Council Faces Reality Check on Downtown Boat Slips
By Carl Wagenfohr
CLEARWATER The January 31st deadline for receiving applications and $500 deposits has now passed, and the hoped-for last minute rush of applicants for the city's downtown slip selection lottery has failed to materialize.
A total of 10 applications have been received for the facility's 126 slips, and the gala event that had been planned at the Harborview Center could now easily be contained in the beach marina's conference room.
Coupled with the recent 35-percent vacancy rate of recreational slips at Municipal Marina on Clearwater Beach, the weak demand for the downtown slips has caused the City Council to recognize as true what Councilmember Paul Gibson has said all along the downtown boat slip project, as currently structured, will be a money loser at least in its early years.
I think it's fair to say we're going to have a lot of empty slips, Gibson said at Monday's Council work session. Gibson had recently suggested that the project be delayed, but received no support from his colleagues. It's clear to me that this is going to get built... what I would like to talk about is how we're going to fund it, he said.
Gibson suggested using Penny for Pinellas funds to buy-down the facility's $9-million debt, reducing operating expenses to be in line with revenues. If we don't do that, every dollar that's coming out of our pockets to run the downtown boat slips is going to come out of the General Fund, he said. Voters who approved the project in 2007 had been promised that downtown boat slips would be self funding, not requiring any tax dollars.
Gibson also proposed reducing the facility's $15.50 per foot per month slip rate. It's clear the rates are out of whack, Gibson said, I'd rather have a marina full at nine bucks than have ten people at $15.50. I think we need to seriously consider what is the right rent to charge that brings supply and demand into equilibrium.
I completely agree with that, said Mayor Frank Hibbard, a self-described 'champion' of the project. When we were pushing for this, obviously, nobody anticipated us having an economy like we have today, he said.
Hibbard said that he would have been willing to delay construction because of the poor economy. But because of the city's sunk-cost and likely loss of a grant that partially-funds the project, he said, I believe we ought to go forward.
I don't have any problem with using Penny dollars to buy-down the debt, Hibbard added, agreeing with Gibson's proposal.
This week, the Gazette performed a 'what-if' analysis assuming a slip rent rate of $9 per foot and an occupancy rate of 65-percent, both figures representative of current Municipal Marina operation; the city's original business plan assumptions were $15.50 per foot and 100-percent occupancy. Recreational slip revenue would be slashed by 62-percent , and a $250-thousand profit forecast in 2012 would become a $355-thousand loss.
We also calculated that between $4 and $5-million of debt would have to be bought-down in order for the facility to break even using those assumptions. But with a shrinking forecast of Penny III revenue and projects already being cut, the substitution of marina debt buy-down for taxpayer-requested improvements to libraries and recreation centers will likely prove to be unpopular with residents who were promised that the downtown marina would not need taxpayer support.
The Council delayed making a decision on rates and debt buy-down until after its February 19th meeting, when it will be presented with a revised business plan for the Municipal Marina on Clearwater Beach. That facility suffered an operating loss last quarter due, in part, to a shortfall in slip revenue. Rates were increased sharply last October, resulting in a 35-percent vacancy in the marina's recreational slips.
Revised assumptions for the downtown marina, including possible debt buy-down, will come at a later date according to Margie Simmons, the city's Finance Director. Meanwhile, the Gazette invites you to participate in our online opinion poll concerning Penny III projects, including the proposed buy-down of downtown marina debt.
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