Submitted by Suanne Z. Thamm
Reporter – News Analyst
June 23, 2020
This summer the City of Fernandina Beach may decide to switch to a new marina operator: Oasis Marinas.
On March 10, 2020, the City of Fernandina Beach issued RFP 2020-02, inviting bids from parties interested in managing and/or leasing City Marina facilities. By the April 30, 2020 response deadline, the City had received five bids. Westrec, the City’s current Marina Operator, did not respond, because it continues under contract with the city unless otherwise notified.
City Manager Dale Martin, based upon an outside financial evaluation of the bids and the Westrec agreement, will apparently recommend awarding a new contract to Oasis Marinas at the July 21, 2020 Fernandina Beach City Commission (FBCC) meeting, thereby parting ways with Westrec, the current marina operations manager.
RFP 2020-02
In their RFP the City wrote:
“Due to the storm effects of Hurricane Matthew (October, 2016), the Marina was effectively out of operation for over three years, only recently re-opening to permanent and transient vessels. The entire southern basin of the Marina has been dredged and reconfigured, with approximately 1,500’ of internal side-tie dockage. The southern attenuator has been replaced with heavier dock sections and provides approximately 1,600’ of side-tie dockage. Utility services (electric, water, fire suppression) have been replaced and upgraded. The northern attenuator (approximately 300’ long) will be replaced with structures and services to match the southern attenuator, as well as restore fuel services (construction anticipated to be completed within six months). In addition to the Marina’s docking capabilities, other amenities include a small check- in structure (which includes a small ship store), a mooring field (currently being rehabilitated) and associated dinghy docks, and a boater’s facility (lounge, restrooms, showers, and laundry).
“The City currently has an operating agreement with Westrec Marinas (copy attached) to manage marina operations. Although the relationship between the City and Westrec remains viable, it has been several years since the agreement has been reviewed, and with the recent renovations, the City Commission believes it is an appropriate time to examine and clarify financial and operational components of the Marina.”
Stantec evaluation
Upon receipt of the bids, City Manager Dale Martin forwarded them to Stantec, Inc., along with Westrec’s contract, for evaluation. Stantec has been working with the city for almost a year to devise plans for eliminating debt and returning profitability to both the City Marina and the City Golf Course.
Stantec concluded that the bid submitted by Oasis Marinas, based in Annapolis, MD, was in the best financial interest of the City Marina. Oasis currently manages or operates 29 marinas along the Atlantic coast (including Florida) and the Great Lakes:
MAB listens to Oasis presentation
The Oasis management team, led by Brian Arnold, appeared before the City’s Marina Advisory Board (MAB) on June 22, 2020 to introduce their company and explain their offerings. They presented a track record of turning around financially challenged marinas and creating a brand of top drawer service to boaters.
Arnold emphasized that Oasis approaches marina management from a hospitality perspective: transient boaters want to be treated specially, and he said Oasis works hard to achieve that through concierge service, booking services and other amenities that cause boaters to seek out their marinas. He also stressed that they are a metrics based company. “We don’t win unless the marina owner wins,” he said. Arnold added that 75 percent of their managers are groomed within the company, where extensive training is provided.
In response to MAB questions, Arnold said that no current slip owners would be evicted, and the mix of local and transient slips would be maintained. He opined that the fees charged to transient boaters were “soft.” He explained that Oasis showed lower operating costs due to economies of scale.
Members of the Marina Advisory Board appeared impressed by Oasis, but also seemed confused that they were only seeing one of the 5 bidders’ presentations. They appeared especially gratified that Oasis was approaching marina management from a hospitality perspective. Members suggested that both the MAB and Oasis needed to cultivate a strong working relationship with the Tourist Development Council (TDC).
Commissioner Mike Lednovich, who along with City Commissioners Philip Chapman and Chip Ross also attended the meeting, advised that based upon the financial evaluation provided by Stantec, the City Manager would be recommending making an award to Oasis at the July 21, 2020 Fernandina Beach City Commission Meeting. MAB members and the public will have an opportunity to weigh in with the FBCC on the bid award at that time.
Some MAB members expressed concern that Westrec would not be given an additional year to perform on their current operating agreement, since the marina will only return to full operations this summer. But other MAB members expressed disappointment that Westrec had not “sharpened its pencil” to make themselves more competitive going forward.
Even MAB members who supported continuing with Westrec for another year agreed that it is in the best interests of the City and its taxpayers to periodically survey the market to insure that the City is receiving the best product at the best price.
In a letter to City Manager Dale Martin dated June 17, 2020, Westrec VP Jim Frye thanked Martin for the opportunity to assist in evaluating the marina management options. He wrote:
“Westrec’s position remains the same as previously communicated; we are happy to continue under the terms of our current Management Agreement. We have an experienced team in place at the marina and can continue managing the marina without the interruption of a transition. We were sidelined briefly when the City hired a Project Manager to manage the marina reconstruction but as the marina has been completed and turned back to us we are off to a very strong start, especially given the extraordinary challenges presented by the ongoing COVID 19 pandemic.”
Hmmm, where is the skin in the game for Oasis? It is one thing to project better revenues and less expenses, but what happens if they fail to meet those numbers? Appears to be change for the sake of change and a penalty to Westrec for not agreeing to lowering their fees, although Oasis has the second highest management fees of all the respondents. Do the MAB members forget about all the efforts of Westrec to get various boating groups to include FB as a destination for their annual cruises?
Time will tell.
As a lifelong Fernandina resident and sailboat owner, I would NOT be in favor of changing Marina Management “for the sake of change and pretty numbers”. The current Marina Management – and all of its personnel – have a years’-long reputation for genuinely exceptional customer service; the kind of “neighborhood friendliness” that Fernandina is nationally recognized for, specifically meaning/referencing those “familiar faces”, so long seen again, and again boaters as they annually migrate south then back north. A new company coming in… will be obligated to take an “Sorry, it’s just business… just Policy…” attitude about procedures and expenses to scrimp and save pennies to *attempt* to meet their projected numbers.
Commissioners: Sometimes, “you don’t know what you’ve got ’til it’s gone”; I ask you NOT to be penny-wise and pound-foolish.
Thank you, Jack Daniels III
Such a noble routine:
Don’t know if there are incentives in Westrec’s current contract to meet income goals, but there should be. I think Westrec has done a good job. I’ve stayed in several of Oasis’s marinas over the years and am familiar with the quality service they provide. They seem to have the talent and experience to do the same here. However, I hope the city does its due diligence in talking with others that have contracted with Oasis and plans to visit some of their marina properties. Would also be good to review their marketing plans for their marinas. This is a big decision that will impact city taxpayers.
Let’s hope the City is not using future revenue income “projections” that are overly optimistic and untested, and urge the City to run the marina for 6 months with Westrec to establish a reliable run-rate. This is for the last half of calendar 2020 – and with the proposed “full opening” WITH A GAS DOCK we will see what warm summer boating months plus one 3-day holiday (Labor Day) – plus the months going into the annual Fall/Winter N/S boat migration – do produce. THEN, City can decide to replace Westrec or keep them based on this test period. This seems fair to all bidders as well. And, if the fuel revenues are better than in these proposals, the City is in a stronger position to negotiate a service contract.
And Oasis projects they will realize a 43% markup on fuel sales while everyone else is consistently 28 – 29%. It would be interesting to hear Oasis’ rationale as to why they believe they can achieve such an increase.
Additionally, their operating expense figure is 22% below the next lowest bid (Mobius) and 27% below Westrec. With personnel costs the biggest component of operating expenses how exactly will Oasis utilize “economies of scale” to achieve those results and still deliver “top drawer service”?
Bid information can be found in the MAB’s meeting packet at: https://fernandinabeachfl.civicclerk.com/web/UserControls/DocPreview.aspx?p=1&aoid=1773
For the financial analysis, it is important to understand the caveats that Stantec placed on their analysis of the bids in their conclusion (misspellings corrected by me):
“As the City interprets the proposals, it is worth considering the differences among the proposals and evaluating the ability of the firms to achieve the estimated or projected results underlying their proposals. The proposers’ assumptions for differing budgets were not disclosed, and the other proposers’ reliance on the City’s budget should also be considered as the City seeks to rely on the representations in these proposals. If the firms are not able to generate the projected results, the financial implications to the City would differ from the projections shown.
It is also important to note that the Net Income Component of the analysis is based on data that is somewhat speculative in nature. We are unable to validate the underlying assumptions supporting each firm’s proposed revenue and expense budgets and those assumptions have implications for the City. For instance, the Marina’s Slip Rental revenue is a function of total slips available and the fees by City Commissioners, so it is possible that differences in projected Slip Rental revenue between proposers might not be justifiable.
Additionally, the City should weigh the differences in results relative to the Marina’s overall budget. As an example, the difference of the lowest management fee to the highest is only $36k, or approximately 1.2% of the Marina’s total current budget.”
Looking at Oasis’ marina portfolio the FB marina will be a very small fish in a big sea. The vast majority of the marinas under their management are full service marinas (dry storage, boat lifts, engine and boat repair) and some having hotels, campgrounds, RV resorts and restaurants under their management. One of their marinas is part of a $2.5 billion dollar development project. Great to have that experience but what attention will FB get?
Moving forward on July 21 seems premature. The Stantec study only looked at the financial projections. Has there been due diligence in checking their references, or more importantly, looking at marinas in the bidder’s portfolio they didn’t reference or possibly have lost the management contract. Seems like a lot more homework needs to be done before the best decision can be made.