerarwater Municipal Marina into a loss last quarter. They brought a revised business plan to the City Council's Tuesday worksession that addressed both the money-losing operation on Clearwater Beach and the soon to be built facility on the downtown waterfront.
As reported in the Gazette's January 29, 2009, edition (Marina Slips Vacant Following Rate Increases), an exodus of boaters following last fall's steep rate increase resulted in a 35-percent vacancy rate in the Municipal Marina's recreational slips.
In an effort to improve occupancy and return to profitability, Morris proposed rolling back the marina's rates from $9.13 to $8.51 per foot per month for residents, and from $13.14 to $10.33 for non-residents. The lower rates, Morris explained, were developed from a recent survey of competing municipal and commercial marinas that currently have near 100-percent occupancy.
In addition, Morris proposed to lower the commercial slip rates by 10-percent, "our own mini stimulus package," he said. The Municipal Marina's charter fishing and excursion boat tenants have been suffering from a combination of high fuel prices and a downturn in the tourism economy.
The rate reductions combined with an assumed 75-percent occupancy for recreational slips and 95-percent for commercial slips would return the marina to positive cash flow for 2009. With rates frozen and an assumed occupancy of 90-percent for recreational and 100-percent for commercial slips, the marina would return a net operating profit of $39,000 in 2010. Rate increases of 5-percent would be imposed in subsequent years.
The red ink projected for the downtown marina would be eliminated by a combination of buying-down the facility's debt and lowering rates to increase slip demand and occupancy. Only 10 boaters had submitted applications by the January 31st deadline for what was to have been a gala slip selection lottery.
Morris proposed downtown rates of $9 per foot per month for residents and $10.50 for non residents, down from the $15.50 that was originally used to demonstrate positive cash flow for the $11-million facility. But those lower rates came with a caveat; "In order to do that," Simmons told the council, "you'd have to be willing to fund some of the cost of construction of the boat slips from reserves."
The Council had recently discussed buying-down the facility's debt using Penny for Pinellas funds, but Simmons explained that only $2.5-million remains in the Penny II budget, and that Penny III revenues don't begin flowing until February, 2010.
Simmons suggested that the Council decide how much debt to buy-down, and take that money from Central Insurance Fund reserves now, "contingent upon your discussion of Penny next month." She was essentially asking the council to mentally pre-allocate Penny III revenues in advance of the public hearing that would be required to commit those funds.
Simmons offered several scenarios of debt buy-down, ranging from $4.125-million, which would require 95-percent occupancy to show positive cash flow, to funding the full $8.25-million, which would show a profit with only 80-percent occupancy of the marina's soon to be built 126 slips.
City Manager Bill Horne stressed that the Penny III debt buy-down was proposed "in the context of that being your highest Penny priority. The idea would be that, if you used Penny, that's one of those projects that, added to the list, would kind of sit at the top. So clearly it would get funded, which would mean that some of the other projects would have lesser priority."
With Penny III revenue projected to fall short of original estimates, the Council was recently asked to cut $20-million in value from the list of projects that were used to sell the Penny III referendum to voters in 2007. (see Penny 3 Revenue Forecast Cut, Projects to be Axed , published in the Gazette's January 22 edition) The proposed debt buy-down having highest priority would bump even more projects from the list.
Thus far in the Gazette's online Penny III Project opinion poll, our readers disagree with Horne's priorities. During the two weeks that the poll has run, buying-down the marina debt has been among the top three projects that our readers would like to eliminate. While it sits at the top of Horne's priority list, it sits near the bottom of our readers'.
The Council is scheduled to approve the revised marina and downtown slips business plan and decide the downtown marina debt buy-down at tonight's public meeting at City Hall.
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