Industry Articles

Industry Articles - 2001

Boat & Motor Dealer, December 2001

Be Prepared for Insurance Premium Hikes
by Mark Yearn

As the end of the year approaches, we look back on an insurance industry that went through rapid changes. Some of these changes were brought on by the industry and its failure to perform in a financially sound manner.

Other changes were brought on by the events of September 11. The dollar loss to the insurance industry from September 11 will take years to determine. As of this writing, the estimates have risen from $40 billion to $70 billion. Whatever the final number, the insurance industry lost 25 percent of its capacity to write business from a single occurrence on a single day. ·

What does this mean for you? Insurance companies are reviewing their portfolios to determine what types of business they are comfortable insuring.

Boat dealers and marina operations have never been an industry the majority of insurance companies have felt comfortable insuring. The availability of insurance for the marine industry was already limited to a small number of insurance companies.

As a result of the events of 2001, there are now fewer insurance companies willing to offer insurance protection to boat dealers and marina operators throughout the United States. ·

Because of this, the law of supply and demand has taken over. There are fewer insurance companies, thus creating a limited supply and an increasing number of businesses looking for insurance protection, thus increasing demand, hence, premiums go up.

As we go forward into 2002 (and probably into 2003), plan on premiums increasing for your insurance protection.

No one can predict the price increase for any given area. The Great Lakes have seen a 15-20 percent increase on average, while Florida has seen a 50-100 percent increase (if coverage is even available.) If you prepare a budget, expect an increase in your existing insurance premiums by 40 percent.

To obtain the best program at the best price, pick a marine insurance specialist to represent you. Let them broker your account to the insurance industry and give them your full support. Allow them plenty of time to market your account to available markets.

Most importantly, provide your broker with all the information he requests. You will wonder what bearing a lot of it has on the pricing of your insurance; however without it, your price will be higher.

Assist your broker by providing him with full details of your operation, including pictures, financials, and a history of your successes and failures.

By working together, you can overcome the current state of the insurance industry and obtain the proper coverage for a fair premium.

Mark Yearn is a marine insurance specialist exclusive to Marine Insurance Services based in Milford, Mich. He can be reached via e-mail at: This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

Boat & Motor Dealer, December 2001

Financial Trends in Marinas—A Personal Observation
by Dennis P. Kissman

I was recently asked my opinion about the financial trends taking place in marinas and what we can look forward to in the coming months. As we all know, comparable information on marinas to establish trends is nearly impossible to obtain and when we can get it we are suspicious as to its source and accuracy. With this in mind, let me say that my comments and conclusions are based strictly on my observations from working in this industry. The degree to which a particular marina may be affected by these trends varies as much as the marinas themselves. ·

REFINANCING

There are two areas that I believe will have the greatest impact on this industry in the next few years and maybe well beyond. First, I am aware of more than 30 marinas (and I am sure there are plenty more) where mortgages with balloon payment balances will be coming due within the next 36 months. All of these marinas will require refinancing. This does not sound like a very large number, but in the world of marinas this is enough to impact the entire industry in the United States.

As of the moment, I am not aware of any lenders out there that really understand marinas and are eager to finance marinas on decent terms. Unless this industry has another Harry Neiman backed by a NationsCredit/Bank of America who took the time to understand marinas, I see possible trouble in financing marinas in the future. I do not mean that this was the only source for marina loans, but it became the authoritative source that other lenders looked to when considering the financing of a marina. As of now that source does not exist. ·

INSURANCE COVERAGE

The second greatest impact I see this industry facing is the ability to secure proper insurance coverage at an affordable price. In some instances it just is not available at any cost. I know of some marinas in the Southeast United States and Caribbean that have had their property insurance premiums increase as much as 300 percent this year or have had deductibles increased to the point that it is financially impossible for the marina to self insure for the deductible. This can put a marina owner in a very difficult position because if he has a mortgage, the lender requires minimum insurance coverage to cover the loan balance, or it can be called. ·

INCREASING PROFITS, REDUCING COSTS

Another disturbing fact that I see happening in this industry is the pressure being placed on profits even if we exclude the insurance premium increases. Over the last several years the economy in general prospered. Yet looking back into the history of some marinas, their profits did not increase along with the prospering economy. Now that it appears the economy may be slowing, especially in the recreation industries for the next couple of years, these marinas have nothing to fall back on because they did not take advantage of the good times. ·

There are only two things that have an impact on the profits of a marina. The amount of revenue the marina can generate and the cost to generate that revenue. Both are in the control of the owner. Unfortunately, what often happens is the marina owner is in denial of this fact and oblivious to what is happening around him and thus refuses to take the necessary action either to increase revenues or reduce costs.

Because marinas have a finite amount of space to rent in a given amount of time, it is easy to see what needs to be done to increase revenues. You can do one or more of the following: increase rates, increase occupancy, or implement new sources of revenue around your core business of storing boats.

First, let’s consider increasing rates. For whatever reason, there are a number of marina owners that have befriended their customers in the name of “customer service” and as a result will not raise their rates for fear of offending their friends. Don’t confuse being friendly to customers with providing “customer service.” Granted, they go hand in hand, but being friendly is the way you provide customer service and not customer service itself. Customer service is anticipating and satisfying the needs of your customer in a timely and professional manner. We have come full circle, because if you satisfy your customers now, increased rates can follow. Boaters are very adamant about service they feel they are paying for and not receiving. ·

The second option is to increase occupancy. This may not be an easy option. Given the seasonality of boating, most marinas are full during the prime boating season. To attempt to try to fill your marina in the off-season may be nearly impossible. However, in some of the more popular boating areas in recent years slips are being rented on an extended basis to guarantee a customer a particular slip during the peak boating season. I believe this trend will continue as the number of boats increase in a given area, but this concept will not be widespread. ·

The third option of increasing revenues is to add new profit centers. Overall I have seen little creativity in this area, particularly where a marina has been in the same ownership for a long time. I know I am preaching to the choir on this one, because those of you that keep up with what is happening in the industry through trade periodicals such as this magazine are the owners and operators who are looking for new ways to increase revenues. One of the best sources is learning what others have tried and are willing to share.

The other side of reducing the pressure on profitability is expenses. It is not easy to increase profitability by cutting expenses. Many of the expenses incurred in a marina are not in our control and as a result must be passed along to the consumer. The problem here is that we go back to the first argument as to why rates cannot be increased: befriending your customer. ·

PERSONNEL

There is one area where I see changes and one that is in the control of the marina owner. That is salaries and wages. Owners who take the time to study the job market understand that they compete for quality people who have a choice of careers in a variety of industries. Many marina owners are realizing this fact and paying competitive wages to retain a higher caliber employee. This is a good trend in the industry, but on the flip side, the percentage of payroll and benefits to revenues generated at many of these marinas is increasing. This is not a good trend.

Boat & Motor Dealer, December 2001

International Trends in Development
by Ron Stone

0ne of the tasks of ICOMIA’s Marinas Committee (IMC) is to spot trends in marina development worldwide. (ICOMIA is the International Council of Marine Industry Associations.) This is accomplished at committee meetings by comparing reports of related current events in the several countries represented on the committee, as well as by distillations of magazine and newspaper coverage of marina projects. With representatives of marina interest groups in 28 countries spread across Europe, the United States, Latin America, the Middle East, Southeast Asia, Oceania, and Japan, the committee has an exceptional vantage point. ·

Taken from the IMC’s most recent report, these international trends in marina development are discerned:

DRY STACK GROWTH

As a result of a trend toward ever-larger, sea-going pleasure yachts, stimulated by exceptional economic growth in the 1990s, more marinas and boat yards are reconfiguring slip space to keep up with the growing demand for space for luxury yachts exceeding 70 feet in length. In the process, small boats under 40 feet are being relocated out of wet slips into dry stack storage as well as marinas and moorings farther outside metropolitan areas. Some owners are resorting to trailering them from home.

Commercial marina developers are running out of waterfront space. This may be due to competition with residential, retail, and office development, environmental restrictions, and resistance by organized private homeowners who fear a new or expanded marina will cause traffic and pollution problems disturbing their peace and quiet and undermining their property value. Community and coastal multiple-use master planning is sorely needed.

PUBLIC FACILITIES

More government entities are commissioning government-owned marina construction and expansion, justifying expenditure of general taxpayers’ money as a way of revitalizing waterfronts, stimulating surrounding business districts, attracting tourists, creating jobs and adding to the tax base. However, because in most cases, government lacks the expertise to successfully manage a marina, there is a definite trend toward privatization or leasing management to private enterprise.

CLEAN MARINAS

More marinas and boatyards are voluntarily engaging in recommended best management practices to avoid the risk of water contamination from vessel maintenance and repair operations, petroleum storage and transfer, sewage disposal, solid, liquid and hazardous wastes, storm water runoff, and facilities management. They recognize that clean marinas and boatyards are not only good public relations for community acceptance but good for business because boat owners desire clean, inviting surroundings. The encouraging news is that governments are helping to publicize marinas and boatyards as voluntary clean water practitioners, awarding them Clean Marina flags and plaques under the Blue Flag program in Europe and the Clean Marina programs in the United States and Canada.

National and regional marina operators associations are broadening their horizons, actively seeking informational exchanges with their counterparts in other countries to learn from example how they are boosting business and meeting regulatory challenges. To facilitate the sharing of information, ICOMIA’s Marinas Committee has established a web site with links to several marina operators groups around the world. For further information, log on to ·
www.internationalmarinaconference.com.

Ron Stone is a senior advisor with the National Marine Manufacturers Association and chairman of the ICOMIA Boating Facilities Committee. He served as NMMA's director of facilities and government relations for more than four decades. He is the founder of the States Organization for Boating Access.

Fore & Aft, December 2001

News magazine for the Yacht Harbour Association of the UK
Marinas’ Contribution to the Economy in the United States
by Ron Stone

Marinas are significant contributors to national, state and local economies in the United States.

Sheer number attests to this. According to findings by the National Marine Manufacturers Association (NMMA), the number is well above 10,000 nationwide and growing. One state (Florida) boasts more than 2,200 marinas, which exceeds the total number of pleasure yacht facilities in several other popular recreational boating market countries.

Nationally, the number of berths offered by these facilities is estimated to exceed 1.1 million. Though the majority of privately owned boats in use on U.S. waters are still under 71/2 meters stored in garages or parked in driveways at home on trailers, the frequency of permit applications for marina development and expansion in recent years indicates an increasing number of boat owners are opting for wet—or close to the water—slippage.

At the same time, the receptivity of local governments to having marinas sited within their boundaries, let alone getting into the marina business themselves, is gaining. ·

The reason more communities and private developers are embracing the marina approach to access to recreational waters is primarily due to its underlying healthy economics. ·

Marina construction and renovation creates jobs in the building industry. Studies in the U.S. indicate that approximately 65 percent of the cost of a facility is attributable to labor. For example, building a $3 million marina could contribute $1.95 million to the local economy from just the wages paid; likely more, to the extent that construction materials are purchased locally.

Marina construction and operation is attractive to municipal, county and state governments as a source of additional revenues in property, income, sales and other taxes.

Employment within the marina equates to about 3 jobs per 100 berths. That’s roughly a base of 32,000 full-time workers nationwide; many thousands more, counting part-time workers. Localities that levy a tax on employment within their jurisdiction, not to mention state and federal governments, derive meaningful revenues from marina employment. ·

Marinas generate sales income directly on site, and indirectly in the community at large. Studies indicate that between 40 and 60 percent of all marine related products are sold through marinas and boatyards. Multiplier values for non-tourist oriented marinas in the continental United States typically range between two and three, meaning that every dollar spent at the marina generates two to three dollars of income for the community at large. Related businesses—restaurants, gift and clothing stores, hotels, gasoline stations, auto repair shops and others—benefit from the extra spending activity slip holders represent.

In the United States, there is a strong trend among communities with blighted, run down waterfronts to encourage, and even subsidize, private investment in marinas as a way of economically revitalizing the area. Across the nation, there are many success stories, emulating the pioneer Inner Harbor development in Baltimore, Maryland where putting in marinas and subsequently creating a demand for other public recreation pursuits along the waterfront has regenerated the economy in nearby downtown business districts. Not only boaters but also non-boating area residents and tourists, drawn to the revitalized waterfront, are now patronizing area restaurants, retail shops and tourist attractions. Many local governments have been sufficiently encouraged by such examples to build or buy marinas, eventually leasing management to private enterprise and sharing in slip rental revenues.

Increasingly, marinas are becoming a focal point for housing and office locations with harbor views. These waterfront projects often transform outdated industrial or neglected shorelines into pristine parks. In the process, marinas also are an impetus for beautifying and cleaning up community waterfronts. The clean water campaign in the United States is building on momentum created by marinas voluntarily installing boat sewage pump-out stations and adhering to state and federal nonpoint pollution control requirements.

From the boat owners who enjoy them to local residents who benefit from them, in the United States marinas make good economic sense for many communities across the country. ·

Caveat: This information precedes the tragic events of September 11th. Since that date, resulting public anxiety has been a powerful constraint on travel and tourism. Leisure-time pursuits, including boating, can be expected to suffer short-term cutbacks until the country is comfortable that terrorism has been arrested and destroyed.

Ron Stone is a senior advisor with the National Marine Manufacturers Association and chairman of the ICOMIA Boating Facilities Committee. He served as NMMA’s director of facilities and government relations for more than four decades. He is the founder of the States Organization for Boating Access.

Boat & Motor Dealer, December 2001

The 12 Commandments for Safe Dry Storage
by Gene Spinazola

Last February, the International Marina Institute held a Dry Stack Conference in Ft. Lauderdale. My task was to put together an interesting presentation, illustrated with slides and video, to make a point. That’s a tall order for many of us on the lecture circuit because we see many of the same faces at these conferences. Fortunately for me, there are marina fires each year, so I can get a new set of slides or video footage to share.

Speaking at this conference motivated me to compile a list of do’s and don’ts for the dry stack business. I have seen dry stack buildings and structures in the United States, of course, but also in Brazil, Australia, Singapore, New Zealand, and England. I realized that the problems I noticed in one country or state were the same ones I have seen elsewhere in the world. ·

Most marina projects start out on the right foot, with a “Development Overview,” “Site Evaluation and Assessment,” an “Engineering Design” stage, and so on. Then we build the facility and guess what? The “where are we going to put the lawn mower?” stage develops. Remember, this dry stack building was designed for boat storage, not lawn mowers. ·

Here’s my point. I don’t have trouble with storing lawn mowers in this building, if you designed the building for proper lawn mower storage. However, if this is an afterthought, I have trouble with the idea. It’s not the lawn mowers, you know. It’s the concept.

So, if I were going to build a dry stack storage building, these are the conceptual guidelines I would follow:

The 12 commandments, according to Gene:

1. Make the dry stack a single-purpose building for dry rack storage of boats.
No lawmowers and gas cans
No battery chargers
No welding machines
No Coke machines
No paint supplies, etc.

2. Allow NO ELECTRICITY in the building with the exception of “Explosion Proof” ceiling lights for nighttime boat storage operations. NO WALL OUTLETS. You hear me…NONE. If this is a single-purpose building with outside work racks, there really is no need for adding electricity to this mix.

3. Install a sprinkler system for “building and content” with in-rack sprinklers and “Auto Call” to the responding fire department. I would enhance the sprinkler system with foam injection into the water flow to improve the fire suppression capability. The two or three sprinkler heads over each boat would have a lower temperature setting than the sprinkler heads located in the roof. I would want those sprinkler heads to activate early on in a fire because they most likely will be closest to the source of ignition.

4. Design the building’s roof with burnout panel skylights, placed to give the best daytime lighting for the forklift operator and the best ventilation effect in the event of a fire. Burn out panels in this case are translucent fiberglass inserts that will melt at a low temperature and are designed to let the heat and smoke out of the building.

5. Install heat detectors (rate-of-rise heat detectors or equal variety, not ionization type) with “Auto Call” to the responding fire department. There can be a problem with smoke detectors, especially if you are using diesel-powered forklifts. The exhaust from the engine can activate the smoke detectors. The “Auto Call” to the fire department is perhaps the most important link in the detection system because it assures a response even if you’re closed for the night.

6. Require all boats to have battery disconnect switches. Boat electrical systems have been the cause of several dry stack fires. While this will not guarantee your safety, it will reduce the risk, and your underwriter should reward you for this item.

7. No customers allowed in the building, EVER.Not even to retrieve an article from their boat on the bottom rack. Bring the boat outside and place it on the service rack, let the customers get what they need, then put the boat back in storage. Note: The wait to have their boat brought outside will encourage them to bring everything off the boat before it goes into storage. ·

8. Have outside “Wash and Clean Racks” and separate “Repair and Maintenance Racks.”Any boat in the “Repair and Maintenance Racks” must stay out of the building overnight. Again, boats that have recently been worked on have a higher potential for creating a fire problem than boats that have not had anyone touch them. This is common sense. ·

9. Have realistic building separation. Build modules so fire will destroy only one area of the marina, not the entire facility. Firewalls are another way to create modules and allow you to subdivide your building so other activities can take place using a common wall within a structure.

10. Carry comprehensive insurance coverage that really protects your investment.The key element here is that your underwriter knows your business and loss potential. ·

11. Have an “Emergency Plan” for daytime and nighttime situations that you and your staff practice on a regular basis. It should include a “Post Incident Plan” for customers and the media. Having a plan helps you “pre-think” the emergency situation. If you don’t have a plan, don’t expect the end results of the emergency situation to be in your favor. Note: Think legal.

12. Finally, don’t allow customers in your marina (75 percent of your problems). Then you won’t need to hire employees (another 20 percent of your problems). Now, hope for the best (the last 5 percent).

Okay, these may not be the only items to look at when you plan your dry stack building, but if you pay attention here, you will make out better there (in court). ·

Gene Spinazola specializes in marina fire and safety issues, and he welcomes calls: (207) 326-9147. He is president of Gene Spinazola P.E. & Associates Inc., in Casane, Maine. www.marinafires.com·

10. Carry comprehensive insurance coverage that really protects your investment.The key element here is that your underwriter knows your business and loss potential. ·

Okay, these may not be the only items to look at when you plan your dry stack building, but if you pay attention here, you will make out better there (in court).··

Gene Spinazola specializes in marina fire and safety issues, and he welcomes calls: (207) 326-9147. He is president of Gene Spinazola P.E. & Associates Inc., in Casane, Maine. www.marinafires.com

Marina Dock Age, November 2001

Employee or Independent Contractor:
How to Make the Right Decision
by Dennis P. Kissman

In our consulting practice, we are often asked to review a marina’s operation for operating efficiencies. One of the most frequently reviewed situations is the relationship between independent or subcontractors and the marina. Inevitably, there are two questions that arise. First, is the independent contractor really independent or is he another employee of the marina? Second, am I better off using contract labor than hiring an employee for a particular task? ·

The IRS has established specific guidelines to determine if someone is a contract person or an employee. It is worth your time, and most likely your money, to review these guidelines to see if the independent contractor you hire meets these guidelines.

Assuming they meet the IRS guidelines, is it the right decision for your marina? Remember that from a customer’s point of view the employee or independent contractor working at your marina represents both the marina and your interests. For the purpose of this article, I am using the terms independent contractor, subcontractor, and contract labor interchangeably. In marinas we most often use the terms contract labor and pay the person as though he were a vendor rather than an employee.

To clarify a point, I am not referring to Ted’s Landscape Service that comes in every two weeks, mows the lawn, and trims the bushes. I am referring to the individual who works in your service department on customer’s boats under the guise of your employee or the seasonal person that you contract with to operate your fuel dock seven days a week to avoid paying overtime and taxes. Look at the following table and see which of these three examples would pass the IRS litmus test for independent contractor status.

Although each case must be determined on its own facts, based on all the information that pertains to that particular situation, I think it is fair to say that the only scenario that gives the appearance of an independent contractor is Ted’s Landscape Service. There are two things that I look for immediately to make a preliminary determination as to status. First, does the independent contractor have a business license to provide the services you are contracting for, and second, do they have the proper insurance coverage to protect you for the services they are offering? If either of these requirements is missing, there is a good chance these individuals would not meet the IRS test of independent contractors.

In this situation, however, the IRS may not be your primary concern. If an accident occurs involving these independent contractors or is caused by these same individuals, you could be jeopardizing your insurance coverage and opening up a new set of problems. ·

One of the primary reasons given by marina owners for hiring an independent contractor rather than an employee is the ability to terminate a person immediately. This is a misconception. An employee can be terminated just as easily as an independent contractor if the proper documentation is prepared. I believe the real reason for this thinking, although never discussed but always recognizable, is the difference in the relationship between employee and employer and independent contractor and employer. There is a bond that exists between employee and employer but not between independent contractor and employer. This is the real reason employers are quick to terminate independent contractor arrangements and slow to terminate employees.

As for the cost factor, the only savings when using independent contractors over employees is in the form of the employer’s share of payroll taxes, insurance, and other fringe benefits. Granted this could be as high as 30 percent of the hourly wages paid, depending upon company-paid benefits, but even the independent contractor has obligations to pay certain taxes and other payroll-related costs. If they don’t pay and a problem later arises, the liability with penalties could fall back on the marina to pay.

A far more compelling reason to review your policy for hiring independent contractors is the control over your business that you relinquish. This happens because the marina owner never takes the time to formally draw up a contract that spells out what is expected. ·

There is no clear black and white solution to this problem unless you do not hire independent contractors. That isn’t the right answer either. There is a time and place to hire independent contractors instead of employees and vice versa. Just take the time to think through the ramifications if something does not go as planned, then make your decision.

Employee or Independent Contractor? IRS Considerations ·
FACTORS INDICATING CONTROL	EMPLOYEE	INDEPENDENT CONTRACTOR
Note: These factors are only possible indicators of a worker’s status. Each case must be determined on its own facts, based on all the information.
Is the worker required to comply with employer instructions about when, where and how work is to be performed?	Yes	No
·
Is the worker required to undergo training?	Yes	No
·
Does the worker hire, supervise and pay others to perform work for which he or she is responsible?	No	Yes
·
Must the worker’s job be performed during certain set hours?	Yes	No
·
Must the worker devote full time to the job?	Yes	No
·
Must the work be performed on the employer’s property?	Yes	No
·
Must tasks be performed in a certain order set by the employer?	Yes	No
·
Is the individual required to submit regular written or oral reports to the employer?	Yes	No
·
Is payment by the hour, week or month?	Yes	No
·
Is payment in a lump sum?	No	Yes
·
Are the worker’s business and travel expenses paid by the employer?	Yes	No
·
Does the employer furnish the tools and materials required for the job?	Yes	No
·
Does the worker rent his or her own office or working space?	No	Yes
·
Will the worker realize a profit or loss as a result of his or her services?	No	Yes
·
Does the individual work for more than one firm at a time?	No	Yes
·
Does the worker make his or her services available to the general public?	No	Yes
·
Does the employer have the right to fire the worker?	Yes	No
·
Does the worker have the right to quit the job at any time, whether or not a particular task is complete?	Yes	No
·
Source: Modern Real Estate Practice, 15th Edition, by Galaty, Aliaway and Kyle, Real Estate Educaaon Company, Chicago, 2000

Marina Dock Age, November 2001

Solving the Abandoned Boat Problem
by Ron Brazda

Any marina owner who has ever had to contend with the disposal of a boat that has been abandoned on the premises knows what a monumental headache it can be. More than taking up valuable space, the boat, if left to deteriorate, can become an eyesore and a wellspring of pollutants, such as leaking battery acid, fuel, oil, chemical preservatives, and lead from paint.

In most places, the marina is within its rights, under mechanics’ lien law, to obtain a lien against an unclaimed boat for unpaid storage and repair charges, and then, if the owner fails to pay up, have the boat auctioned off at public sale for restitution. Also, leaving a boat in a wrecked, junked, or substantially dismantled condition where it poses a threat to navigation, is punishable under federal and state laws by fine or imprisonment.

Of course, it is harder on the marina if the owner of an abandoned boat cannot be located and held responsible for removing it from the premises. Some vessels are stripped of numbers or personal belongings that might help identify the owner.

The best advice is to check with local authorities first. If local officials do not know who owns the boat, try the state boating agency. There may be a state law covering the situation. According to the National Association of State Boating Law Administrators, at least 32 states have titling laws documenting legal ownership. In addition, eight states require outboard motors to be titled.

Take Ohio for example: Under the Ohio Revised Code 4585.31 through 4585.34, the marina’s rights in the case of abandoned boats and outboard motors are clearly spelled out.

First, the marina must apply for a title search on the boat or outboard motor at the state Division of Watercraft to find out the name and address of its owner and to search for any lien or mortgage by a previous creditor. The fee for the title search is nominal ($2).

Second, upon receiving the results of the title search, the marina must send a notice to remove the boat or motor to the last known address of the owner. Such notice must be via certified mail (return receipt requested). If there is a lien-holder or mortgagee, the marina must send notice to them as well, about where the boat or motor is located and any maintenance or repair charges due, including parts, labor, dockage, or storage charges. If previous creditors, so notified, fail to assert their rights within 45 days, their claim is invalid. However, they may still claim funds from the subsequent auction sale of the abandoned boat or motor.

Third, if the boat or motor is still unredeemed 45 days after return receipts are recovered, the marina needs to obtain written confirmation of the fair market value.

Fourth, if the property is valued at less than $10,000 and has been left for six months without permission of the marina, the marina owner may have the boat or motor sold to the highest bidder at an advertised public auction. The marina is entitled to recoup any money for expenses in connection with the cost of the removal and sale of the abandoned boat or motor as well as for unpaid maintenance or repair charges, cost of parts or labor, dockage or storage fees.

But what recourse do marina operators have in jurisdictions without a boat titling law?

Recent developments in Michigan suggest an alternative. There, the Harrison Township Board voted in favor of a local ordinance that would allow the Macomb County Sheriff’s Department to tow away an abandoned boat if it has remained on public or private property for more than 48 hours. Patterned after the state’s abandoned motor vehicle ordinance, the proposed local law would authorize law enforcement personnel to take into custody any abandoned boat that does not have permission by the property owner to be kept on the premises. Towing would be at the boat owner’s expense, if the owner can be identified. Any unclaimed boat would be scrapped or auctioned off.

Derelict vessels left to deteriorate in waters outside a marina are another matter. In U.S. navigable waters, the Coast Guard has chief responsibility to remove the hulls where they pose a navigation hazard. Owners, if they can be identified and tracked down, face civil penalties for removal costs and possibly criminal penalties for violations of the federal Clean Water Act if it is determined that fuel leaks or other debris from the boat are a source of damage to the environment. Elsewhere, unless there are stern, enforceable laws for holding the owner accountable, the problem—and the cost of getting rid of derelict boats in open waters—often falls to state and local authorities and volunteers.

Initiatives by other countries for treating the problems of removal and disposal of derelict vessels are worth watching.

The European Community (EC), headquartered in Brussels, has directed member states to take steps to ensure that abandoned boats are disposed of so as not to harm the environment. As a result, the Norwegian Pollution Conkol Authority has taken progressive steps, making a grant to the Norwegian Marine Industries Federation to study the longevity of materials used in the manufacture of pleasure craft and ways of satisfactorily breaking them down and disposing of them. Taking a cue from the “polluter pays” principle laid down by the EC, which holds the economic producer responsible if the product owner cannot be found, Norwegian manufacturers pay recycling insurance.

Another EC directive provides that old boats may not be disposed of by incineration if they are made of hazardous chemical elements, while another one under active consideration would require producers to take back electronic equipment in old boats.

In Japan, the Ministry of Land, Infrastructure & Transport has initiated the regulation of the shredding and recycling of end-of-use boats. A system for collection and disposal was inaugurated in Tokyo in 2000. Other prefectures are now following suit to deal with the problem of ownerless, abandoned boats in public waters. The Japan Boating Industry Association is cooperating with authorities on a Boat Recycle Law, which may take effect by 2004.

Currently, there are no progressive recycling requirements for recreational boats in the United States. The only federal rules possibly applicable to the disposal of derelict boats can be found in the Federal Code of Regulations (CFR Part 260), insofar as they identify various hazardous and regulated wastes that may be present on abandoned boats (lead, oil, coolant, and so on), and prescribe procedures for disposal. State laws vary regarding what materials should be recycled and what materials can be treated and disposed of and where.

Marina Dock Age, September/October 2001

A Pollution Story to Make Your Hair Curl
by Mark Yearn

When marina operators have underground storage tanks on their premises they have to provide financial guarantees to protect against the liability posed by long-term leakage. Insurance coverage exists to cover such exposure. These operators are also aware that representatives of the federal, state, and local governments can demand that evidence of insurance be provided immediately upon request or the tanks may be closed.

But this is not the only kind of pollution loss that could occur on your property.

Here’s a true story: A marina with a number of underground fuel tanks purchased insurance for the long-term seepage exposures from their tanks as required by the government agencies.

This marina leases out slip space to more than 800 boat owners. It also leases buildings and slip space to a large restaurant operation, a boat dealer, a fuel dock operator (who also operates a pump-out station) and a service and mechanical repair operation.

None of these tenants own or operate an underground storage tank, therefore, none of these tenants have purchased any type of pollution insurance protection.

The boat dealer docks a brand new boat at one of its slips with a full 500-gallon load of diesel fuel and leaves for the day. Sometime during the next couple of hours, the fuel filter seal malfunctions and fuel seeps into the bilge of the boat. The bilge, doing what bilges do, pumps the fuel out of the boat.

During the evening, the restaurant employees notice the fuel in the water, and make an announcement over the restaurant public address system that all customers with boats docked at the restaurant must move them.

The restaurant does not notify the marina guard or manager of the spill. At approximately 2200, the restaurant closes. Everyone goes home. The bilge continues to pump fuel out of the boat until approximately 0900 the next day.

Upon discovery, the winds decide to shift, and 120 gallons of fuel are now spread throughout the harbor.

The pollution recovery company is notified, as well as the local USCG and fire department. But the marina does not know whom to contact at the National Pollution Office.

The pollution recovery company spends the next two and a half days siphoning 12,000 gallons of water in order to obtain the release from the USCG. Due to the way this spill was handled by the company, the fine for this spill was very small. Fines can be high and are subject to the discretion of the USCG.

The final cost? In excess of $31,000. Did the dealer have insurance? No. Did the restaurant have insurance? No. Did the marina have insurance? No.

Fortunately for the dealer, the manufacturer stood behind its product and paid the clean-up fees.

Although the marina was not involved with this incident in any way, the marina has the lease with the state for the water rights, and it is their responsibility to protect the waters. Therefore, it is responsible for the cleanup of any spill in its harbor, regardless of the source or cause.

PROTECT YOURSELF

As a marina operator, what can you do to protect yourself?

1) Make sure you know and understand the requirements for an emergency
action plan.

These action plans generally need to be in a red folder in a spot where all employees can access them immediately, and which provide simple and easy to understand instructions on what to do in the event of a pollution spill.

Design and implement the plan, reviewing it semi-annually with the entire staff. Have two or three employees designated as on-call emergency spill contacts. These employees need to receive extensive training on what to do and how to act in the event of a spill.

Obtain an on-demand contract with the local pollution recovery company. Put its phone number on all phones in your marina, including pay phones and tenant phones.

Make sure your tenants know what your action plan is, and that they (and their staff) are aware of what needs to be done in the event of a spill.

The government authorities can ask and demand to see this information at any time, so be prepared.

2) Purchase a pollution liability policy that not only provides for the UST
(or AST) exposure you may have, but includes coverage for:

First Party Cleanup for Scheduled Locations
Third Party Liability for Scheduled Locations
Transportation
Third Party Liability for Non-owned Locations

3) Require all tenants of your property to provide you with evidence of
pollution liability insurance for the same coverage as you purchase.

Have them include your operation as an additional named insured on their policy. The product is available with or without UST/AST coverage.

4) Require all slip holders to provide you with evidence of pollution insurance
protection under their boat/yacht policy.

(You are already obtaining evidence of insurance from all your slip holders, right?)

5) Many states have Clean Marina programs. Get involved.

Your local association provides members with a Best Management Practices guide. Work toward earning the Clean Marina designation. Not only is it good public relations, but most insurance companies will provide you with credits on your premiums.

AN OUNCE OF PROTECTION

Pollution issues, storm-water run-off and bottom washing are just a few of the “hot topics” that will become more and more volatile in the future. Marinas are going to be forced to spend dollars to further protect the waters from pollution.

Be proactive. Set up an action response plan and make sure your employees and your tenants know what to do.

Make sure your tenants are protecting you, to the same level as the government requires you to protect the public. No sense letting a single mechanic on your property cause a $50,000 pollution spill they cannot afford to pay for, nor have the insurance to pay for, leaving you to pay the bill and possible fine.

At the very least, protect yourself. Purchase the insurance. It is not expensive and is one of the most important pieces of insurance you can purchase for your business.

For further information on pollution insurance for marinas contact Jim Titus at Americana Financial: (877) 552-3772 or at This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Marina Dock Age, September/October 2001

Adequate and Sustainable Water Supply
by Gene Spinazola

If we were designing a marina from scratch, it would be easy to lay out the site to allow good emergency vehicle access to all parts of the marina. We would start with an adequate hydrant system with 12-inch water mains, then add fire lanes with a wide turning radius for the fire apparatus, and good building separation. We would have no main docks longer than 150 feet and the emergency apparatus could drive right to the head of each dock. Yeah, right!

The reality

I know that you paid a lot for an upland site, and to get return on your investment you need to utilize every inch of the property. However, the right design for you may not be the right design for me—at least from a safety standpoint.

I wasn’t joking in my last article when I wrote: “Most marinas that I have been to are located on the water.” So, getting the “wet stuff” (the water) to the “red stuff” (the fire) is the point.

Let’s say you pick me up at the airport and we drive to your marina. My work starts long before we arrive at the front gate. It starts somewhere up the road as we pass the local fire station, a hydrant along the roadside, or, perhaps, no hydrants along the roadside. Is this an urban or rural area, is the access road narrow and winding or a divided highway, and is there a train track crossing?

When we arrive at your marina, a whole new set of criteria comes into play. We’re not starting with an empty lot; we’re starting with your marina, as it is today. And we’re going to look at the good, the bad, and the ugly situations that could arise from a fire emergency.

Using what you have

Do you have a hydrant system? Is it on the property or down the road? Is it ornamental or adequate? By ornamental, I mean totally inadequate for the fire load potential at your marina. By adequate we mean that it will supply all the water we would need for the largest fire load at your marina (i.e. burnable buildings or boats).

At most marina fires, supplemental water supply will be a required operation for the fire service. The initial fire fighting water will come from the onboard tank of the “first in” fire truck. Then hydrants will be utilized, and if not adequate, or not available, drafting or tanker shuttles will supplement the water supply.

When and where you need it

Where will the fire department get the supplemental water supply at your marina site? Although there may be plenty of water just outside your facility’s windows (either in the lake or river), you need to remember, that big red truck has to get within a few feet of that “wet stuff.” If the truck can get to the water and draft (suck water into the truck), then it can pump the water to the fire scene where it can be used. If something stands in the way, or if building positioning doesn’t allow for a fire truck to get within a few feet, all the water in the Atlantic isn't going to do you any good.

Walk around your marina and list all the places where a fire truck might be able to drive to the water, drop a suction hose and strainer overboard, and start pumping. There are restrictions you must take into consideration, such as:

The driver is not going to drive past the fire to get to the water unless there is an escape route that can be utilized if the fire can't be controlled.

The driver may not drive down a grass slope or embankment if there is a possibility the apparatus will get stuck. These trucks are extremely heavy and not off road vehicles.

There are real limits as to how high the apparatus can be above the water. For example, the practical lift, or the ability for the truck to pull water up hill, must be taken into consideration. For most fire apparatus this is 12 to 18 feet. Brand new trucks and pumps perform a little better, but you should plan on the older truck showing up at your fire.

Travel lift and fork lift wells are generally good access locations, unless your dry stack is on fire.

Boat launch ramps are good locations, especially in tidal areas. When the tide is out, you just drive further down the ramp to the water’s edge. A bit of caution here however, the weight of the fire apparatus may challenge the ramp construction.

Dry hydrants (called drafting hydrants in some areas), where properly installed, make excellent sources of supplemental fire-fighting water. All things considered, dry hydrants are inexpensive to install and allow rapid connection for supplemental fire-fighting water.

Let’s look at dry hydrants. A dry hydrant is a large pipe located in the upland area that has a special fitting to which the fire apparatus can connect its suction hose. The dry hydrant pipe usually is buried underground, runs out into the water, and should have a strainer located on the end of the pipe. Normally, the strainer is located at least two feet below the surface of the lowest water level expected in the marina.

The pipe can be ferrous or nonferrous, such as Schedule 80 PVC, and should be installed with the least number of bends possible. Some limitations (in addition to height) are friction losses due to the diameter and texture of the pipe’s inner surface, as well as the overall length of the piping run. In areas where marine growth is a problem and would plug the strainer, a hard suction hose and strainer can be suspended over the water. In this system, the hose is dropped into the water only when needed, thus avoiding any clogging.

There are a number of options available that may assist the fire department in developing an adequate and sustainable water supply at your marina. The water-supply issue is definitely one item that should be on the top of your list of “things to do.” Get together with your fire department and really examine water-supply accessibility, then develop a water-supply plan with them. www.marinafires.com

Marina Dock Age, September/October 2001

Dealing with Deadbeats: Cut Your Losses
by Dennis Kissman

When do you figure you’ve closed a sale? This might sound like a silly question, but it’s not.

Is it when someone signs the dockage agreement to bring his boat into your marina? Or is it when you send out the monthly statements for dockage?

If you answered “yes” to either of these questions, you’re wrong. A sale is not a sale until you’ve collected the money for the services rendered.

Double-entry bookkeeping was a great invention. It allows you to record sales when the services are rendered, keeps track of the transaction, and records when the services are paid for. Over the years, we have worked with a number of clients who had dreams of owning a particular marina only to discover that the books misrepresented the financial reality of the property.

What do I mean by this? The seller claimed he had a sale and recorded it as such in his books. But when asked to verify if the payment was deposited in the bank, there was no record. This raised the question as to whether there actually was a sale. Most of the time a seller would want you to think so. What we find is that the offset to the sale is recorded as an accounts receivable and eventually written off to some obscure account. In that case there is no sale, because no money changed hands. It’s pretty hard to pay your mortgage with a sale recorded and no money in the bank.

I have seen more marinas with collection problems than those that don’t. There are several steps you can take to reduce and even eliminate your collection problem. First, be selective as to whom you accept into your marina. Second, constantly review your outstanding accounts receivable and look for changes in your customers’ payment patterns.

For some reason, most marina operators are afraid to turn away any customer, because they think a full marina is synonymous with success. Wrong again. If you fill your marina with non-paying customers, you lose two ways: You are unable to collect money for the space being occupied, and you have no chance to fill that space with a paying customer.

Never lose sight of the fact that the principal income generator in a marina is renting space. Whether that consists of slips, racks, dry land storage or commercial space, you only have so much to rent for 365 days a year. Any day that you do not generate paying revenue from those spaces, your income decreases and you can never make it up.

Inevitably, every marina owner and/or operator will be faced with collection problems at some point, no matter how good your screening process is. Popular ways to address the problem are to chain the boat to the slip or don't launch it if it is on dry land. Then you start with the progressively nasty letters and phone calls, and finally go after the title to the boat. All of this takes time, energy, and money. In my opinion, it’s the opposite of what should be done.

Look at it logically: The person already has financial or other problems, or he would be paying his dockage or storage. By chaining or not launching the boat, you have only assured him a place to keep it with no way to pay. Remember, you only have 365 days a year to collect money from that space. Wouldn’t the logical approach be to get that boat out of your marina sooner rather than later? My experience has shown that the longer you hold on to the hopes of collecting on that debt, the more it will cost you. It is better to cut your losses and move on.

For those of you who feel you cannot let go and must do everything in your power to collect that debt, my advice is to make sure your license agreements for dockage or storage have the correct information to be able go after your customer. I would say that in more than 80 percent of the operating assessments of marinas we conduct for clients, we find errors or omissions in the information they have on their customers.

One of the most important bits of information you can have when it comes to collecting on a past-due debt is knowing who the finance company is that holds the lien on the boat. This is important because your claim for dockage or storage will come before any claim by the finance company. On more than one occasion we have contacted the finance company that has a loan on a boat and advised them of our intentions to obtain title to the boat to settle a claim for dockage or storage. The finance company has then put the necessary pressure on the customer to settle his bill with the marina. Let’s face it: They have a lot more experience when it comes to collecting on bad debts than a marina owner and/or operator.

As we said earlier, probably the best way to collect on a bad debt is to prevent it from happening in the first place. The first thing is to study your customer accounts receivable balance often—and that doesn’t mean once a month! Look at it at least weekly, and not just the past-due amounts. Look for changes in customer payment patterns. A customer who always pays on the third of the month, who has not paid by the tenth, should be a concern. There may be legitimate reasons, but do not assume that is the case. Customers develop payment patterns based on their own cash flow situation, and when that pattern changes, it could mean a problem.

Always keep in mind that a boat usually is not an essential part of one’s existence, and when it comes to allocating limited resources, the non-essentials are the ones to suffer first. Take a proactive approach to working with your customer, but do not be taken in by a hard-luck story If you do, you may be giving that same story to your lender, and we all know how friendly your friendly banker really is when it comes to making your mortgage payment.

There are three more things I want to mention regarding collecting on past-due accounts. First, when you start the process, see it through to conclusion. If you approach collections in a haphazard way, you can expect the same results. Second, never ask an employee to dun a customer for money if they are not comfortable doing it. That is the best way to lose both the customer and the employee. And third, to all you owner/operators and managers out there who befriend your customers and share that Friday night beer with them: It will end up costing you a lot if one of those customers (friends) becomes delinquent. Remember, you are running a business, not a social club.

Marina Dock Age, September/October 2001

Solutions to Preserve Water Access
by Ron Stone

It is common knowledge that marina developers are hard pressed to compete for desirable water frontage. The high cost of land, real estate taxes, zoning restrictions, and environmental regulations work against them. It’s difficult to compete with hotels, condominiums, restaurants, and retail complexes. Stand-alone marinas are not notable profit-makers, which is ironic when you consider how many mixed use developments include marinas as an added attraction.

Wet-slip availability has tightened in many parts of the country where the only real growth in marinas has been through expansion of existing facilities, as opposed to new construction. To compound the shortage of wet slips, many small marinas have sold out to non-marine land developers. When rising property taxes, insurance premiums, utility and maintenance costs seriously eroded their profit margin and they could no longer raise slip rates and remain competitive, these marinas found that selling the land was their way out.

Dry storage and innovative land acquisition of abandoned waterfront factories and commercial fishing wharves may be touted as alternatives, but even they are not immune to opposition by environmental protection advocates, resistance from organized private residential property owners, and competition from land developers.

Crisis proportions

Arguably, the incremental loss of valuable waterfront for recreational boat access to non-water-dependent uses over the past several years has reached crisis proportions. The question is whether the crisis can be alleviated by long-term waterfront planning that saves space for boating access. The other non-water dependent uses, such as hotels, restaurants, and condominiums, can survive away from the water. Boating, obviously, cannot.

Case in point

Recently, the Naples Daily News ran a two-part article about how the acute local facilities shortage, aggravated by state and local environmental restrictions, is threatening the city’s image as a boating mecca.

Unable to find safe, convenient, wet and dry storage in the area, many Naples residents are taking their boats elsewhere. The owners of large yachts are docking them clear across state in Fort Lauderdale, or off-shore in the Bahamas, and have to fly or drive long distances to get to their boat on weekends. Many small-boat owners, who once relied on dry storage, are storing them behind their homes on boat trailers. And, be cause more and more boaters are competing for slips, prices have increased sharply.

The situation also has worsened at boat ramps. The limited number of parking spaces at public boat ramps is causing monumental back-ups. During peak weekend hours, 30-minute waits to launch and retrieve one's boat, coupled with 30-minute walks back to the car/trailer, are commonplace.

The leading local newspaper submits that city and county officials have been totally negligent in failing to address the boating facilities shortage in long-range community development plans.

A recent public opinion survey by the Daily News offers solutions such as:

prompt efforts to determine what options remain to ensure that the few remaining sites available for marinas are secured by government action;

a general relaxation of oppressive regulations and restrictions on existing facilities, as well as the development of waterfront property;

a dialogue between developers, environmentalists, business community leaders and citizens, placing the common interest above self-interests; and

a vision statement for the waterfront commercial district to preserve water- and marine-related businesses, and revised. zoning to support that statement.

Bluebelting: Useful government initiatives

Long before Naples, a 1990 nationwide survey of state boat access administrators was performed by the States Organization for Boating Access (SOBA). It concluded that the primary culprit in the development or conversion of waterfront property to uses that are not water dependent is a lack of comprehensive land-use management planning.

SOBA research discovered several ways that state and local governments could help. Collectively, these approaches are described as “bluebelting.” It is a term borrowed from greenbelting: the practice of providing farmers ways of preserving agricultural land. The concept is to provide some form of protective zoning to enable marina developers to gain priority status in competing for waterfront property, and providing some form of tax relief or economic incentive for existing marina owners.

In Oregon, for example, the state has a comprehensive, statewide zoning plan that identifies appropriate land uses. It serves as a model for local planning and zoning.

At one time, Florida enacted a Comprehensive Planning Act, dictating that priorities should be established to provide for siting water-dependent uses such as marinas. To what extent this has been superceded by environmental protection law, such as manatee protection planning requirements, is not clear.

Preservation efforts

In 1986, the Massachusetts Legislature went so far as to pass a Boatyard Preservation Act. The act authorized the state to purchase future development rights to waterfront property currently occupied and in use by a marina or boatyard rather than risk its sale for a non-water-dependent use and the erosion of Massachusetts' maritime heritage.

Government would pay the difference between the fair market value of the land and the water-dependent value of a marina or boatyard. To the marina or boatyard owner’s advantage, this offered instant liquidity that could be reinvested elsewhere and allowed him/her to keep the profits presently derived from all marina assets even though the government may have bought 80 to 90 percent of such assets. Unfortunately, the legislature did not appropriate funds necessary to implement the act.

New Jersey also has a law to protect boatyards under historical preservation measures and “in the public interest.”

In addition, many state regulatory agencies, through their own program statutes and interpretations and for that of the federal Coastal Zone Management Plan (CZM) have the authority to regulate development of coastal lands. This incorporates the concept of appropriate use.

Also, at the federal level, there are currently two pieces of legislation pending in Congress that could be significant for the acquisition and use of waterfront land for marinas and other public boat access purposes. First, the National Recreation Lakes Act of 2001 would authorize pilot projects on 25 “demonstration lakes” under various federal agencies’ jurisdictions where marina concessions and other innovative public-private partnerships would be encouraged. The other is the Brownfields Revitalization and Environmental Restoration Act of 2001, would make it easier to clean up contaminated, former industrial sites located on navigable waterways, and convert them to recreational boat use.

Marina Dock Age, July/August 2001

It’s Your Responsibility: Adequate and Sustainable Water Supply
by Gene Spinazola

Here is a statistic you need to be aware of: On average, a fire department will require 30 to 35 minutes to set up an adequate and sustainable water supply at a marina fire. We’re not talking about rural areas or volunteer fire departments; we’re talking about your fire department. Even when they’re just down the street, adequate and sustainable water supply will require more time than you could ever have imagined.

The Elements

When a fire apparatus first arrives at a fire scene it can start pumping water as soon as the hoses are laid out and the fire fighters are suited up in all their protective equipment. The initial water supply will usually come from a tank located on the fire apparatus. As a general rule, trucks that operate in areas where there are fire hydrants carry less water than trucks in non-hydrant areas. Regardless of this point, the onboard water supply will last only about three to five minutes.

Boat fires are different than structure fires. The fuels involved are very different, and the “playing fields“ aren’t even, either. For example, in a house fire, water will cool the burning material and extinguish the fire. Some fire departments will add a surfactant, such as “Class A Foam” to the fire fighting water stream to improve the cooling effect by allowing the water to penetrate the burning wood surface.

A 40-foot fiberglass motor yacht or sailboat, however, is a different matter altogether. For one thing, fiberglass resin burns at a much higher temperature than wood. The fiberglass itself does not absorb water as wood does and therefore the cooling aspect of water on the fiberglass is much less effective. Generally, the fuel tanks on the boat will be an active part of the fire and the total fire load.

The playing field for a house fire allows fire fighters to travel 360 degrees around the fire and, if necessary, position themselves on the windward side of the fire. Boat fires in marina slips, on the other hand, provide a single point of entry and it may not be the best place for the fire fighters to be.

Fire exposures are those things that are close to the fire and may become involved and add to the size of the fire. A boat in an adjacent slip is a fire exposure in the same way a neighbor’s house would be.

Early reports of a recent fire on Lake Union in Seattle indicated that at least 12 boats were destroyed with the dollar loss expected to exceed $1,200,000. Think of it this way, that’s almost the same as loosing a whole neighborhood of $100,000 houses. In both cases, the fire load is tremendous and will require adequate and sustainable water supply that exceeds the fire load.

Your Obligations

One of the key elements in successful fire fighting is getting the wet stuff (the water) to the red stuff (the fire). Remember this: Eventually, if we do nothing, the fire will go out. Therefore, the measure of success (or what is saved) is a direct result of our interaction.

Obviously, most of the marinas that have been to are located on the water. If that’s the case, what’s the big problem? You have plenty of the wet stuff. All you need to do is get the fire department to pump it to where it’s needed. In many marinas that may not be so easy.

Do you have fire hydrants on or near your property? What is the maximum flow rate for that hydrant? Are you located at the end of the water main? Has there been any new building or new water demand in your area that will affect the flow rate to your hydrant? If a hydrant can't flow 1000- to 1500-gallons per minute, then you will need to make up the difference by providing other options.

Developing a water supply that is adequate for the potential fire load at your marina does not have to be expensive. What it does need is to be developed in partnership with the fire service. If they don’t buy into it, they won’t use it, and you’re wasting your time, money, and, of course, your property, too.

Gene Spinazola specializes in marina fire and safety issues, and he welcomes calls: (207) 326-9147. He is president of Gene Spinazola P.E. & Associates Inc., in Casane, Maine. www.marinafires.com

Marina Dock Age, July/August 2001

Consider the Concept:
An International Federation of Marina Organizations
by Ron Stone

The concept of an international federation of marina organizations is on the agenda for the spring 2001 meeting of the Boating Facilities Committee of the International Council of Marine Industry Associations (ICOMIA).

Since 1991, ICOMIA’s Boating Facilities Committee has functioned as the technical service arm of recreational boat and associated equipment manufacturers in all matters pertaining to boating facilities development, operation, and maintenance. Popularly known as the IBFC, the committee is a mix of representatives from national marine manufacturer’s associations, national and regional marina and yacht harbor organizations, and government representatives, for the promotion of nautical tourism and navigation safety in 15 countries around the world.

Considering that the IBFC meets only a few times a year, it is remarkable that it has accomplished so much. The committee organizes triennial international marina education conferences; maintains a library of authoritative references on financing, designing, building, improving, maintaining, and operating marinas; conducts marina market and regulation surveys; publishes an international directory of marina architects, engineers and consultants; and networks with other organizations in the field. One of the IBFC’s primary goals, however, is organizing marina interests worldwide.

In the IBFC’s formative years, national and regional associations of marinas and yacht harbors were already in place in certain developed boating market countries such as Holland, Great Britain, Italy, and the United States. These countries have been the backbone of the IBFC.

These early associations had their genesis either in a collective response to regulatory issues or in a recognition that marina operators can do more good for themselves and the boating industry by putting their heads together on market research, recommended marketing strategies, and frugal, environmentally-responsible, profit-making techniques for operating and maintaining their facilities.

In more recent years, the IBFC has encouraged marina interests in developing, boating-market countries in the Caribbean, Latin America, Eastern Europe, the Middle East, and Southeast Asia to organize as well.

Today, there is an emerging body of opinion within the IBFC that favors renaming the Boating Facilities Committee the International Federation of Marina Organizations. Certainly, the change would more clearly identify the constituency.

The new federation would continue to function as part of ICOMIA, acknowledging that marine manufacturers have a big stake in the future of marina growth and development to provide berthing space for new, and increasingly bigger, boats. As a matter of policy, the federation would be open to all bona fide marina organizations.

In many developing boating-market countries, there is an identifiable cadre of marina operators, but little or no recreational marine manufacturing, and therefore no local manufacturers’ group with whom they can ally. The view of the IBFC is that because such non-affiliated marina associations have been welcome to participate in the committee, they would be welcome to participate in a global alliance of marina organizations under the auspices of ICOMIA.

The advantages of an international federation of marina organizations may seem academic to the individual marina operator, but they are too important to be missed.

A federation can provide a worldwide forum for the discussion of problems plaguing marinas around the world. A recent IBFC survey found that the most common problems include environmental restrictions; supply and demand; a scarcity of available, affordable waterfront space; financing; permitting complications that delay and drive up the costs of construction and improvement projects; dredging; resistance by local private residential property owners to allow a marina in the neighborhood; and government indifference to the needs of marinas, coupled with a lack of understanding of the marina’s importance to the economy.

By networking and sharing information about how to overcome these problems, through an international federation, national and regional marina associations will be better able to help their members and the greater marina community. To facilitate the exchange of information, it is recommended that ICOMIA set up an international Web site distinctly for marinas with links to members, Web sites.

An international marinas organization would have more prestige and credibility in educating government regulators about the economic benefits and environmental compatibility of marinas.

Probably the biggest challenge to organizing marinas as a global force will be convincing them that there are political and financial benefits to them. However, the experience that the IBFC has had to date in attracting more and more marina groups to their meetings encourages the group to believe they have struck a responsive chord.

Marina Dock Age, July/August 2001

Making the Best of a Tough Situation
by Dennis Kissman

Have you tried to get a loan or refinance your marina lately? Unless you’re willing to sacrifice your first born, and probably more, you most likely don’t stand a chance in today’s tight financial market. All the lenders in the U.S. that had specialized in this type of loan are out of the marina lending business. Local lenders will give you lip service, but when it comes to actually writing the check, they have more excuses than the amount you want to borrow. Or they tack on demands so high they guarantee your failure.

There is no easy solution to this problem, and I do not see it getting better in the foreseeable future. Without being too bearish on the issue, I believe it is going to get worse before it gets better. In my opinion, we may be looking at a two-year downturn.

This is a good time to maintain good customer contact. Enough gloom and doom. We are in this situation now, so let’s make the best of it. What I want to concentrate on here is identifying and assessing your resources. The first one is your customer base. Your customer is at your marina for a reason. Take the time to learn what that reason is and make sure it doesn’t change during these times. Remember the famous saying about customers: It costs five times more to attract a new customer as it does to retain an existing one.

DON’T ALLOW YOUR CUSTOMERS TO BECOME LIABILITIES

Keep in mind that your customer’s situation may change during these times, as well. Watch for changes in his boating frequency, payment pattern, and condition of his boat. Changes in any of these areas should immediately raise a red flag. This is a critical time to maintain good customer contact. Your customer may be very sensitive about his situation and embarrassed to talk about it.

Now is the time to put forth the customer service we all talk about in this industry. But don’t go so far as to carry his burdens for him, including his financial obligation to you. You are not the bank. What happens when your lender expects his loan payment and you come up short? You’re in the same boat, so to speak, as your customer. In fact, your customer is no longer a resource if he doesn't pay his bill, and he becomes a liability.

EMPLOYEES: YOU AFFECT THEIR LIVES

The other major resource you have is your employees. How do you handle them in an economic downturn? The answer is: fairly. This is easier said than done. There are two obvious things you can do. You can ask everybody in your organization to tighten their belts and share in the problem, or you can let them go to reduce your staff. These are tough decisions and should not be taken lightly. You are altering someone’s life. There are both positives and negatives to either of these solutions and only you will be able to determine which is better for your situation.

If you take the belt-tightening route, you must make sure you are willing to sacrifice more than what you are asking of your employees. Not lip service, but real sacrifice. Obviously the sacrifice you are asking equates to dollars, and you must be fair to everyone on your staff. If you ask your employees to go on a shortened work week, the $8-an-hour employee is going to be affected differently than the $15-an hour employee. In this case, fairness does not necessarily mean reducing the hours equally. The best advice I can give is to plan before you act. And as economic conditions improve, you must restore what you asked your employees to sacrifice.

The second option is to reduce staff, and that means terminating someone. This may sound cold and callous, but at least you are giving your employee the opportunity to maintain his or her lifestyle even though it will obviously be affected in the short term. I have been on both ends of this situation. I was given help finding a new position, and I have helped terminated employees find jobs. I can honestly say that it has worked out to be positive for all parties in each case.

YOUR SAVINGS ACCOUNT

A couple of years ago I wrote an article in this magazine about cash flow in a marina. It simply showed that over time a marina typically receives its cash on the same date each month. If you receive 30 percent of your cash for the month on the eighth of each month, then that should not change. as it relates to customer spending patterns. Likewise, the article went on to say if the cash received on the eighth of the month is lower than expected, chances are slim to none that the cash would be made up during the remainder of the month.

So monitor your cash on a daily basis if you expect to stay on top of the situation.If you continually assess your resources and understand what effects each of them has on your business, I am sure you will be around during the coming good economic times to tell how your business survived the 2001 economic downturn.

Marina Dock Age, July/August 2001

Security Brings Piece of Mind… You Hope
by Patience Welton

Boaters are the last of a dying breed of trusting souls. I’ll bet the majority of the boats in your marina if they are locked at all have the key under the mat or in the fish box. Now that big secret has been revealed to the world—What are you doing about security?

To your customer, his boat represents a large investment both financially and emotionally. It is your job as the marina operator to keep this precious vessel safe from harm by providing a secure facility. This is achieved by controlling access, establishing policies and promoting awareness.

The Basics
Criminals are looking for the easiest opportunity. Your responsibility is to identify those opportunities and eliminate them. Start by developing an open line of communication with the local police department. They will keep you apprised of new developments and any known risks in your area.

Many marinas offer their local marine patrol free or discounted dockage for their patrol boats. You will get more than you give in this kind of arrangement. Regular presence of law enforcement officials is always an effective crime deterrent.

Security Tips
Limit access to the boats to owners and guests only. Barriers at dock entrances are ideal but at minimum signs should be posted stating access limits and marina regulations. Include security polices and procedures as part of your emergency plan, reviewing it annually. Record all incidents including action taken to prevent problems from recurring. These records will prove valuable should there be a claim filed against you.

Provide adequate lighting at all access points. Night patrols challenging strangers is a big step to reducing incidents. The question then becomes who should preform the duties of the night watchman. Should you look to an outside source to provide this service or keep it in-house?

Rules of Liability
In-house staff will easily identify your customers, employees and outside contractors. Because they have a working knowledge of boats, they may be able to minimize a problem such as a boat taking on water or helping a late arrival tie up. Properly trained employees will develop a sense of loyalty to “their” marina and this can be a very valuable asset.

The compromise is the liability the employee you hire belongs solely to your company. In lawsuits based on negligent hiring, courts are regularly holding employers liable for acts committed by employees. The term “negligent hiring” means the employer has hired someone without properly confirming the information on his or her application is accurate and factual. Be diligent with your hiring practices!

Contract security should be insured against negligence, licensed by the community and have trained, qualified officers able to cover all the contracted times. Officers may be more aware of the legal aspects of security and may be less likely to deviate from a policy or procedure. Having an officer available to cover vacations and sick days is the problem of the security firm, scheduling and overtime are no longer your headache.

In most cases your insurance liability will pass through to the security firm. Carefully read your contract with the firm before signing. Should there be a “hold harmless” statement which relieves the security company against liabilities, claims, judgments, etc. you may be assuming more liability than you intended.

Another option to be considered is the hiring of off duty police officers. These officers are well aware of the criminal element in your area, know the law and have an intrinsic knowledge of the security and emergency procedures of your community. In a small marina this choice may be the perfect solution to your security obligations.

In a multi-use complex or a private community, security may be a separate department not in the control of the marina operator. It becomes the responsibility of the operator to develop a good working relationship with the security department. The operator must ensure the marina security and emergency plans are incorporated and become a vital part of the overall facility plan.

Training For Safety
The one common thread regardless of the type of security you employ is training. The marina security stories read like a combination of Monty Python and Stephen King. First the late night calls from guards concerned the tide looks lower than normal, then there is no call from the same guard regarding the strong odor of diesel which in the morning revealed a several hundred gallon spill. Or how about the boat owner provides a security pass to workers who return later that evening to robbed the boat of all its electronics. Proper training will help to keep these adventures to a minimum.

Security should have the same emergency training all your dock staff does from the location of the main circuit breakers and fire equipment to the operation of the trash pump. Do not overlook this type of training even if you contract with a security firm!

Along with proper training provide your guards with a copy of the policies and procedures, which they must sign stating they have reviewed and understand them. Included should be a policy statement, which appears to be common sense but may not be to an enthusiastic young guard—No attempts are to be made to safeguard property if there is any risk of physical harm to anyone.

Sharing The Load
Boat owners also have a responsibility to keep their marina and property safe and should be regularly reminded to report suspicious activities, marina rules violations and not to freely share gate keys or pass codes. Many live-a-board marinas have implemented neighborhood watch-type programs with good success.

Security is a perception. Whether you contract with a security firm, hire a consultant or utilize your own staff to achieve the perception of a safe, crime free marina all it takes is proper planing, training and a little common sense.

Marina Dock Age, July/August 2001

Where to Turn for Marina Loans
by Harry Nieman

In the last several months, Federal Reserve Chairman Alan Greenspan has lowered the Fed rate six times, by a half percent each time. One would think that with the bank prime lending rate at around 7 percent, loan funds would be plentiful for any reasonable purpose, such as financing a marina. You already may have learned that is not the case.

Banks are reluctant to finance marinas in a go-go market, and are now really in a rather cautious lending mode. The uncertain economy has caused cash flows to be adversely affected in regular business enterprises well known to the banking community. One can only imagine how banks react to marina loan applications.

STORAGE = STEADY INCOME

Very few lenders in the market place understand the marina business and its strengths and weaknesses. Most believe it to be highly volatile because of the recreational aspect of boating and are unaware that the steady income generated from storage (wet or dry) is the heart and backbone of any marina’s success.

Most of this revenue flows to the bottom line, also known as NOI (net operating income) or EBITDA (earnings before interest, taxes [income taxes], depreciation, and amortization). Much of this income will not be impaired in an economic downturn because the boats have to be housed somewhere.

Today, zoning and other ordinances generally prohibit storage in a non-commercial industrial location. If the boat owner is unable to make his payment to the bank for his boat and the bank repossesses the boat, it is now the bank’s obligation to make storage payments to the marlna owner.

Surely, before this happens though, the boat owner can find cheaper storage. If the boat is small enough, the owner might take the boat out of the water or the dry stack building and store it on dry land himself. This causes income to go down for the marina owner, and in a downturn or slow economy, fuel sales are reduced, as well as repair, service, and new boat sales.

If disposable income is reduced, it has an effect on recreational expenditures (i.e. golf, vacation, etc.) but most fishermen continue to use their boats because they enjoy the sport, own a boat anyway, and are limited to spending money on other diversions so they continue to support boating.

WHERE HAS All THE LENDING GONE?

Unfortunately, there currently is no one source of exclusive marina financing. This was the niche that I operated within for seven years. I pursued nothing other than marinas until my funding source decided to collapse the specialized recreational division and direct the general bank to merge this activity within the full banking network. I was no longer able to provide expertise or support for this lending niche. One other lending source attempted to create a successful marina lending operation, but it failed to establish any material significance in the marketplace and ultimately terminated its marina lending effort.

New marina owners, buyers, or sellers are relegated to dealing locally with the community lender, then educating each new loan officer of the merits of their requests. It is important that the local lender support such businesses in the community, since it requires reciprocity for each to survive.

One major drawback may be that the local lender is not sufficiently capitalized to handle a large loan request of a multimillion-dollar marina. Then the request must be searched regionally. A borrower must convince the lender of the merits of the loan request, the safety, the return, or the advantages of other business generated by the marina which might benefit the lender (e.g. compensating balances, investment banking, vehicle loans and equipment financing, personal and consumer business, and so on).

To commence with the loan request, a prospective borrower must prepare the last three years’ financial statements reflecting items of income and expense on the marina. The borrower must also provide an expense item to cover reserves for replacements (normally 2 percent of gross income) excluding any extraordinary income (boats, motors, trailers, etc.) and a charge for management of the marina which is normally 4 percent of gross income. Also, including a current income and expense statement covering the previous 12 months is very important to reflect current activity and trends affecting the marina.

In the event additional income or expense are to be incurred during the ensuing 12-month period, a pro forma or projected statement should also be prepared. A description of the property and all its components which is being offered as security to the lender is necessary so the lender understands what collateral is provided for the loan. The borrower should provide a bio or resume authenticating his expertise in the marina industry or some support of business acumen along with a current personal financial statement.

THE NUMBERS

A loan request should be reasonable, based on the dollar amount of the loan and the cash flow of the marina to service the debt payment. A loan to value ratio of 70 percent is adequate to produce a debt service ratio (DSRI of 1:30, which is a standard ratio for the average marina loan. Certainly some marinas will qualify for more or less based on certain circumstances. A marina with a good track record should qualify for a loan based on a 1:30 debt service ratio. It must also provide the lender with the comfort of repayment of the debt.

To overburden a marina with more debt than described unduly burdens the owner/operator to provide efficient and consistent revenue not subject to any disruption reduction or variation. A high level of debt puts the marina owner at risk and the lender in a defensive and sometimes litigious posture.

Many local lenders, particularly those in your community, may require personal guarantees and/or additional collateral to induce them to extend a marina loan. However, once lenders have experience with marina loans they will then be willing to extend credit to marina owners/ operators for acquisitions, expansions, and renovations.

Harry Nieman is based in Pittsburgh, Pennsylvania, and may be reached at (4l2) 884-2218.

Marina International, June 2001

Ready for Anything
by Patience Welton

Are you ready if the next phone call you receive is a bomb threat? Or, if you weren’t there would your staff know what to do? I'll bet you’re thinking yeah, like that would ever happen because until this year that would have been my response. At a luncheon for marina operators, my companion was bemoaning the fact while en route to the meeting her marina had received a bomb threat. I was impressed with her calm demeanor and asked stupid question number one. Did your staff know what to do? The answer was, of course they’ve been trained. At this point I am thinking would I know what to do let alone know how to train my staff? Not learning my lesson from stupid question number one, I moved on to the second stupid question. Who ever heard of a bomb threat to a marina? Two more marina operators at the table of twelve shared their bomb scare stories and I made a mental note to keep my mouth shut and reevaluate my emergency plans as soon as I got home.

Human fenders
We all train our staff not to use their body parts as fenders between the boat and the dock, what the proper procedure is for fueling, and where the fire extinguishers are but do we really give them all the training they should have to handle any situation. Do you teach them the chain of command, how to call in an emergency and to whom, that directing the emergency equipment and crowd control are probably the most important tasks they can preform. How about referring all questions to the company’s designated spokesperson. I don’t know about you but I personally have nightmares of the 18 year-old dock attendant appearing on the nightly news giving his expert opinion on the cause of the fire, accident, sinking… Scary thought isn’t it?

There is so much more to emergency training than how to cope with the immediate problem. Would your staff remember to lock the cash register/ship’s store before running out to help? Is your company policy “No attempts are to be made to safeguard property or money if there is any risk of physical harm to anyone: safeguarding life is the primary concern.” If not, why not? Does everyone really understand this policy means in a robbery, give them the money…

Play what-if scenarios with your crew; let them take turns making up the problem that needs to be solved. I promise the scenarios, which have not occurred to you and how active the imagination of your staff is will amaze you. Not all situations are emergencies but will still require calm organized responses. I admit I wasn’t ready for the bomb threat situation but I do know what to do if an alligator should take a stroll down a dock or a deer is drowning in the harbor and my hurricane plan is honed to near perfection. Experience is a wonderful teacher, be sure to share your wisdom. Also include damage control after the incident in your plan. Be prepared to prevent looting or control all the overnight experts ready to help with the clean up or repair for a small fee. You will find it an enormous advantage to already have established contact and a relationship with a diver, spill response team, marine contractor, and salvage company.

Training can be a pleasure not a chore. Have fun with it. Practice throwing life rings, using the fire hoses, deploying the spill boom. Better yet invite your local emergency response providers to preform a drill. The importance of keeping the walkways clear of obstacles becomes apparent when the firemen in their full gear are dragging a hose to the end of a dock to a boat billowing with smoke from a smoke machine. Your marina residents might even think more seriously about their plans.

Dedicated training personnel?
Knowing what equipment is available through your emergency providers will be helpful to your plan. A frantic call to the local fire department to bring the trash pump to aid with a sinking vessel would be futile if the pump was mounted on the truck and so can't reach the boat. Some lessons are learned the hard way.

Do you have designated personnel conducting the training and maintaining your plan? If you are relying on the already educated employees to train your new staff then let me remind you of the game you played as a child - “Telegraph” or “Chinese Whispers”. The first person whispers a statement to the second who repeats it the third and by the time it reaches the last person the statement no longer remotely resembles the original. You get my point.

If time or ability is at a premium perhaps you should consider using an outside service to provide you with the groundwork for your plan. There are many options and varying degrees of help. The Panic Preventer File, which is a guideline to marina emergency response, is available at University of Florida through the Florida Sea Grant College Program will at a minimum give you a base to build your plan. Government agencies all have some forms of assistance. Your own Marine Association will be eager to help, as is your Insurance Company, they call it risk management. Marina Consultants and Management Firms can custom design a plan to your specific needs and even conduct the training. Regardless of how you handle your plan and training, it is vital that it be done because we all know --Murphy was an optimist when his law is applied to marinas.

Marina Dock Age, June 2001

Renovated Marinas
by Patience Welton

The Jockey Club Marina could best be described as an aging jet setter in need of a face-lift. Built 32 years ago she faced the same problem many marina facilities do when they are attached to other enterprises (hotels, restaurants, and clubs). The allocation of funds is never equal. The marina may produce more revenue every year but at capital budget time the carpet in the obby wins out over replacing aging pilings. In the Jockey Club Marina’s case she was well past her prime but an underwater survey revealed that she had good bones and all her concrete support piles were still in good condition.

Walking the property for the first time it was apparent that the money had dried up years ago and the docks had been without daily maintenance or supervision. The 6-inch fire main was broken in too many places to count, the potable water leaked at every joint. The electric room had been taken over as a storage room by one of the few remaining boats and was filled to the top with lumber for on going carpentry projects. One yacht owner had even installed his own electric service so that he would be guaranteed power. The majority of the pilings were toothpick thin at the splash zone. The list went on and on.

The first instinct was to declare my boss a true visionary, but after closer inspection it was apparent that the Jockey Club Marina had a lot to offer and the pluses far outweighed the minuses. The present layout of the marina was great, like a Frank Llyod Wright home it was ahead of its time. Built in an era when the average vessel carried a beam of 16' or less the majority of slips can boast 30 foot of room or better. Her location was another big plus, on Biscayne Bay just off the Intracoastal Waterway, with the Miami Beach skyline to the East. A recent survey by the MIASF boasted that 900 megayachts (a vessel 80 feet or better) per season will visit South Florida and more than half the slips in this marina were able to accommodate them.

Where to start? Big boats need big power. The initial plan was to do the work in phases starting with the up-grade of power and the repair of the utilities then move on to the structural repairs in the second phase.

Do your homework

Do your homework. Talk to people in the industry, go to other area marinas and look at the solutions they use to local problems such as storm surge, marine growth, and fire code. Ask the marina operators for input. Did they have problems with permitting, would they recommend their engineers, contractors, and equipment? What would they change if they could do it again? You will be pleasantly surprised how eager everyone is to share his or her knowledge and experience.

Take the time to get feedback from dock attendants and professional crew, they see the marina through different eyes. Find your target market and ask those boaters what is important to them.

Keep a notebook

With all good homework assignments it’s important to keep a notebook. Photograph good ideas, take “before” pictures of your project, collect brochures of products that interest you, keep business cards and make notes. From the beginning of this project everything has been placed in a three ringed binder. Having all the information centrally located and easy to reference was a big time saver.

Choosing engineers

The world now revolves around your engineered drawings. Without plans you can’t effectively bid the project or even consider the permitting phase. Armed with recommendations from industry contacts we went in search of an engineer. This is similar to looking for a spouse. You want someone you trust, that has the same vision of the future and you can communicate well with.

Overwhelming is the word that best describes this step. Each bid presentation was better than the last. In the end, we decided to hire two engineers—one structural and one electrical. The final choices were driven by many factors. We spoke with their peers, their clients and went to sites to physically see their work. Cost was also a factor and there was a wide range to the bids, to the point we weren’t sure that everyone was bidding on the same project. To determine that we were comparing apples to apples took more communication. This was a benefit because as we talked to each engineer it became clear which ones had the best understanding of our objectives. Then, sign the contracts and move on to the next phase.

Thank-you notes

Write and thank everyone who took the time to bid. If you can, give them some insight into why you made your choice. In most cases they have put a great deal of time and effort into your project and deserve the courtesy of this information. At a previous restoration project, we had been hired to supervise, the marina owners had bid the same job out so many times that when they were ready to actually do the work only two of the original eight contractors were even interested in the job. Tell people the truth. If you are doing research for next year’s capital budget, they will help you but don’t pretend you are going to spend money you don’t have.

The next phase of the project involved working with the engineers while they put the preliminary plans on paper. For the structural engineers, this meant field trips to marinas to see the ideas we liked. Their challenge was to make these ideas work in our restoration project. Ok so, it’s not as challenging as the woman that goes to the beauty parlor with the picture of the movie star she wants to look like is but it’s close. Our visions were only the beginning of their work. There were days spent in the rain and sun compiling drawings so they would have some place to start and from there they moved on to the dreaded maze of code compliance and the actual drawing of the plans.

Electricity

Our electrical engineer was chosen for the project because of his extensive marine electrical experience. His days were spent with us looking at a slip and determining what the maximum power requirements would be of the largest vessel it could accommodate. This is not as simple as it sounds. In the marina right now there are four vessels over 100 feet and each one has different power needs. This is an area where many projects make the mistake of letting the power capacity of the slip determine the size of the boat instead of the maximum capacity of the slip. Back to lesson number one, do your homework and know your target market. We spent the Fort Lauderdale Boat Show talking to megayacht Captains and Builders to determine what their requirements were now and what the future would bring.

Telephone and cable

The decisions about the electrical power were not nearly as complicated as the telephone and cable service. I still wake from nightmares about ISD lines and CATV. Technology is moving so rapidly that it is difficult to know what to do. In the age of wireless communication, will vessels even want or need these shore-side amenities?

Conduit is cheap, run an extra empty line. Ok not cheap but it will be worth every penny if there is a need to run a new wire after the reconstruction is complete. The guy running the new wire will think you of as someone with forethought and wisdom.

Once the engineers have completed the preliminarily drawings they will be sent to you. This is not like curling up in front of the fire with a best seller but you absolutely need to review these plans completely. Make a written list of your questions, anticipated problems and any oversights. Our first list had 35 items of concern. A meeting of the entire project team was then called and every item was addressed. Back to the drawing board and the process starts again, plans, review, and meeting. Once everything is right and everyone is in agreement then the plans go off for their preliminary review by the various permitting authorities so there are no surprises when the contractor is ready to pull the permit and begin the work.

This is the level of completion that the Jockey Club Marina restoration project has reached to date. We will continue to chronicle our adventures. We have learned it is sometimes more fun to live vicariously than to experience the real thing. We hope this will answer the question our boss repeatedly asks. “Why aren’t you spending money?” Soon… we’ll be spending money, soon…

Marina Dock Age, April/May 2001

Determining a Marina’s Value in the Real World
by Dennis P. Kissman

The marine industry as a whole has some real soul-searching to do. The engine manufacturing component of the industry is just getting over the OMC bankruptcy shock. Now we hear of the changes at the top of Marinas International, leaving its future uncertain as to whether Goldman Sachs, its principle financier, is planning to stay in the marina business or dump their portfolio of marinas on the market at fire-sale prices. Top that off with the negative talk about the economy, and everyone is beginning to worry about the future.

Marinas are one of the last remaining cottage industries in this country and reacts to news of this kind on a personal level. As a result, the Marinas International news will have a greater negative impact on the marina component of the industry than OMC had on the engine-manufacturing component. And all this comes on the heels of Bank of America (formerly NationsCredit, the largest lender on marinas), pulling out of the marina lending business and leaving it up to local branches to make individual lending decisions.

My concern is that this wave of disturbing news may cause some marina owner/operators to panic and may discourage other potential buyers of marinas. My word of advice is, don’t panic, but reassess your position before you make any changes in your business plan. There are still opportunities for owners to sell or refinance and for buyers to buy. But I think everyone may have to be a little more creative to make it happen. Be wary of the Carpet Bagger—this industry has seen more than its fair share over the years—who comes knocking on your door to tell you about this great deal you can’t live without. Most likely you can’t live with it, either!

Always remember that your audience is made up of customers who will give you money. For a transaction to culminate there has to be a level of confidence between all parties involved or the check will never be written.

With this in mind, let’s look at how we can achieve this goal. Your ability (or that of a potential buyer) to get a loan will be based strictly on the past performance of your marina. If you have followed some of my articles over the years, I have explained how to prepare for this.

Let’s assume you did not prepare, so the question is, what can I do now? All is not lost, but this is not the time to get holier than thou. Obviously, the end result is not going to be as good as it would have been if you had prepared, but let’s work with what we have and make the best of the situation at hand.

At this point, the one advantage you have over everyone else is that you know your operation better than anyone else. The first thing to do is honestly assess your operation. Separate reality from wishful thinking, and be able to present the facts, not fantasy. Wishful thinking is the “could have done it, but didn’t” syndrome. Fantasy is creating financial and statistical information that has no relation to what actually happened.

Suppose you need a loan to expand your operation. You might think this is wishful thinking because you would be creating something new, and the only information you can present are financial projections as to what this addition will do for the operation. This may be true, but it is not your projections that will get a lender to write the check. It is how well you have performed in the past that will reassure the lender that you will be able to meet your projections. In any scenario where someone is going to write you a check, past performance will determine the outcome.

Now the question is, how do you make your operation look good without distorting the truth? I would suggest recasting your financial statements. This works to your benefit as long as you have honestly recorded all cash received. In this process the controlling document will be your federal tax return. At some point it will have to be produced as support for the loan request.

If you are like most of us, an accountant prepares your tax return and you probably have not taken the time to look at it beyond what moneys you have to pay or the refund you will be getting. Also, most marina owner/operators only look at half their business by preparing an income statement for the business. The lender is going to look at this income statement but he is also going to look at schedule “L” of your tax return, the balance sheet.

Without getting into a boring explanation of the relationship of the income statement and balance sheet for your business, let me give you an example of a situation I encountered recently with a client who was looking at a marina to buy and operate himself.

To set the stage, let me say the marina was in good condition and had great development potential, but the asking price was unrealistic. Also, the seller, being an owner/operator, had the right intention and recast his income statements for the last three years, taking out what he considered non-marina related expenses. On the recast income statements he presented to my client, the marina income and the non-marina related expenses corresponded to what was reported on his federal tax returns. This was a good sign, as it took a combined loss and was able to show that the marina was profitable.

Here is where the seller’s presentation started to unravel. His reported revenues for the most recent year were a little over $200,000, with a reported profit for the marina of about $96,000, or a 48 percent return on revenues. There was about $150,000 of revenue related to boat storage, and the balance was from a number of other profit centers that were not carried on credit. What this meant was that the $150,000 was subject to terms and carried in accounts receivable until paid.

The first warning sign was in the combined statement—a write-off for bad debts of $17,000. This write-off was recorded as a non-marina related expense. This is hard to explain in that there are no revenues reported as non-marina related. A lender would pick up on this immediately and reduce the marina’s income from $96,000 to $79,000, an 18 percent drop in borrowing power.

Now the balance sheet on the tax return comes into play. It has a Line item for an outstanding account receivables balance. The amount appearing here is $65,000, or 49 percent of the total year’s sales subject to account receivables. How comfortable do you think a lender will feel believing the reported income number now? If you are dealing with a very liberal lender he may allow the account receivables balance to equal one month of billing, but that's about it. This means that the lender would take approximately another $50,000 off the borrowing power of the marina, bringing it down to $29,000, or a 70 percent drop from the marina’s original borrowing power.

It is unfortunate that the gap between the asking price and the actual borrowing power on the marina had grown so far apart. As a result, I had to recommend to my client that he pass on this deal unless the seller was willing to recognize the true value of what he had to sell.

If the seller had only taken the time to understand what he was doing, the outcome would have been completely different. Remember, you have only one shot to present your case to either a lender or seller. Any changes after that point only raises suspicions about the information you are providing. If you are serious about selling or getting a loan, take your time, and get sound, expert advice. Understand your audience and how the information you prepare will be used. Follow these suggestions, and your chances of succeeding will be greatly enhanced.

Marina Dock Age, April/May 2001

International Marina Conference Planned for Sydney
by Ron Stone

Sydney Australia, will be the venue for ICOMIA’s Fourth International Marina Conference, popularly referred to as IMC 2002.

A WHO’S WHO OF SPEAKERS

The conference, scheduled for March 7-10, promises a truly international perspective on the significance of marinas in today’s leisure-time industry.

Several Americans are included in the lineup of speakers:

Dennis Kissman, president of Marina Management Services, Inc., will lead the marina management/operations issues panel discussion. Jim Frye, executive director of the Marina Operators Association of America (MOAA) will discuss professionalism in marinas and how marine trade associations can be of help to marinas. Mary Kuhn, marina manager of the Marriott Marina in San Diego, California, will describe the Marriott’s approach to hospitality.

Dan Natchez will share his vast knowledge and experience as president of an international consulting service to point out the advantages and pitfalls of doing business on the Internet. Dennis Nixon of the University of Rhode Island and cofounder of the International Marina Institute, will explain universal principles of marina liability. Edwin F. Drabkowski, U.S. Environmental Protection Agency, and Jan R. DeLaney, Florida Department of Environmental Protection, will describe educational approaches to the campaign for clean waters.

Dave Obern, head of the Oregon State Marine Board’s highly acclaimed public boat access program, will talk about soon-to-be published federal design standards for barrier-free boating and sport fishing facilities.

Steve Lewis, in charge of the Wisconsin Department of Natural Resources’ public boat access program, will cover design, construction, and maintenance of boat launch ramps. In 2002, Mr. Lewis will be president of the States Organization for Boating Access (SOBA), the national organization for state government agencies responsible for planning, designing, building, and maintaining public recreational boating facilities.

Mike Kelsey, Sr., recently retired as longtime chairman of Palmer Johnson, will describe what megayacht owners and captains look for in facilities and services.

There is a great diversity and wide range of talent and experience among speakers from other countries, as well.

From Great Britain, Sam Bourne, executive director of the Yacht Harbour Association of the U.K., who is currently president of ICOMIA, will emphasize the importance of marinas to the success and future growth potential of the recreational boating industry. Peter Wagstaffe, customer relations manager for British Waterways, will present an inspirational example of public/private partnerships, telling how his public corporation works with private enterprise to cultivate the recreational potential of a 2,000-mile inland canal and river network in England, Scotland, and Wales.

From France, Philippe Duchene, general manager of ACT-OUEST, will talk about optimizing marina profitability by sensible pricing policies for boat slips, boat hoists, and land-based services.

From the Netherlands, Jolke U. Brolsma, secretary of PlANC’s Sports and Pleasure Craft Commission, which is made up of multinational government representatives involved in navigation safety, is invited to discuss an in-progress working group project on dredging problems and solutions for marinas.

From Italy, Angelo Zerilli, director of the Italian national government’s nautical tourism promotion program, will describe how his country has streamlined the permitting process for marinas. Roberto Perocchio, president of the Adriatic Nautical Tourism Association, will be one of the panelists on marina management/operation issues.

From Australia, Jeff D’Albora, a veteran marina developer, will present a case study (Akuna Bay) of operating a marina concession in a national park. Another case study, on pollution prevention by the Southport Yacht Club in Queensland, will be presented by Steven W. Fisher, Gold Coast Marine Agencies Pty Ltd. In addition, lan McAndrew, a marina owner/ operator and president of the Australian Marine lndustries Federation, will be part of the panel discussing marina management/operation issues.

From Singapore, YP Loke, an international marina consultant and former manager of the world renowned Raffles Marina, will round out the panel on marina management/operation issues.

From Northem Ireland, John McCorrnick, general manager of CarrickLergus Waterfront, will provide a case study on how inclusion of leisure, sport, and recreation special event facilities can ensure the success of waterfront development.

From New Zealand, Peter Bursfield will describe the cost benefits to Auckland from construction of a super-yacht facility that is involved in hosting the America’s Cup.

WHAT THE CONFERENCE HAS TO OFFER YOU

This is no ordinary marina education conference. It’s your chance to meet and exchange practical information with marina colleagues from all over the world.

Signing up for the conference gives the opportunity for site visits to Australian marinas to see for yourself how marinas are meeting the challenges and thriving in one of the world’s fastest growing boating markets.

IMI SEMINARS ARE A BONUS

A two-for-one package is being offered. Conference registrants will be eligible for a discount on the one-day International Marina Institute’s introductory seminars that have been arranged to dovetail with IMC 2002.

IT’S A BARGAIN!

The conference registration fee of $800 (Australian dollars) translates to approximately $400 (U.S.) at today’s exchange rate. It covers an opening night’s reception, two days of formal sessions, morning and afternoon refreshment breaks, a dinner cruise of Sydney Harbor, free access to marina products and services exhibits next door to the conference, a third-day escorted combined bus and boat trip to representative marinas, boat yards and yacht clubs in the Greater Sydney area, and a copy of all of the papers presented at IMC 2002. The two-for-one package for those wishing to attend IMl’s all-day successful marina management seminars on March 6, the day before the conference, also at the Darling Harbour Convention Centre, is a real bargain—$960 Australian (half that in U.S. dollars).

For more particulars, contact Ron Stone, ICOMIA/IBFC Chair. Telephone: (808) 695-1142; fax: (808) 695-1370; or e-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Marina Dock Age, April/May 2001

Make Sure Your Marina is Protected in Our Litigious Society
by Ron Brazda

There once was a time when attorneys were used only in worst-case scenarios, for real estate closings, or for settling a will. Nowadays nearly everyone has someone they can call “my lawyer.”

I live on a small island in the middle of the ocean, where the ratio of advertised law firms to people is one to 423. Assuming that the average law firm employs between three and five attorneys, that equals one attorney for every hundred people inhabiting a 32-square mile island.

I recently had the opportunity to be the interim manager at a marina in Washington, D.C. During my first two days there, I must have heard the word “sue” at least 50 times—more than I had in my entire life. These “lawsuits” never came to fruition, but it proved to me that we live in a society where people think if someone looks at you wrong, you can sue them.

Marina owners and operators spend more time and money on attorneys then you might like to think about. I once saw a commercial lease that was 65 pages long. This was for just one business occupying office space and a boat slip—that’s it. Leases and contracts like this seem to be written by an attorney for an attorney. They are written with the assumption that one party will sue the other eventually, and you have to trust that your lawyer has covered all of his or her bases to keep you clear.

The problem still exists of how long such agreements should be. Is asking your customer to sign a ten-page document to rent a boat slip too much? Ask your attorney and he will say no. Ask your customer and you will probably get a response filled with four letter words.

If you are operating a boat rental operation, a well-written and executed boat rental agreement can save you money in damages. When I was renting boats, I was personally named in a suit by a boater who broke his arm. The suit claimed that the company and I never informed him that boating can be dangerous. Our contract, which we thought at the time was excessively long, was our saving grace. Not only did the contract, which they signed and initialed in all of the twenty places, cover injury, it also covered accidental death. Once we sent signed copies of the agreement to the accuser’s attorney, the suit was immediately dropped.

It is the responsibility of each property owner or manager to make sure your property is a safe and hazard-free environment. Simple things that are often overlooked can increase your risk of being on the wrong end of a lawsuit. Cracks in your parking lot can be a liability to you. Someone could drown in your marina, and because there was no life ring on the dock, you could be held liable.

It is like the old saying goes, If it weren’t for lawyers, we would not need lawyers. Since we do have them, there will be litigation. In our current day and age, there are more things to sue about than most people think.

Marina International, March/April 2001

Are You Doing Your Job?
by Patience Welton

Can’t find good employees, is a lament often heard at marine industry functions everywhere. What is a poor marina operator to do? We compete with industries offering more glamorous, lucrative, and prestigious entry-level careers. What do we offer?

The allure of trudging the dock through rain, sleet, and snow making sure every vessel in your control is safe and secure. The panic when the projected path of a hurricane passes directly over your marina. The glamour of pumping out holding tanks and collecting trash!

The prestige of being the one they call at home in the middle of the night to be reassured the slight change in the tide is a normal daily occurrence or they think they left the oven on and would you mind double checking. Don’t forget the honor of being able to work on every holiday.

With the money you make you can retire early, as long as you’ve made wise investments with the money you’ve inherited, made in your first career or won in the lottery. This is a career you do for the love of it and we can’t possibly compete with the six-figure salaries offered by high-tech companies.

Management Techniques

So as Marina Managers are we doing a good job attracting and keeping employees? Start by doing some soul searching, and review your management techniques. Are you the type of person that you would want to work for?

How are your communication skills? Do you tell your employees what you require or do you expect them to have your common sense? Have the words “he should have known better or why do I have to tell you this“ every crossed your lips. You haven’t hired mind readers and what is clear, as night and day to you might not make a bit of sense to someone with different life experiences. If an employee makes a bad decision because of lack of good information, who is at fault? And when an error happens do you take the time to explain why your eyes are bugging out and steam is coming out your ears or do your employees automatically just run for cover. Do you treat them as you expect to be treated? Do you share positive feedback as easily as you criticize? A bit of encouragement goes a long way to way to making a person feel wanted and needed.

Are you understanding? Do you know what kind of life challenges your employees are facing and do you care? If you are thinking, I pay them to work eight hours and it doesn’t matter what happens when they are off the clock, you fail. Have you ever needed to take a few minutes from your workday to pick up your sick child at school, run to the bank, or renew your driver license? So does everyone else. I once had the pleasure to employ a single mother with three children; together we experienced high temperatures, teacher conferences and baby sitter problems. I adjusted the work schedule on occasion, let missed time be made up when ever was possible but in the end I got more than I gave. She was a faithful loyal employee that never took advantage and was always there when I needed her. To many people this kind of flexibility is worth more than money. This does mean that on occasion you might have to “jump in” and fill the empty spot. You will find this goes miles in the respect category and will verify that you meant what you said… “I will never ask you to do something I haven’t done myself.”

Money Isn’t Everything: BUT

Do you understand the concept of a living wage? Take a good look at the take home pay of your employees? Do they need to choose between the rent and food? Recently five security personnel left a facility for the complex next door enticed by a fifty-cent an hour raise. Employee turn over cost money — advertising, uniforms, training. Do you think you are saving money by paying the same amount as your competitor? Do you give raises when they are merited or wait for the ever so popular annual review. Even worse do you wait for the employee to approach you and tell you why they need more money? Some won’t ask for a raise, they will just move on to the next job or enroll you in the involuntarily profit sharing program.

Offering benefits of value is probably the biggest obstacle facing all companies today. Health care costs are spiraling out of control but it is not a benefit if the employee can’t possibly afford it. There is no easy answer to this problem but you owe it to your employees to regularly review your plan to guarantee you are offering the best value available. Money isn’t everything. Do you look for ways to make your marina a fun place to work? Staff meetings outside under a tree instead of in the office. Music of their choosing not yours (you can still control the volume). Are family members encouraged to visit? This has a double benefit because not only will a person who is proud of their job, do the job proud but it sometimes makes it easier at home when the family understands the pressures and the responsibilities that are part of the daily routine.

When was the last time you took a dock attendant to a Marine Industry Function or to visit the neighboring marina? A few hours at the boat show goes a long way with the dockhand whose primary job is pumping fuel in the hot sun, or hauling groceries. Being a mentor is worth every bit of time and effort you put into it. The reason I still love this business today was because of the support and encouragement I’ve received from my mentors.

Happy Staff: A Marina’s Most Valuable Asset

A manager’s primary responsibility is to protect and maintain the facility’s assets. Surveys say marina patrons list clean rest rooms as their number one priority but that is not true. Nothing can match a smiling helpful employee. Happy staff is your most valuable asset. A visiting yacht club was heard praising a 30-year-old marina, in dire need of renovation because their service was better than the 4 star resort down the waterway. The enthusiastic effort of the dockhands was the sole reason for this compliment.

Are we having a hard time finding and keeping good employees because they aren’t out there or are the good employees firing us because we are not doing our job by offering support, guidance, understanding and training? What made you choose this career and stick with it? Maybe it is just being around people who are truly enjoying life. My favorite time of day is doing the dock walk when there isn’t a soul stirring as the waves lap gently against the shinny white hulls and the morning dew is glistening on the varnish. That is when I think to myself what a great job working in a marina is and everyone should be as lucky!

Marina Dock Age, February/March 2001

There’s More to the Story
by Ron Stone

In the last issue of Marina Dock Age, I told you why marinas make news, and looked for patterns in the forces shaping that news. Because of magazine space limits, coupled with the inevitability of late breaking stories, I could not hope to cover everything in one article. This article is a followup, because there is certainly more to the story of why recreational boating facilities are newsworthy.

DOWNSIZING MARINA PROJECTS

Between the developer’s original vision and actual construction or expansion, there is often a difference in the size of a marina. Many projects have had to be downsized: sometimes because there was no other way of gaining the necessary federal, state, and for local government approvals than to strike an accommodation with environmental protectionists who fear negative impacts on the environment; sometimes because there was no other way of appeasing local private property owners, who fear that a marina in their midst will depreciate property values and disturb their peace and quiet; and sometimes because of overruns on estimated construction costs.

The following stories are fairly representative:

Gloucester Daily Times, MA, Feb. 25, 2000:

The neighbors at Pigeon Cove object to the building of a 80-slip marina on an abandoned factory site, contending that a commercial business in their midst would spoil the historic character of the harbor. Although a previous site owner’s plans envisioned a bigger marina, which was blocked by litigation by abutting residential property owners, the neighbors are still not satisfied that the project has been scaled down enough.

St. Ignace News, Ml, Jan. 13, 2000:

The state Department of Natural Resources wants to build a 122-slip marina at Mission Point on Mackinac Island. It’s needed to help fill a need for transient dockage in the area. The city and a community preservation group vigorously oppose further development of the island’s scenic shoreline and the prospect of increased boat traffic. Alternatively, they suggest expanding berth space within the existing harbor at Haldimand Bay, or building off the Straits Transit Dock, between the existing marina and the east breakwall. Either alternative allows for only 53 additional slips, versus the 122 proposed by the state. The DNR maintains that those alternative locations are already congested. Unless the opposing forces can effect a compromise, there may be no marina development at all.

Coastal Observer, SC, Aug. 24, 2000:

Getting clearance to build Willbrook Marina, off the Waccamaw River on Pawley’s Island, took 10 years of negotiating with environmental interests. When first proposed, plans called for a 42-acre complex with 200 boat slips and 200 housing units. The project was reduced to an 11-acre complex with 50 to 60 wet slips and a 288-boat dry stack storage building. In exchange for a permit to dredge 1.1 acres of wetlands in order to connect the boat basin to the river, the developer agreed to plant 1,000 pickerel weeds, a native Low Country aquatic plant. He also agreed to allow public use of the facility’s boat ramp for a day fee of $5.

MORATORIA

Sometimes, as a way of holding down the number of boats on the water, antagonists will go so far as to advocate a moratorium or stoppage of marina construction or expansion. They think that curtailing boat access will reduce boat traffic safety and environmental impact problems. This is specious reasoning. Safe boat carrying capacity studies indicate that only 15 percent to 30 percent of a marina’s boaters will be out on the water at the same time; even less, during the work week.

Be that as it may, the following are a few examples of what marina operators have had to contend with lately:

Daytona Beach New-Journal, FL Aug. 14, 2000:

Volusia County officials have been working on a manatee protection plan that proposes countywide limits on marina expansion. It calls for a moratorium on new boat slips for one year if two or more manatees are run down and killed by watercraft within a two-year period in designated waterway zones. There are 17 such zones in the county—eight on the Atlantic Intracoastal Waterway and nine along the St. Johns River. Under the proposed manatee protection plan, the only way a marina could justify expansion would be if it had a 90 percent average occupancy rate for a two-year period.

Austin American-Statesman, TX, Sept. 23, 1999:

The Lower Colorado River Authority voted to stop all marina construction on Lake Travis for one year while the agency worked on rules to reduce boat traffic, speeding, and noise. There are now 55 marinas and 4,098 slips on the lake. The moratorium did not apply to slips under construction or slips already permitted for future construction. In 1996, the agency imposed a six-month moratorium while it upgraded building standards for marinas.

Austin American-Statesman, TX, Jan. 5, 2000:

Sandy Creek Marina investors sued to force the city of Jonestown to permit them to build at Lake Travis, alleging that the city deliberately delayed permitting their project so that it could adopt an ordinance regulating marina construction on that part of the lake within city jurisdiction.

The city ordinance, intended to prevent more boat traffic, limits boat slips in any new marina to 40 feet in length. The number of boat slips allowed is determined on a case-by-case basis.

Door County Advocate, Wl, March 10, 2000:

In Spring 2000, marina interests rallied against a limited state moratorium against dredging upper Lake Michigan harbors from March 15 to June 30. The proposed no-dredge poLicy was driven by a state Department of Natural Resources concern that the extraordinarily heavy dredging needed to offset record low water levels on the Great Lakes would unduly interfere with the critical spawning period for a variety of fish species. After it was pointed out that Spring dredging was critical to providing access to marinas and boat launching sites in time for the 2000 boating season, and that the moratorium could be devastating for areas economically dependent on recreational boating and tourism, the proposal was put aside.

A compromise agreement allowed dredging of village and town marinas, private marinas, commercial fishing docks, and other places where it would provide a public benefit that balances any potential harm to fish and wildlife propagation.

PUBLIC ACCESS RIGHTS VS. PRIVATE PROPERTY INTERESTS

Marina and boat launch projects often encounter organized opposition by local riparian private property owners and others who cannot abide competition for use of the water. In many instances, these locals are recreational boat owners themselves. They believe their resident status gives them a priority over transient boaters from outside the community. They do not grasp, or are unwilling to concede, that marinas and marina users have as much right as they do to access public waters. Similarly, commercial navigation interests have been known to argue that their economic status entitles them to weightier consideration, though that too is debatable in light of the growth in recreational boating and its increasing economic importance.

Case-in-point:

Charleston Post and Courier, SC, March 17, 2000:

The state Office of Ocean and Coastal Resource Management granted a permit to the Charleston County Park and Recreation Commission to build a public boat launching ramp on the Cooper River, at the southern tip of the former Charleston Naval Base, notwithstanding objections by commercial shippers that the resulting increased recreational boat traffic will interfere with navigation in the commercial shipping lane of the river. The state sided with the county in finding that the project would not cause serious safety problems. Also, it found that no group, commercial or recreational, is entitled to exclusive rights to use of public waters. The next step in the permitting process, getting a U.S. Army Corps of Engineers permit, could be delayed a year or longer, particularly if the commercial shippers act on their vow to appeal.

MARINAS AND COMMUNITY WATERFRONT REVITAIIZATION PROJECTS

Studies indicate that a marina create; jobs not only directly for the people who work there, but indirectly, through spending in the community by marina patrons and visitors. It’s called the ripple effect. Thus, it is no surprise that marinas are the linchpin of many waterfront revitalization projects these days.

For example:

Commercial Reality Review, Feb. 29, 2000:

As part of a program to increase tourism, employment, and business opportunities along the Delaware River, the Delaware River Ports Authority has authorized $220,000 for the Cooper’s Ferry Development Corporation to plan a series of waterfront improvements, including a public marina, a roadway system, and an expansion of the New Jersey State Aquarium.

Commercial Investment Real Estate Journal, March/April 2000:

Building a $300 million mixed use development, including a marina, on the site of the former Homestead Works steel mill on the Monongahela River at Pittsburgh, was used to illustrate a commercial real estate investment article about the trend in vacant warehouses and factories being converted to new uses. Former industrial sites are desirable for marina development, he article finds, because they usually are near water lines, sewage systems, roads, and utility lines.

BOATING PAYS ITS WAY

Some critics of municipal marina development are fearful that such projects can be too ambitious, and if supply turns out to exceed demand, general local taxpayers will wind up supporting a facility that benefits too few in the community. Others are afraid that local government authorities, generally having no expertise in marina management, will be unable to make the facility an economic success.

The positive experience of one of the nation’s largest municipally owned recreational boat harbors would seem to belie such concerns.

Bond Buyer, October 25, 2000:

The Chicago Park District plans to issue $67 million in bonds to pay for renovations, maintenance, and operation of its eight-harbor system. The A-rated bonds will be backed by slip rental revenues. The district expects to close out the year with a nearly $100 million surplus, thanks to the strong financial performance of the harbors. The 2000 boating season slip occupancy rate was roughly 97 percent to 98 percent, with some slips left open to accommodate transient boaters and some still under renovation.

The district’s experience with leasing management of the harbors system to the Westrec Corporation, a private professional, has been a great success.

Marina International, February/March 2001

Thinking of Converting Your Marina to a Dockominium? Think Twice.
by Dennis Kissman

In the past several months there has been a renewed interest in the dockominium concept. It is coming from a variety of individuals, existing owners of marinas, potential buyers of marinas, and marina developers. I do not have a definitive reason as to why the renewed interest in a concept that for the most part failed in the late 1980s and early 1990s. Particularly when nothing in the industry has really changed.

Lets take a look at what happened in the first go-around of marina conversations. I will grant you there were a few successes. But the failures, and those that did not meet the marina owners’ exceptions, far outweigh the successes. When the concept was first introduced, it was because of a perceived supply and demand imbalance. In reality, there was no imbalance except in a very few markets. And even then, it did not guarantee success.

They say we can learn from the past, so let’s look at what happened, and see if those same pitfalls can be eliminated today. We must realize that there are two sides that have a different set of concerns: those of the boater, and those of the marina. First, the boaters concerns:

1. Owning a boat is not a necessity, even though we would like boat owners to think that way. We compete for leisure time and discretionary dollars. The decision to buy a slip for your boat is a low priority, which translates into higher marketing cost for the seller. It is easy to sell the first 20 to 30 percent of the prime slips, but what about the remaining 70 to 80 percent of slips that are not sold?

2. One of the primary reasons a person buys a boat is to be mobile. The minute they buy a slip, some of that mobility is lost. If I wanted to lock myself into one spot, I would prefer buying a cabin or condo on land, a lot less costly to maintain.

3. Owning a particular boat is usually not a life-long commitment. When a boater trades a boat for another, the new boat is usually a different size. The forty-foot slip that they bought last year does not fit the beamier fifty-foot boat they have this year. The original premise of supply and demand imbalance still exists for this boat owner.

4. Does the owner have the incentive for ongoing cost savings? Before purchasing a slip, the boater paid his slip fees; now he has to pay property or personal taxes on the slip, interest expense on the purchase price, and monthly and special assessments for operating and maintaining the marina, plus all the other costs of owning a boat.

Having had first-hand experience in a couple of marinas where the lender had to step in and take over the property on partially sold-out marinas, these are the types of concerns that you will be faced with from prospective buyers. Once the prime slips are sold, these questions get harder to answer.

What are the problems the marina owner has to consider in order to sell slips?

1. First, do you have the right to sell slips? Most marinas are developed on submerged leased land from the government. How can you sell something you don’t own? There have been several attempts to long-term lease the slip to run concurrent with the master lease on the marina. The problem here is there are very few really long-term leases out there that make this a viable option for a buyer.

2. Often times, converting a marina requires a re-zoning of the property, a process that can be both costly and time consuming.

3. Assume you have to re-zone the property, and are successful. That usually triggers a higher property tax assessment. When you operated as a commercial marina, you were taxed accordingly; now that you want to privatize the slips, each slip is taxed individually, and the parts do not add up to the whole. I have seen property taxes on a marina quadruple before the sales effort even began. You can say that you don’t care because the individual slip owners will pay. That’s right, but on day one of the conversation, who owns those slips? You do, and you continue to own them until sold.

4. When you operate your marina commercially, you are the boss. You set the policy and make the decisions. You also know how demanding some of your customers are. Now you want to privatize your marina. That requires setting up an association similar to a condominium. The association is what will dictate policy for the marina in the future, not you. And heaven forbid you lose control of the property and still own a fair number of slips. We all know the condo commandos who take control of an association: well, slip owners who are also boat owners with big egos, who take control of your association, can make these condo commando-guys look like wimps.

This is the one area where I suggest you spend the most time and money. The dockominium association documents are critical, especially if you do not completely sell out in a short period of time and you have to remain in the deal. The main reason is, your interest is not the same as those boaters who bought slips, who use the slips themselves for the most part. You own them to sell and rent in the interim. If your documents are not drafted correctly, you could be faced with all the cost of owning a slip, and no right to recover your costs through renting slips.

I know in most states, if not all, a dockominium association has the same authoritative powers and must abide by the same regulatory rules as any condominium association. When seeking advice on drafting these documents, use someone who specializes in this area. I have seen cases where the seller did not sell out, and his expected profits evaporated because of poorly drafted dockominium association documents.

5. Assuming up to this point you have been able to overcome all obstacles and you are now ready to go into the marketplace, what is your association’s operating budget, and how is it different than when you ran the marina as a commercial marina? Almost without exception, the monthly per-foot assessment to the slip owner will equal what you charged your customers when you operated as a commercial marina. In the end, this is the one reason that most dockominium projects failed. It is impossible to show the slip buyer that there is a saving. He begins to add up all his other costs and asks himself, why do I want to take on this obligation when I can rent for the same or lower monthly amount? That argument on increased future value doesn’t hold today. We are a society of cash flow. Just look at how cars are marketed today. The salesperson doesn’t ask how much you want to spend for a car—they ask how much do you want to pay per month. This is taking place with a critical item like a car in our everyday life, and you expect to sell future value on a non-essential item like a boat slip?

This is another example of how this industry hurts itself. I have long been an advocate that slip prices are too low for the investment and operating cost you have to incur. Here is a concept that should work, and does in other industries—but we throw up our own obstacles and shoot ourselves in the foot. Until you can demonstrate monthly cash flow savings to the slip buyer, it is almost impossible to have a successful conversion to a dockominium.

The last thing we need to learn from the last go-around on conversations is the greed factor that marina owners had, and is the underlying reason for all the failed projects. In the late 1980s and early 1990s, the marina owners wanted to sell slips but keep the other profit centers in the marina, such as fuel sales, ships store, and repairs. Their intention was not to get out of the business, like a typical developer does; they still wanted to wear their operator’s hat. In other words, they wanted it all, and it didn’t work. If you think about it, the reason your marina is a success as a commercial marina is because of all the various profit centers working off one another. So don’t try to carve out one element and assume it can remain successful.

The dockominium cortcept is successful in other parts of the world. But if the concept is to come back into favor in this country, we need to learn from the past by rewriting the book on how it’s done, and not just by putting a new cover on the same old book.

Marina International, January 2001

Whose Marina Is It?
by Patience Welton

Marina Operators daily walk the fine line between satisfying their customer and maintaining control of their operation. Patience Welton of Marina Management Services Inc. offers some tips on how to satisfy both objectives.

Long-term live a board, yacht club members, regular berth holders and marina visitors expect and deserve courteous attentive service, and one of the keys to superior customer service is to make each and every client feel important and special. But it is very easy for what was originally a special privilege surreptitiously to become a right.

The long-term live a board quickly comes to think of your marina as home because it is. They are nice folks so you over-look the small potted plant on the dock. Before you know it, the dock is an over grown jungle and your friendly local fire inspector suggesting that the top of the fire hose cabinet may not be the best place for that window box full of petunias.

This customer knows all the rules and regulations. Daily ways are invented to circumvent these rules. He knows that outside contractors are required to show the office proof of liability insurance but that guy driving the "Midnight Marine Repairs" panel truck who just stepped on his boat with a tool box is just stopping by for an all day cup of coffee. How did this happen? We bent the rules trying to be the nice guy.

Club members offer unique challenges because their dues "pay your salary". A very nice committee hired you. They neglected to mention that there were 500 members who see themselves as your immediate supervisor and no job description could possibly cover all your responsibilities. Recently at a private club, there was a panic call to the harbormaster from a boat owner about a water problem. The marina’s maintenance man was immediately dispatched; it wasn’t until his return 3 hours later that the source of the water problem was revealed as ruptured water heater in the member’s home!

There are 499 members that do not want to pay that employee to repair a water heater but if it is them that needs you to walk the dog or drive them to the airport of course that would be a different story.

Regular customers become territorial. Heaven forbid that you should try to alter something that was once offered as a courtesy. A marina once offered dingy dockage to accommodate vessels that were anchoring out in attempt to be a good boating neighbor. When it became apparent that this was the cause of the overcrowded parking lot and the dingy dock would need to be removed it became a right not a privilege. The solution to this problem became a public relations nightmare, ultimately it required finding another location for the dingy dock on public property and providing the funds to install it.

Ownership of parking spaces whether assigned or not is something that defies explanation. I’ve had a yacht owner tell me he had 9 crew so he would require 10 prime parking spaces. I’ve seen a car, whose owner was sailing a race, end up on a sidewalk because it was left in someone else's regular space. My personal favorite was the club member who left his Mercedes parked outside the busy Marine Store subjecting it to the elements and truck deliveries while he went cruising for four months. Did I forget to mention that his empty garage at his home was three blocks away? The only wisdom I can offer on this subject is to make a policy, stick to it, hope for the best.

Customers with a feeling of ownership in your marina is not necessarily all bad, with ownership comes pride, care, and concern. In many marinas the live a boards have a neighborhood watch program that will surpass any security system or night watchman you could employ. In several California marinas they have even incorporated live a boards into their emergency plans, offering classes and training. Can you think of a better solution? We all know what the odds are of an emergency happening in your marina when you aren’t there. Murphy’s law always prevails, so having your first responders trained and organized is an excellent option.

Fair Rules

The secret to maintaining control and keeping everyone happy is to establish rules and regulations that are equally and fairly enforced. A marina guest can not feel singled out if the rules are known and consistently enforced. A second benefit to this practice is all the marina employees can refer to the rules with confidence thus reducing the number of phone calls you will receive at home that begin “What do I do about…”

How do we know that this is the solution? A prime example is a 600-slip marina in Florida that has a complete cross section of live a boards, regulars and transients. The rules, which are strict and have earned the marina a "clean marina" designation, are posted throughout the property. Boaters regularly vote this marina one of the best facilities available. No one minds obeying the rules as long as everyone is held to the same standard.

Keeping the lines of communication open should be a priority. Bad news travels fast whether it is true or not. A regular newsletter is a useful tool in keeping rumors to the minimum. A pointed article can be the best way to address a problem without confrontation. The offenders will know who they are and so will their fellow boaters. Peer pressure is a wonderful thing, use it to your advantage.

Keeping control does not mean being a dictator. Listen to your customers if there is something they want which is reasonable; by all means remember the goal is customer satisfaction. One marina had some unused space that they offered to the boaters as a lounge. To complete the renovation the marina gave the boaters a small budget. Everyone benefited. The marina up-graded its facility with little cost because the boaters contributed the labor to fix up their lounge. The boaters now feel special and important because the marina took steps to give them something.

Okay so listening isn’t always easy. Do the words “You know what you should do…” make you reach for the tranquilizers? Here’s what you should do—hand the problem back to him.

Appoint him the head of the committee to research the problem and the various solutions, poll the boaters for their input and to make a complete report of their recommendations. If they feel strongly about their idea, they will embrace this challenge and you will benefit from sincere input from your customer base. This technique works particularly well in the private club environment. A member that was wearing me out about an expensive dock modification he was sure we needed never mentioned it again once he was given the responsibility of doing a feasibility study.

Establishing authority early is an important aspect of control. A well-known American Yacht Builder once came into a popular South Florida marina looking for dockage, which was at a premium. He said to the girl at the reservation desk “Young lady do you know who I am?” Her reply was “Yes sir but right now it appears more important that you know who I am.” This interaction was the basis of a long-term relationship based on mutual respect.

In conclusion the key to keeping ownership and control of your marina is to ?rule" with a fair but firm hand. You might want to give your folks a call for some pointers. I bet they used the same techniques raising you.

Marina International, January 2001

Employee’s: You Get What You Pay For
by Dennis Kissman

This is the time of year, with the memory of the holiday season still lingering and the prospect of preparing tax returns off in the distance, that we need to get down to business and begin preparing for the upcoming summer boating season. I am sure you have given serious thought to that dock that needs to be repaired, the shallow spot in your channel, or the power pedestal that got fried from being overloaded last season. Chances are, you have even thought about little things like what color T-shirt sells best in the ship’s store, or do you sell more Coke than Pepsi.

Don’t get me wrong. All these things are important. And you can have the best facility and the best marketing campaign. But without your staff you have nothing.

FEWER PEOPLE WITH GREATER SKILLS

The size of your staff is not as important as the quality. I prefer fewer people with greater skills. To achieve this, there is an old saying that holds true: “You get what you pay for.” I have talked to several marina owners who say they can get dock attendants for $6.50 an hour all summer. They are probably right, and they will be hiring them, over and over, all summer.

I much prefer hiring a dock attendant for $10.00 or $12.30 per hour who can do the work of three $6.50-per-hour dock attendants. And, I’ll have the bonus of knowing he or she will show up for work tomorrow. To have that employee come back year after year is a tremendous asset to your organization.

Having a skilled, loyal employee is especially critical as OSHA and other governmental agencies turn their attention to marinas. Think of what that inexperienced $6.50-per-hour employee could do to you financially when the OHSA inspector comes unannounced to your property.

Inspectors usually start by quizzing your $6.50-per-hour employee about on-the-job safety. That’s the same employee you didn’t bother to train because you knew he or she would be a short-timer. That high school kid, the son or daughter of a friend of a friend, could cost you big time by putting you on the wrong side of OSHA. Do you really want to part with your hard-earned money? Last year’s OSHA inspections at 19 marinas resulted in fines totaling $28,735.0—an average of $1,512 per marina.

That’s a good argument for retaining excellent employees. And the only way the good ones will stay with you, either on a seasonal basis or year-round, is if they are able to make a decent living. No employee wants to feel they are being taken advantage of, and no employer wants to feel that way about an employee. There are two ways to know if you achieve this goal: If you can build loyalty and retain your staff year after year, and if you do not have any "involuntary profit sharing" by employees.

EMPLOYEES MUST BE RIGHT FOR THE POSITION

Employees can either be your greatest asset or your biggest liability. This is usually a function of the amount of time you dedicate to organizing and training your staff. This doesn’t mean just filling positions. It means placing employees in the positions for which they are best suited. A number of times over the years I have placed ads for employees and gotten responses from people that I thought were good, but not for the job I was advertising for. When this happens, I assess my entire operation to see how this person could fit in, and possibly promote someone else from within. This is not an easy task nor should it be taken lightly. You are affecting several people’s lives, including your own.

ALL IN THE FAMILY

This brings me to another important point on a very delicate subject. It relates to family employment. This industry is still very much a cottage industry, and it is not uncommon to have a couple of generations of family working in the business. I think it’s great when your son or daughter can take over your business. But give them a fighting chance to succeed by giving them the chance to learn how business is conducted in the outside world.

You have to remember that if your son or daughter works for you, no matter what you say, it is not an employee/employer relationship, and this is usually evident to the rest of your staff. I have seen these arrangements go both ways: where there is no direction or it is overbearing. There never seems to be that happy middle ground that you can achieve between an employee and employer.

Remember, too, that even though they are your offspring, they are not your clones. Their approach to a problem, or business in general, is probably different than yours. The best thing you can do is let them develop their own style. And you may need to face the reality that they may not be interested in following in your footsteps.

THE BROTHER IN LAW

The other situation is the unemployable brother-in-law. Yes, they are out there, just waiting to run a marina—specifically, your marina. Now, I have nothing against brothers-in-law. But, like your kids, this is not just an employee/employer relationship. In this situation it is extremely difficult to be objective. Often this relationship and how you handle it can have a negative impact on the rest of your organization.

If you are faced with either of these situations, remember what I said earlier about not taking advantage of your employees and the employees not taking advantage of their employer. This becomes very difficult with family employment. An employee usually has a life outside of work, whereas a family member may have a 24/7/365 relationship with their employer. This is not a healthy situation.

To put the importance of your staff into financial perspective, their salaries are probably your single largest expense. Marinas that are providing a high level of service to their customers should incur labor costs between 16 and 22 percent of total revenues, and as much as 50 percent of the total operating expense. This does not take into account what inexperienced and untrained employees can cost you in other areas of your operation.

The bottom line for your operation, literally speaking, is directly affected by the amount of time you allocate to hiring, training, and motivating your staff.

consultants to the trade

Industry Articles - 2001