Commentary: Does This City Want to Lose $500,000 a Year on its Marina?

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 cross@fbfl.org.