October 2012 - Association of Marina Industries

Industry News Continued from Page 6
said the fee increases are likely to put many operators out of
business and could change the character of the harbor.
Business owner Russ Fluter said marina owners have no
choice but to pass on the rent increases to their customers,
who may then go elsewhere.
“This is going to hurt property values on the harbor,” he
said. “It’s a serious mistake.”
The business owners could still opt for an annual permit with
the same rental terms as a long-term lease. The increases will
become effective in 2015 and will be phased in through 2020.
The rent increases come in the wake of the city’s tripling
of mooring fees in 2010. City Manager Dave Kiff said this
fee raise is necessary to ensure that the city is charging fair
market rates for public tideland uses.
Tuesday’s vote applies only to large commercial marinas.
The council is expected to set the rental rates for other commercial
operations such as yacht clubs, shipyards, sport
fishing charters, small commercial marinas and nonprofits
in future meetings.
Jim Mahoney, a 28-year business owner, said a number of
small businesses such as restaurants, fuel docks and boat
operators that have built their livelihoods around the harbor
will suffer because of these increases.
Daigle said she did not support the rate increases because she
would like to take a comprehensive look at the issue, including
more economic studies to assess the effect on area businesses.
“I’m concerned by the level of confrontation (this issue)
has led to in our city,” she said.
Plan Ahead for Your Marina’s Future
Funding Needs
The topic of replacement cost is a subject I wrote on several
years ago; however, I think it’s an important topic for
marina owners and one worth revisiting. Whether you’ve
recently completed a total rebuild of your marina or are beginning
to realize that the life of your current docks is finite,
taking a good look at the future replacement cost is an exercise
worth doing. It makes good business sense and will help
you better plan and prepare for the future of your marina.
The question for many marina owners is “what will it cost
to replace our docks in ‘x’ number of years and how will we
fund it?”
Although there are a number of variables that will affect
the answer to this question, the heart of the question can be
answered by calculating the time value of money and the
future cost of a marina rebuild.
Here is a list of the variables that you’ll need in order to
make a reasonable estimate.
1. Cost to rebuild your marina today: An experienced
dock builder such as Bellingham Marine can give you an
estimate of the current cost to build the dock system you
have envisioned for your marina in the future. For funding
purposes, plan to have at least 30% of that cost available
for your down payment. Most commercial 20 year loans
require 25% to 30% down.
2. Annual increase in cost of construction: while this can
never be predicted exactly, an experienced accounting firm
in your area should be able to provide a rate at which you
can expect the cost of construction to increase each year.
This will give you a safe number to work with.
Gardner said that although she understands the need for a
rent increase, she cannot support such a steep rate rise.
Councilman Rush Hill, who proposed the two-year coolingoff
period before the increase kicks in, said the city should
protect its small businesses during these tough times.
“I think this is the right thing to do, but the wrong time to
do it,” he said.
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3. Interest rate of investment account: If you don’t have a
feel for this, you may want to consult with your banker or a
local investment firm.
4. Useful life of existing dock system: Modern concrete
floating docks are estimated to have a useful life of 35 to
50 years. Lightweight dock systems, such as timber, aluminum
and steel typically have a life of 20 to 30 years. If
you have an existing system and need help estimating its
remaining useful life, there are a number of professionals
in the marina industry that can help you come up with a
reasonable estimate.
Industry News Continued on Page 8