Submitted by Suanne Z. Thamm
Reporter – News Analyst
May 31, 2018 8:31 a.m.
On May 30, 2018, Fernandina Beach Mayor John Miller posted this message to city commissioners from City Manager Dale Martin on Facebook:
Based upon discussions with others today, it appears that the USACE Sec 408 review for the proposed repairs of the southern attenuator will be completed and the associated permit issued in sufficient time for the City to continue the originally proposed sequence of repairs: receive bids by Jun 25 and present a recommended award to the City Commission on Jul 17. It appears as if the current Coast Guard review (as part of the final permit to be issued) is not related to the City’s fueling operations but rather, as is the case with the USACE, the proximity to the federal navigational channel.
I have a teleconference scheduled with FEMA officials tomorrow to review the status of the City’s recovery effort and advise those officials of the expected USACE actions.
I will keep you informed of additional developments.
The city recently qualified three firms to bid on the design build project to repair the marina’s south attenuator. Those bids are due back to the city by June 25.
The city also recently issued RFP 18-13, seeking proposals from qualified financial institutions to provide a bank qualified, tax-exempt non-revolving line of credit (the “Loan”, “Line”, or “Note”) in the amount of $6.6M, at the lowest overall borrowing cost, pursuant to certain conditions. Responses are due back to the city by June 20, 2018.
According to the RFP, “Proceeds of the Line, along with other available funds, will be used primarily for the repair and replacement of the City owned Marina damaged as a result of Hurricane Matthew and other improvements to the Marina. The total project cost is estimated to be approximately $8 million. The City currently anticipates that a large portion of the overall project cost will be funded through federal and state sources, and the Loan will provide an interim funding mechanism prior to the reimbursement from these federal and state sources; however, the City cannot provide any assurance as to the amount, if any, or timing of any moneys from federal or state sources. In addition, a portion of the project cost is anticipated to be funded from non-ad valorem revenues of the City.
“The Loan will be payable from reimbursements from Federal Emergency Management Agency (“FEMA”) Public Assistance Grant Program and the State of Florida Division of Emergency Management for up to 87.5% of the cost of the covered repairs to the marina damage from Hurricane Matthew and well as a covenant to budget and appropriate legally available non-ad valorem revenues in an amount sufficient to pay the principal and interest on the Loan. Such covenant to budget and appropriate pledge shall not prohibit the City from pledging such non-ad valorem revenues, or any portion thereof, to secure other debt issued in the future or from issuing future additional debt payable from a covenant to budget and appropriate pledge from legally available non-ad valorem revenues of the City. The Loan will not be secured by a debt service reserve fund.”
An item that could be covered with such a loan outside the scope of FEMA funding might be additional dredging of the south marina basin.
Another concern to local boaters has been the delay in restoring fueling and pump out services in the marina. These services have not been available since Hurricane Matthew paid the city a visit in October 2016. Item 7.4 on the Fernandina Beach City Commission (FBCC) Agenda for the June 5, 2018 Regular Meeting also relates to the city marina. Proposed Resolution 2018-79 would direct the City Manager to proceed immediately with repairs at the City Marina irrespective of related U.S. Army Corps of Engineer permits with respect to repairing the northern attenuator to provide services such as fueling and pump out operations.
While the City has completed minor repairs to the northern attenuator, U.S. Army Corps of Engineers (USACE) staff contends that a permit should have been sought for those repairs. The City Commission indicated that the City should submit a permit application “after the fact” to satisfy the USACE concerns. Previous FBCC discussion was that said application would be submitted following the anticipated review and approval by the USACE for the southern attenuator permit.
The Fernandina Beach City Commission will meet on June 5, 2018 at 6:00 p.m. in City Hall Commission Chambers at 204 Ash Street, Fernandina Beach, FL 32034.
Editor’s Note: Suanne Z. Thamm is a native of Chautauqua County, NY, who moved to Fernandina Beach from Alexandria,VA, in 1994. As a long time city resident and city watcher, she provides interesting insight into the many issues that impact our city. We are grateful for Suanne’s many contributions to the Fernandina Observer.
Is the city marina truly an asset in a financial meaning? Does it “meet debts, commitments”?
Definition — property owned by a person or company, regarded as having value and available to meet debts, commitments, or legacies.
Richard,
I don’t think you can apply the strict financial definition of “asset” to government owned property if you are looking at only revenue to meet expenses. Under such a strict definition the city’s parks don’t qualify as assets since they don’t generate revenues sufficient to cover their costs, but most would say our parks are some of the city’s greatest assets. However, the marina could be considered at financial legacy. Investopedia definition:”A legacy asset is an asset that has been on the company’s books for a long period of time. A legacy asset has generally decreased in value to the point of a loss for the company.”
The designation of the marina as an enterprise fund is arbitrary and done to isolated its revenue and expenses from the general operating fund of the city (as is done with the airport, golf course and utilities). There is nothing from an accounting standpoint to prevent the city from removing the marina as an enterprise fund and make it part of the city’s parks and recreation department; however, politically, I think that is unlikely to happen.
Correct. Please note my question was prefaced with the limit to financial purposes only and to elicit discussion and clarity which you have provided. Additional thoughtful input from readers will be helpful.
People value waterfront property more than any other. Waterfront property has far more potential to generate revenue to the city and help cover costs of the operations of the asset than a legacy asset such as the city park on Atlantic. The question for the city is “Can the desired results be achieved via private ownership more effectively than via city ownership?’ A sale would need to require a private operation to meet the desired benefits to downtown merchants and, serve the local and visiting boaters, charter fishing, etc. A reverter clause in a sales contract might be possible as insurance that the property would “revert” to the city in case of a failure of a buyer to perform. The existence of a bona fide offer to buy is an indicator that someone believes in this concept. When the offer is received the Commissioners will be able to consider the risks versus the possible benefits. Those benefits could include cash which can be applied elsewhere as needed ( other waterfront improvement / CRA) , and elimination of unpredictable and very expensive maintenance and repairs. Let’s rely on the commissioners’ to give careful study to the offer.
Gee Richard, I think you’ve got the City Marina confused with the Port of Fernandina.
Please see my reply to Mr. Lott.
I like what Dave Lott said..removing the marina as an enterprise fund & making it part of the city’s Parks & Recreation department…….enough talk already, action!!
Beneficial to this discussion would be a review of the City’s Audited Financial Statements from 2012 to 2016 with focus on the Marina Enterprise Fund. The information is public and can be easily accessed on the City’s website. The reporting periods are not calendar year-ends (12/30) but are government fiscal year-ends (9/30).
Prior to damage created by Hurricane Matthew (Fernandina Beach impact date: October 7, 2016), the Marina was reporting consistent annual revenue averaging $2.2 Million. Operating Income and Operating Cash Flow were also positive. Operating Cash Flow is the cashflow from day-to-day operations (“reoccurring”) available for paying principal and interest (“Debt-Service”) and maintain the infrastructure of the Marina.
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Despite being positive, the Operating Cash Flow has been inadequate to pay Bond Debt (principal & interest) and maintain infrastructure. To meet its debt obligations, the Marina Enterprise Fund has relied on advances and loans from the General Fund and Water & Sewer Fund. The cost of maintaining the Marina, primarily the need for dredging, has never been formally addressed.
Ideally, the goal should be to increase Marina Operating Cash Flow to enable it to be a self-sufficient operation no longer dependent on advances and loans from the General Fund and Water & Sewer Fund to maintain its infrastructure and repay its $3.5 million of Bond Debt. The bi-yearly cost of dredging will always be a factor.
Currently, the financial status of the Marina is neither a candidate for privatization nor an opportunity for Parks & Rec management.