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A new plan for the St. Pete Marina – Part 2

Eric Feldman

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A rendering from Safe Harbor Marinas of the Central Basin, with the St. Petersburg Pier in the background. Image provided.

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This is the second of two parts.

A proposal from Safe Harbor Marinas (SHM) to rebuild the St. Petersburg Municipal Marina (SPMM) was recently selected by Mayor Ken Welch, and will be voted on by City Council soon. That proposal turns our marina over to a private company, which will design, build and operate (DBO) a private marina on City property. Slip rent will increase, from the current $12 (per foot per month) to $21, then increase to $26 and then $33, making SPMM the most expensive of any marina in Pinellas County. Live-aboard boats, commercial operators and boaters of average means will be driven from the marina.

Part 1 of this letter discussed what a Municipal facility is, and how that contrasts with the current SHM proposal. Part 1 also addressed several of the myths that surround the marina, and the documented facts that contradict them. Understanding those myths is critical, as they are used to justify why it is “necessary” to give our marina away.

This part will propose a viable, cost-effective alternative plan that 1) Preserves SPMM as a true municipal marina 2) addresses needed repairs and upgrades now 3) provides for more capital-intensive upgrades over time.

But first we need to discuss (and correct) more marina myths.

Myth #4: Slip Rents at the Municipal Marina are too low. In fact, slip rents at SPMM ($12) are slightly above local municipal marinas (Clearwater $11.5, Gulfport $10). SPMM rents are only “low” when compared to Harborage, Vinoy and West Shore Yacht Club, three of the most expensive marinas in the Bay area. This was the sleight-of-hand used in the Master Plan, when those three marinas were used as “comps.”

Myth # 5: The St. Pete Marina is a mis-managed money pit. In fact, even at the current “too-low” slip rent rates, the marina earns 17% profit. SPMM is the only Enterprise Facility (The Trop, Mahaffey Theater, Airport, Golf Course) that consistently turns a profit (St. Pete Financial Reports). For over 100 years, that profit was re-invested in the marina thru “rolling upgrades.” Until now.

In 2016 the City began diverting $618,000/year of marina profits into City coffers. If you wonder why the bathrooms and utilities have not been upgraded, why facilities are under-maintained and why the marina is understaffed, it is because marina profits are being used to fund other City projects.

Despite those deficiencies, the marina operates near 100% occupancy and has for years. That is 660 boaters who “vote with their wallets” every day. Someone is doing something right.

Myth #6: The marina needs a complete rebuild – all at once. In fact the City’s own Consulting Engineers – in the Marina Master Plan – recommended a phased approach to upgrading the marina. Yes, a number of facilities require attention now, but the cost of those items is modest, around $3.7M in 2017, or $4.7M in 2024. This includes bathroom upgrades, new bathrooms, electrical upgrades, and repairs to the 53 (out of 1013) dock structures that require attention. The seawalls also need immediate attention, but that is a separate City project.

The big money is in upgrading the docks. We would all love to see floating docks – integral to that “world-class marina” vision, and a real convenience to boaters. But those can be installed as a rolling upgrade, as the current docks age-out (or as money becomes available). That was the recommendation in the Master Plan. It is common practice, and it’s just common sense.

The SHM proposal requires closing the entire Central Basin during construction, then the entire South Basin. Local marinas are full. Where will those hundreds of boats go?

Summarizing some of the previous points:

The current proposal from Safe Harbor Marinas increases slip rent by 250%.

Affordable slip rent is core to being a Municipal Marina.

Current SPMM slip rents ($12) are in line with other local municipal marinas.

SPMM earns 17% profit = $618k/year, which is NOT re-invested in the marina.

The marina is NOT falling apart; 95% of the docks are in “Satisfactory” condition.

Immediate repairs and upgrades needed total about $4.7M.

Additional upgrades (floating docks, etc.) can be phased in over time.

Given those parameters, here is a viable, cost-effective plan to revitalize the St Pete Municipal Marina.

1) Vote down the Safe Harbor Marinas proposal.

2) Re-commit to keeping the marina “accessible to all.”

3) Re-commit to keeping slip rent in-line with other municipal marinas.

4) Give back the $4.9 million that has been diverted from the marina since 2016.

5) Dedicate future marina profits for the marina.

6) Invest in the marina, like we invest in other enterprise facilities.

7) Organize a citizen-led, publicly accountable Community Work Group (similar to the Waterfront Parks Foundation) to prioritize and plan revitalization efforts.

8) Fix what’s broke now ($4.7M for bathrooms, utilities).

9) Fix the seawalls (this is a separate City project with a separate budget).

10) Eliminate the middle-man – Hire contractors directly to save money.

11) Normalize the slip rent structure (currently wacky!) to increase marina revenue.

12) Look for low-cost opportunities to adjust slip sizes.

13) Develop a realistic, well-engineered plan for floating docks and other upgrades.

14) Replace fixed docks in stages, as they reach the end of their service life.

Our choices are clear:

Do we move forward based on myths or facts?

Do we take the easy way, and privatize the marina? Or do we roll up our sleeves and do the work needed to revitalize our marina?

And do we want an exclusive, private marina on City property at the heart of our waterfront?

Or do we want a world-class marina that is accessible to all?

 

The documents referenced in this letter are available at this link.

They include:

Safe Harbor Marinas Proposal

Marina Master Plan

Slip rents (St. Pete Municipal, SHM Proposal and local marinas)

SPMM Condition Inspection Reports (and Summary)

*St. Pete Financial Reports for Enterprise Facilities (and Summary)

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11 Comments

11 Comments

  1. Avatar

    James Ziemann

    February 12, 2024at7:20 pm

    The municipal marina has been neglected for years, neglected, despite the tremendous profit they have been making.
    My friends had a boat there and the docks were crumbling so badly they had to have a temporary ramp over the broken concrete to reach their Boat.
    I urge everyone to vote NO, and DO NOT turn over this jewel to this company, or any private company.

    SHM , in my opinion, mismanaged the harborage for years-raising our rates substantially every year-but not making the most basic repairs.

  2. Avatar

    Debi Mazor

    February 9, 2024at11:18 pm

    Private-public partnerships are an oxymoron— simply a mechanism to generate funds to private interests while utilizing public assets. Who benefits here? Certainly not the citizenry—the average boat- owner cannot otherwise afford to keep a boat in the water. The 1960 visionaries who built the Marina gave something important to St Pete—a place to play, a place to welcome transient boaters, a place to live for over 100 people. Expanded to over 600 slips over its 80 years of existence it became one of the largest in the State. Once gone lost to the public forever..

  3. Avatar

    Page Obenshain

    February 2, 2024at10:14 am

    I represent the MARINA ADVISORY COMMITTEE endorsed by our city council.

    Eric Freedman studied the marina and its needs. He put his best effort forward, however our committee does not agree with his approach. We earlier met with Eric, reviewed his proposal, and concluded that the sixty year old marina in the central yacht basin has reached the end of its useful life. Recently the city spent 2.5 million of borrowed money applying a temporary band aid fix. The slips are too narrow, the electricity and plumbing is out dated, The docks and pilings are in poor condition and do not present themselves well. The 1920 vintage seawalls are also in need of replacement.

    The time has arrived to replace the docks in the central yacht basin. Repairs to the south basin docks are necessary now and money should be put reserves to ensure the Marina is funded for the future.

  4. Avatar

    Suzanne Kelley

    February 1, 2024at6:40 pm

    When does the City Council vote on the proposal and could you more explicitly tell us how/what we can do to sway that vote? Who do we contact?

    Thank you for a very informative article.

  5. Avatar

    Herbert Wittnebert

    February 1, 2024at1:49 pm

    If only there were more thought full and community minded individuals in St. Petersburg government like Mr. Bill Herrmann. What a better place it would be! I retired in 2012 from a non US government as a maritime project specialist working arm and arm with PHD economist on projects with a lot more zeros than this one. My experience is that the economics of high value projects involving a government entity is always jaded by influence of the powerful folk’s interest not the public’s, regardless of the economics.
    Since I use St. Pete as a transient destination, I have used SPMM frequently especially the now closed mooring field. I have been annoyed by the lame excuses for that closure and now the day rate exceeds that at the Harborage, I see no reason to use SPMM at all.
    Both Naples and Gulfport have no issue with their mooring field so it is heard buy the excuse of regulatory compliance. More likely the case for both the mooring field and Safe Harbor Marinas is some monied individuals have gotten their claws into the St Pete decision makers and lining their pockets in the process.
    I don’t have a vote on this but I do have an anchor and a dinghy.

  6. Avatar

    S. Rose Smith-Hayes

    February 1, 2024at11:53 am

    Please just keep FRESCO’S, that is one of my major concerns. Giving back the rent for the Marina is a great idea.

  7. Avatar

    Bill Herrmann

    February 1, 2024at11:13 am

    Although I am a founding member of the Marina Advisory Committee (MAC), I do NOT write on behalf of the MAC or any other entity I am involved with.

    My comments are based on 27 years of municipal government experience operating a department within an enterprise fund that has a current budget of around $30 million. I have over 40 years of boating experience and recently as a professional mariner have sailed into or out of marinas from Curacao to Boston and Seattle to Cadiz, Spain.

    That said, any discussion of the St. Petersburg Municipal Marina (SPMM) must start with a proper understanding of what a municipal enterprise fund should be. Enterprise Funds are financially independent entities that operate under the host city’s umbrella. They generate enough revenue to pay all their internal operating expenses + accumulate cash to fund a capital reserve + pay any debt + make a payment in lieu of takes (PILOT) + pay any hard costs to the general fund.

    Enterprise funds are NOT intended to be a source of profit to the host city.

    The city’s general fund can charge the enterprise fund for services such as purchasing, legal, or other hard costs. But those charges should be based on a reasonable formula applied to all departments that use those services. It is important to recognize that no other major city takes a ‘profit’ or ‘return on investment’ from enterprise funds.

    As a free-standing financial entity, debt used by an enterprise fund MUST be paid from revenue generated by the enterprise fund.

    Rates charged by an enterprise fund must NOT be market driven! Rates should equal the costs mentioned above. It is the absence of profit that makes municipal marinas, golf courses, etcetera less expensive than those operated by profit-driven entities.

    Now that there is a solid definition of Enterprise Funds, let’s look at Mr. Feldman’s myths.

    Myth #1 we are told that the City “cannot afford” the needed upgrades to the marina.

    Now that we have a clear definition of an enterprise fund, what the City can and cannot afford is irrelevant. If the City of St. Petersburg is willing to operate the SPMM as a proper enterprise fund, the costs of the upgrades MUST be borne by the SPMM users.

    Myth #2 we are told that construction costs will be paid by Safe Harbor Marinas.

    I am not sure where this came from. The cost of rebuilding the SPMM should be paid for by marina users. But those users should NOT be paying profit to the General Fund.

    “In a perfect world” the General Fund would return the millions syphoned out of the SPMM and used elsewhere. But if the excessive transferred simply stopped, the marina could be rebuilt and remain accessible to City of St. Petersburg taxpayers. Those who do not pay property taxes to the City of St. Petersburg, should pay a higher rate to fund parks, police, fire, and the myriad of other services the General Fund provides.

    Myth #3 we are told the marina is falling down.
    Myth #6: The marina needs a complete rebuild

    These are interrelated and will be responded to together. Yes, theoretically the marina could be rebuilt in sections.

    My personal experience running construction projects is that doing the project over many years will have higher costs. Further there is the risk of having slightly different designs for each phase. This will result in a disjointed and hodgepodge look.

    Absent a formal cost-benefit analysis of piecemeal upgrades versus simply doing it at once; all comments are subjective.

    Myth #4: Slip Rents at the Municipal Marina are too low.

    The continued use of market analysis does a disservice to all SPMM users. SPMM rates should cover internal operating expenses + accumulate cash to fund a capital reserve + pay any debt + make a payment in lieu of takes (PILOT) + pay any hard costs to the host city. If the General Fund seeks, it could reasonably request an additional fee for each vessel not owned by someone who pays property taxes to the city.

    Myth # 5: The St. Pete Marina is a mis-managed money pit.

    This is not a complete myth. The assigned marina manager should operate only the marina and the port. But he is also overseeing capital projects such as the air-conditioning replacement at the casino!

    Because he is not focused on the SPMM a sorely needed lease update took several years to complete and implement. When the requirement for insurance was enacted (a standard in well-run marinas) it took the better part of year to move the requirement forward.

    The keys to a successful marina are good facilities, great staff, and decent location. Yes, location is not everything. St. Augustine Municipal Marina and Charleston Harbor Marina both have extremely fast tidal flow. These are two of the most difficult marinas on the east coast to dock a vessel at. Both thrive because of exemplary staff. SPMM needs a fulltime dedicated staff whose sole function is making the SPMM thrive.

    Rates need to go up. Unless rates are increased to fund the normal increases in expenses, the only way to pay for them is by reducing contributions to the reserves to fund capital repairs. We can all see the result of underfunded capital repairs.

    Going forward, I would love to see staff to run the redevelopment. However, the Harborage team is a true ‘best in class’ business partner. I have used their marinas from Key West to Newport and never had a negative experience. But the Harborage is profit driven. This will result in a higher cost for the redevelopment of the SPMM.

    It is essential that the City NOT allow the Harborage group to finance the project. First, this denies the SPMM users from using the City’s access to tax-exempt bond rates. The tax-exempt rate is much lower than the short-term rate the vendor will likely charge users. Each 1% increase in rate of 30-year $59M bond increases costs by $35,000 per month!

    Of concern to all citizens is that if the vendor finances the project, in 5 years when the referendum is presented to the voters, they will be under ‘economic extortion’. Voters will be forced to either extend the contract, and continue to have marina users pay excess interest, or scramble to fund the unpaid principle ($50m?), plus any non-renewal penalties in the contract.

    In summary, while it is preferable to have the City run the project, that may not happen. It is also essential that the City stop the non-standard policy of taking profit from enterprise funds. Finally, they city must float a bond issue to keep the total cost of the project affordable and allow the referendum to be decided without ‘economic extortion’.

  8. Avatar

    George Gower

    January 31, 2024at9:00 pm

    do the 100 foot slips add to the economy or just parked for the use of owner to entertain in port, maybe 10 guest +5 crew that never leaves the dock. While the displaced slips create 500-1000 guests that will dine and shop in the city. Are the few 100 ft slips enough to make up for the 500 slip’s rent it displaces (which the city will not get)? Do we have any numbers? Build some docks out in the bay to park the mega yachts if there is that much demand or just let them go to Ft Lauderdale where the rent is much higher. There is a waiting list for small slips now and the displaced boats have no where to go. Raising the rent is less costly (with some vacancies) than demolishing everything for a private business.

  9. Avatar

    MelvinJunior

    January 31, 2024at8:50 pm

    Yeah, Mike… But, it is by a famous ‘artist’ that four people have ever heard of. And, we get to take pictures of it, and then walk away! It all sounds so very lazy to me, and extremely corrupt. It makes ZERO sense. It’s embarrassing.

  10. Avatar

    Oliver McCann

    January 31, 2024at5:17 pm

    The record of municipal marina redevelopment contracted to private operators results in the elimination of affordable boating. It’s a national trend. Does St. Pete want to go there too? How about a better, more inclusive model?

  11. Avatar

    Mike

    January 31, 2024at11:55 am

    Is it too late to add a multimillion dollar net in the sky to the construction? We can call it a sculpture because it definitely serves no conceivable purpose, not even shade.

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