By Chip Ross
Ten years ago, when former Commissioner Pat Gass asked when the city marina would be self-supporting, then-marina manager Joe Springer quickly replied, “Never.” I now believe Joe Springer.
In a 2020 opinion article, I stated that “if the FEMA appeal succeeds, the new marina is properly managed, and the debt is managed with favorable interest rates, the marina could go into the black for the first time in years.”
The FEMA appeal succeeded. FEMA reimbursed approximately 87% of the cost of rebuilding the marina damages caused by Hurricane Matthew. A new management team was hired that is competently managing the marina. The city also eliminated some of the debt it carried before Hurricane Matthew and refinanced the remaining marina debt. Transient and long-term rentals are at market rate. The waiting list for slips exceeds 50 slips. Fuel sales have been robust. No significant revenue sources are available other than further raising slip fees.
In 2022 the marina produced enough revenue to cover its operating expenses and its hurricane insurance. No dredging was done. Money was transferred from the general fund to pay the debt.
Why is the marina not in the “black”? The short answer is hurricane insurance, pre-hurricane Matthew debt, needed capital improvements, and dredging. Let’s take those issues one at a time.
Hurricane insurance: Before Hurricane Matthew, the city did not insure the marina docks. Fortunately, FEMA eventually paid for a substantial portion of the Hurricane Matthew damage. However, it is highly unlikely that FEMA will pay a second time. In 2021 the cost of hurricane insurance was $362,000. In 2022 the cost was $402,000. It is predicted that cost may increase as much as 30% when the insurance is renewed this summer.
Cost of residual debt: Before Hurricane Matthew, the financing of the marina consisted of a capital improvement note of approximately $2.6 million, an account payable to the utility fund of $2.3 million, and another utility fund loan of $1.3 million. To rebuild the storm damage from Hurricane Matthew, dredge the marina, and reposition the docks to decrease dredging costs and increase revenue, the city established credit lines for approximately $8 million. Subsequently, FEMA reimbursed approximately 87% of the hurricane damages. The city wrote off the money transferred from the utility fund, renegotiated the interest rates on the remaining debt, and paid off the credit lines. Currently, the remaining debt is approximately $4.3 million – $3.2 million at 2.45%, which will be paid off in 2029, and another $1.1 million at 1.48%, which will be paid off in 2030. In total, the city taxpayers will continue to pay approximately $725,000 per year for the next 6 years in principal and interest to pay off the marina debt.
Capital improvements: Despite the rebuild of the marina itself, much still needs to be done to bring the marina into good repair. Presently, the approximately 20-year-old antiquated restrooms flood. Replacement costs will likely exceed $700,000. The boardwalk decking in front of Parking lot B and connecting the docks to the uplands need replacement. The likely cost exceeds $400,000.
Dredging: The marina has experienced sedimentation issues since the marina’s original construction more than 50 years ago. Sedimentation occurs when eroded soil, transported by the river, settles out of the water onto the river bottom. As the sediment accumulates, the water depth decreases and the marina becomes unusable. Dredging removes the accumulated sediment and transports the material to a distant spoil site.
The recent reconfiguration of the docks improved the speed of the water flow in the marina basin but maintenance dredging is still required. For the marina to remain usable, the estimate is that dredging will need to occur in the spring of 2024 and then every 2-3 years after. The estimate is that 20,000 to 22,000 cubic yards of material will need to be removed. The cost will probably be between $40 to $60 per cubic yard, or between $800,000 to $1.3 million.
The city recently commissioned ATM Engineering to analyze the dredging problem and offer possible solutions. To summarize the findings of the 47-page report; “in its current location, regardless of any practical alternatives implemented, the facility, especially the southern basin will always experience some sedimentation and it may continue to be severe.”
In layman’s terms, no matter what you do, because of the location of the marina, it will continue to require dredging. Some modifications may make dredging less frequent, but dredging will be needed for the foreseeable future.
The ATM report also suggested that the best course of action would be to relocate marina dockage to naturally occurring deep areas north of the current location and abandon the current southern slips. No mention was made of the magnitude of the cost or the effect on revenue.
In the next budget (2023/2024) there will need to be money to pay for dredging (between $800,000 and $1.3 million) that is not in this year’s budget. The city will likely receive between $250,000 and $450,000 in grant money from the Florida Inland Navigation District (FIND) to offset dredging costs.
For the foreseeable future, the marina expenses, which include dredging, hurricane insurance, debt payments, and capital costs will exceed revenues. The additional amount is unclear, but it probably exceeds $500,000 per year and will likely increase with the escalating cost of hurricane insurance, dredging, and inflation.
It would appear it is highly unlikely that the marina in the foreseeable future will be in the black. With that in mind, should the City Commission continue to fund the increasing financial burden of the marina with general fund dollars similar to other recreational amenities, or make a serious effort to sell the marina?
I can be reached at [email protected]
Commissioner Ross is right to ask if the city of Fernandina Beach should be in the marina business. Had this been asked 20-30 years ago, with the data we have now, the answer would have been “no”.
And today the answer remains “no”, but as his essay describes it – and by all of the competing concepts about what the city should do with the marina – it appears we are bound by a Gordian knot.
All of this would need to be determined in a very iron-clad manner before putting this property on the market. All options should be explored. The topic of our marina is back at the top of the list, with the resurfacing of Bob Allison’s well-thought-out proposal regarding the marina and waterfront. (And the resultant debate about it.) It seems important to keep the discussion going, rigorously.
The bottomline is that the city of Fernandina Beach needs to make a big decision here. Can the city package an attractive proposition for a buyer, in a manner which also serves the needs of its citizens? If so, this should be explored and hopefully in a transparent way. If not, the city should consider Mr. Allison’s proposal (which may also be attractive to an investor in such a scenario?). It is the only thorough plan that is publicly known, and as he attests in his recent writings it is just
that – a proposal. Meant to spark discussion and be made better by debate and counter-proposal.
Absent a bold move, Fernandina Beach taxpayers are on the hook to subsidize this marina forever. Whether that is good or bad is in the eye of the beholder.
As I have told him, kudos to Bob Allison for his creativity in his marina plan strawman. However, Bob’s plan provides answers to many of the questions you pose. 67,000+ square feet of new commercial building spread throughout Lots A-D, a $20-$25+ million dollar cost upfront for the seawall to reclaim submerged land. I’m not sure private investors are willing to make such an investment on such a vision in these days and times, but to be possible the city would have to essentially abdicate any control of the land and depend on the developers for any greenspace/park that they leave.
Dave, the City has absolutely got to approve anything that happens on this critical public waterfront. This is why I believe its sale would be the worst possible outcome. I am curious….where did you get your figure of $20-$25 million to build the seawall?
Dave, I just re-checked my numbers and research on this. 900 feet times $2000. per foot equals $1.8 million and not $20-$25+ million. Yes, there is the cost of fill but if you double the cost to $4000. per foot to account for the cost of fill dirt this is still not twice the cost of the South Shore Stabilization project and which do you think has the potential to most impact the future of the City’s waterfront?
If all of Commisioner Ross’ assumptions are correct then no one would purchase the marina from the City. The City doesn’t need to make a profit but private industry does. The marina was placed in the wrong spot to begin with but city fathers, at that time, wanted it to be at the end of Centre Street. It should have been placed north, in naturally deep water. The City and it’s citizens need to make a decision; is the marina worth the cost to have a city marina with the view of sunsets, view of boats, and a nice walking area or will we allow some degree of commercialization to the area in order to subsidize the of cost of the marina. So far everyone wants everything without paying for it. The marina only makes money on boat slips and fuel there is no way that will ever support the marina.
This seems like a realistic analysis. I do not know what the best option is,but expecting the marina to be revenue/cost neutral to the city seems overly optimistic.
While being limited of knowledge regarding previous decisions and reasoning, my only comment would be cut the liability of the marina and golf course. Tax payers should not be on the hook for those who choose recreational activities, if they are not self sustainable.
Thank you Commissioner Ross for your thorough and thought-provoking article about the marina. Time for all of us, importantly our entire city commission, to do an equally thoughtful and thorough cost/benefit analysis in order make an informed decision.
Why not explore an operating lease to run the Marina versus an outright sale of the business. The current business model for the City to run the Marina at a deficit with a limited income stream is not sustainable. Its time for a new game plan.
The City previously explored the leasing option. There were no interested parties.
As I have stated before, the City needs to re-evaluate the ATM reconfiguration plan and do a new financial analysis. There may be some elements such as acquisition of riparian rights and Amelia River channel realignment that are simply too big to overcome. If so, case closed and decision to either continue operating at a deficit or close it down in concert with the demolition of Brett’s at the end of their lease. If doable and financially viable, then start working on an implementation plan.
I have had my boat at the marina seasonally Since 2010. It seems like the dredging is the real cost that can never be surmounted. Wondering if anyone has run the numbers with this scenario…..You don’t ever dredge again. Remember debt payoff is only 6 years away. You continue to rent all dock space regardless of water depth until no one will pay for those spots anymore. I will have you know I paid for space for years where I was unable to move the boat 50% of the time. As docks become completely unusable you sell those. In the end probably in 6 years. You will be left with just the face dock. Having been there a long time it is my belief that you will not have to dredge the front of the face dock and I am pretty sure the back side, while getting shallower will be able to accommodate enough water for shallow draft craft. Hence that side will still generate money from people like me. You also get to keep the fuel dock. You could even reduce the bathrooms. You don’t need a team of people to run a single dock get a couple town employees to do it. Just a thought.
It seems we should invest our millions to the north and let nature take its course to the south. Otherwise we are putting money into a sinking ship. Let’s also consider the broader impact to the local economy. If the boaters are spending a boat load of money at restaurants, hotels, etc., then we must consider whether this offsets the loss at the marina.
The marina finances seem obvious. There is little chance that the city will be able to turn it into a moneymaker for all the reasons describe above. The factor that I don’t really hear people mentioning is the intangible value of the marina. Who hasn’t admired it at sunset, or after a walk down Center from the Saturday farmer’s market. Is it worth all the debt, for us to smile at its attraction? Probably not, but Fernandina Beach and Amelia Island has a reputation for being quaint, beautiful, romantic, and more. The Marina is part of the tourist attraction of the city and the island as a whole. I can’t quantify that intangible value but someone who understands these things better than I do might tell us what it’s absence would do to tourism on the island and indeed the county.
So my point is, if it needs money to be maintained, then the maybe Amelia Island Tourist Development Council and the County should consider at contributing to its maintenance. I am sure that they would get a more positive reaction to contribution towards the marina’s maintenance than they have received for their Beach Harmonization plan.
Gentlemen, the good news is there is a solution to the woes of the City’s marina, but it is necessary, for a moment, to think outside the box. Take a few minutes to read the Waterfront Report and Land Use Plan I provided to the City back in 2017. It is available on a link posted by the NewsLeader in their Community Links Section at http://www.FBNewsLeader.com
The existing bulkheads at the marina are old, worn out and failing. They require replacement but they do not have to be replaced at their current locations. If they are replaced at the edge of the current marina and fill is placed behind them, new land can be created where now there is only stinking mud. Yes, a small patch of Spartina marsh grass will have to forfeited but this can be mitigated. Several acres of new land can be added to the City’s waterfront to be used primarily for the largest tree lined waterfront park on the U.S. East Coast alongside the Intracoastal Waterway. A small portion of this new land surrounding the park can be ground leased for commercial uses generating substantial new revenues to the City to begin reducing the marina’s debt and to pay for future dredging. The locations of new buildings can provide important visual and sound buffers to neutralize the industrial influence of the railroad on the new park. This is a winning idea for the City, its marina and its taxpayers. Read the Report and decide for yourself.
Mr. Allison, they are too arrogant to listen to reason. Obviously they’d rather spend money on outside entities that don’t know his area to tell them how to “develop” this area rather than the person who has been here forever and actually CREATED IT. I read your 41 page proposal from 2017 and it it was beyond thorough. It’s disheartening that the people in “power” would rather toot their own horn than actually do anything for the public they were elected to serve.
Back when my husband was on the Commission, he mentioned selling the marina and was about run out of town! When people were saying that no one would buy the marina, he told those in control that Laure DiBella, then working locally, had a buyer! But NO, this was a terrible idea! It is beyond my understanding why some think it is in our best interest to keep an “asset” that is bleeding us dry? I understand that it is part of our history, but our city is in a financial mess and needs our attention. Just as when you have a car you love but it continues to break down and costs you more than it’s worth, it’s time to give it up and move on.