Commentary: Want to Cut Taxes? Look at Marina Subsidy

By Chip Ross

City Commissioner

Citizens want to cut taxes, but the subsidy of the Marina continues to consume approximately 2.2% of the general budget.

Currently the city taxpayers subsidize the city-owned Marina approximately $700,000 per year – approximately 2.2 % of the general budget. That subsidy is likely to increase in the coming years.

At present there are slips available for approximately 79 boats – 75% for transient slip holders and 25% for long-term slip holders. Transient slip holders pay significantly more than long-term slip holders.

The long-term slip holders consist of 24 commercial slip holders, 15 non-city resident slip holders and two city resident slip holders. Each commercial and recreational slip holder is currently subsidized approximately $3,360 per year – the difference between what it costs to operate the marina versus what the slip holders pay.

More than 80% of the commercial businesses’ customers are tourists. Without a sizable number of tourists, those businesses would cease to exist.

The capital needed for the Marina over the next five years will likely exceed 5 million dollars. Approximately $1 million will be needed to demolish Brett’s, $750,000 for new bathrooms, $400,000 to replace the aging boardwalk, $2-3 million to replace Brett’s with an open-air deck, and $400,000 to move the fuel lines when Brett’s is demolished.

The Centre Street Resturant Group [Brett’s] is currently demanding the city pay in excess of $600,000, for interruption of their business. No rent has been paid to the city for over a year. The lease ends in December 2025.

The Marina’s current attenuator insurance policy exceeds $500,000 per year. This will likely continue to increase.

The cost of dredging is currently over $900,000 per year. This will also likely increase. The Florida Inland Navigation District currently pays about a third of that cost. Whether that will continue is uncertain.

The operator wanted to increase the slip fees of both transient and annual slip holder fees to help cover costs. The Marina Advisory Board members and slip holders objected to the amount of the increases. The city commission, by a 4-1 vote, refused to raise the rates by the amount requested by the operator.

The current debt payment is about $700,000 per year. The debt will be paid off in 6 years.

Unless something changes, the Marina will require more than a million dollar a year subsidy, or approximately 3% of the city budget, for the near future.

The Marina Advisory Board is meeting at 5 p.m. on April 22, 2024 at City Hall to “workshop” this issue. Public attendance and participation is encouraged.

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MyFernandina
Active Member
MyFernandina(@myfernandina)
1 month ago

Looks like high time to sell this albatross.
Enterprise funds are supposed to be self-funding.
Let a private operator “clean up” this city-created mess.

Alan Hopkins
Noble Member
Alan Hopkins(@dawaves)
1 month ago

I love our Marina. I just wish that built it in a better place instead of where they did so it wouldn’t cost us about a million dollars a year that it shouldn’t.

The one missing part of the equation is what is the financial economic benefit to the city and its residents by having the Marina in the first place. Until you do a complete analysis you really don’t know whether it pays for itself or not. I have a strong suspicion that it does not. When one group benefits from the resources of the city at the expense of others it’s called free riding. 

Please don’t tell me that I’m against Marina. I’m not. I’m recommending that those that use it pay for it.

I know I’m about to hear all the arguments about how wonderful the Marina is and how it benefits our city. I know it benefits our city it’s one of the reasons why almost a million people come over the bridge every year. But I don’t think it benefits our city anymore than Center Street and all the shops and restaurants and the view out over the river. That view was given to us by God and not by people running the Marina.

There should be no free lunch here. Whatever the going rate is that’s what they should pay. Same thing if you own a building on 2nd Street. You’d be expected to pay the property taxes, pay for all the upkeep, pay for the all the utilities etc. No difference just because you have a boat in our Marina. You didn’t build it you don’t own it and you shouldn’t be subsidized when you use it.

The problem occurs when property is owned by government and officials can pick and choose who benefits and who pays. Some would call this corruption. Time to end it. While I’m at its time to get rid of the padonk courts (I know that’s not how it’s spelled) on the waterfront as well. Now I think I’ve made everybody mad.

Again it’d be very useful to have a full economic analysis but that seems to be lacking. I wonder why when you have a over 200 employees in the city and a budget over over $170,000,000 you would think somebody would be able to come up with that.

Best answer is to sell it and use the proceeds for the betterment of everyone in the city. That way those that use the Marina will pay for the Marina and those that don’t won’t have to subsidize it.

Did I tell you I love the Marina?

Last edited 1 month ago by Alan Hopkins
bev.lawrence23@gmail.com
Member
[email protected](@bev-lawrence23gmail-com)
1 month ago

Yes, I also love the marina and don’t want taxes to increase!!!   

This is a great time to roll up our sleeves and make some decisions, especially seeing that the Corps of Engineers worked with the Ocean Highway and Port Authority to realign the Federal Channel. This allows the marina to expand into deep water, if needed.  

In addition, in the 2022/23 Budget I believe the city transferred a significant amount of funds from the Wastewater Fund – was it a little over 3 million? As a Wastewater ratepayer that is unfair, especially since the taxpayers will need to fund wastewater improvements in the coming years. Monies should stay in the appropriate fund for future needs. If the funds have too much excess, the tax rates should be lowered.

Rick Abernathy
Member
Rick Abernathy(@rick-abernathy)
1 month ago

Chip,

You asked and I told you that we should sell the Marina several years ago. I even wrote a document and sent it to you and you replied that the City could not afford to sell the Marina.

What changed?

Mark Tomes
Trusted Member
Mark Tomes(@mtomes)
1 month ago

It seems at the very least that those who are not paying city taxes should not get the subsidy; i.e., nonresident slip holders should pay the full amount it costs for that slip.

alano
Trusted Member
alano(@alano)
1 month ago

I can’t imagine anyone would want to buy an albatross so I don’t think selling it would be an option. I think they should investigate moving the marina north and, if it is feasible, seek a private party to build and operate it under a land lease from the city.

Rick Abernathy
Member
Rick Abernathy(@rick-abernathy)
1 month ago
Reply to  alano

Our City has no business trying to own and operate a Marina. When you are losing money year after year, cut your losses and sell. In other words as we traders would say, you have a risk factor and at some time, you have to bite the bullet and stop out, if it continues to be a losing deal. Especially if it is not your own money. Just my tax payer opinion, which is what I told Chip in May of 2020.

Bob Reisner
Bob Reisner(@bobreisner_2)
1 month ago

Should the citizens of Fernandina Beach support the forever money losing boat marina?

NO! The Fernandina marina is NOT something that even 1% of the Fernandina citizens use. Yet we pay 100% of the cost. What is it that we need and what should we pay?

The downtown and the people of Fernandina do benefit from a nice waterfront view that includes some boats. We don’t need a full service marina, a boat launch or parking for boats in or out of water. We need transient docking for big boats that make the view interesting. Maybe some space for charter traffic. This marina space benefits the downtown business community, on and off island county residents and, of course, tourists.

We need to scale back the marina to the minimal core that can be sustained for modest losses. Losses that include minimal dredging of the outer docks (and nothing for the inner dock). Then we need to have all the stakeholders in the marina pay their fair share. The stakeholders are the city residents, county residents, downtown businesses, and the tourists that visit.

Simply put, each of these groups should pay 25%. And if they don’t, then the marina really isn’t needed. The marina is only one of quite a few things that the citizens of Fernandina support for the primary benefit of others. We need the same discussion about the $25 million bond issue for downtown improvements (https://bit.ly/FBbondissue).

DennisJay
Active Member
DennisJay(@dennisjay)
1 month ago

FHM was my home port for several years until I got priced out. I’ve never read a good answer to this question: Why is it there are cities up and down the east coast that own financially successful marinas while Fernandina struggles year after year? Almost all of those marinas also have lower slip rates.