Freedom from Unfair Government Competition: Ludington Private Marina Owners Speak Out

[XLFD]

Michigan Waterways Commission Discusses Charter Boats in Ludington City Marina

 

On January 6, 1941, Franklin Roosevelt gave his four freedoms speech at his inauguration.  Included therein, were the freedoms of speech and religion, a large part of the First Amendment, but his other two freedoms were not 'of' freedoms, but 'from' freedoms.  Freedom from want and fear are not touched upon in the Constitution or the Bill of Rights, but with governments intent on increasing their power and status, the freedom in the title of this piece should also be understood and enjoyed by all Americans.

 

On June 21, 2013, the Michigan Waterways Commission met just north of Traverse City, at Acme, Michigan.  Normally, few people in the Ludington area would pay much attention to what happens at one of these meetings, but on the agenda, and a significant part of the meeting, was to discuss the future of private marinas in Ludington and the overall fairness between public and private marinas.  A letter to a DNR official Jason Fleming (who contacted the City about the problem in April) from a local CPA the prior day perhaps laid down the issues most succinctly:

 

Here is a video recording of the meeting concerning the Ludington issues:  6-21-2013 MWC

 

 

At about 3:45 into the recording, the discussion about the Ludington situation starts.  Ray Karboske Jr., Ray's Auto Marine, already known for taking out an injunction against the Washington Bridge construction and the disruption of sediments that would occur, and reaching agreement with the City to put down silt screens as a precaution, led the charge.  Karboske thanks the commission for airing this issue, after his research found that the problems concerning the loss of charter boat revenue for local private marinas has been due to some questionable practices and violation of protocol by the public sector over the years. 

 

 

"Today, June 21, 2013, marks the very first documented meeting called to order with all affected parties to assess the financial impact of private owned marinas competing against aggressive (public) marinas"   He then proceeded to show revenue loss to his own private marina since the 1990s, due to the dramatic decrease (over 50%) in charter and recreational boats at his marina, many of which went to the publicly financed Ludington marina system, a similar drop in fuel sales, and an inability to raise his slip charge due to the oversupply of slips in the area.  He estimates a loss of a quarter of a million dollars over the last 22 years.  He ends with saying others cannot compete fairly with the public marina, whose funding threatens the very notion of free enterprise principles in the marina business.

 

Charlie Lunde, owner of Lunde Boat Company Marina, went through his family history of starting the Lunde Boat Company which morphed into his current business in the middle of last century.  He claims the rise of charter fishing and recreational boating in the 1970s gave rise to the idea behind the public need for the city marina. 

 

 

 

"Having charter boats in the City Marina is a conflict of interest ever since the marina opened, I'd like you to level the playing field and remove charter boats from all (public) municipal marinas in Michigan."  He finished by inviting the commissioners to drive through Ludington on their way home to check out the situation, and encouraged them to send an intern to Ludington to study the problem.

 

The City of Ludington's sole representative, Marina Manager Jim Christensen, went next.  He began by explaining that the city marina had its own fund separate from other City's funds and their operations are solely provided by an "enterprise fund" and get their money by selling slips and amenities.  Though he does admit to his marina being capable of receiving grants, he explains:  "As far as the general operations are concerned, 100% of the operation of the marina is money that is generated by the marina itself.  No money of the local taxpayer is spent."

 

 

He relates that at the beginning of the city marina's operation they were allowed up to 6 charter boats which were later upped to 12, and claimed the city's marina was hit hard by the crash of 2008, and that the City's fees were actually much higher (160%) than Abrahamson's marina, justified by the extra amenities the city marina offers, and are thus not competitive directly against the private marinas.

 

We will look at these assertion's accurateness in a future article. 

 

Duane Colegrove, of Abrahamson's Marina, spoke next, asking for the Waterway's Commission involvement and to get awareness of the problem known.  Competing with the City Marina is difficult.  "The reason rates are down, is not a simple question, and there is not a simple answer... the amenities are there, because the funds are there."

 

 

One of the commissioners asked Duane if, with all these problems, they haven't discussed it with the local city government.  Throughout the audience of 50 people, murmurs of impromptu snickering occurred (17:35 in), while he answered yes, and that they wouldn't permit a meeting such as this to take place.  I would swear, that even some of the audience outside of Ludington found the commissioner's question funny, I think I even saw a smile on Christensen's countenance. 

 

Erv Hackert, a concerned citizen, spoke of history of the City Marina.  Early talk during the proposed marina had charter boats being inappropriate for consideration for permanent dockage due to the infusion of State and Federal funds to the construction of the marina.  He foresees that with all the advantages the public marinas enjoy, throughout Michigan the private marina will cease to exist because of an inability to compete. 

 

"The City pays no taxes, they enjoy public advantages, the City manages both fishing stations (publicly purchased)... the money used for dredging, the grants are used for facilities, restrooms, showers, where private marinas have to dig into their pockets."

 

Jefferson Henry, of Scottville, next spoke having an interest due to his own private venture near the PM River in Scottville.  His presentation concentrated on the issue of law, and the commission's stewardry of that law, and the private marina's stewardry of their own marinas. 

 

 

"You have just heard from the City of Ludington that they have the authority to allow charter boats in their marina, you have in your hands in front of you the interoffice communication..., that they do not have that authority, to allow charter boats, until at least 2001."

 

Lastly, Ray Karboske Sr., took his turn.  He remarked in his 72 years he has been self-employed, and has run a marina for 42 years.  He related he had talked in person with the mayor, city manager, and two city councilors back in the 1970s at the Tamarac Marina docks. 

 

 

"When the marina was proposed to be built they asserted there would be no charter boats in the (city) marina, there were going to be no boats under 26 ft. in the marina, and there was going to be no condos built to block the view of the lake."  After further explaining what other issues they have had to deal with over the years, he finished among applause.

 

There were other private marina owners who could not be there but wrote in their problems with the status quo:  Ed Thompson Jr. of Thompson's Marina, Roy Hackert affiliated with Ray's Auto-Marine, and John Chippi of Tamarac Sportfishing Dock. 

 

There was further discussion over the topic, the commissioners looking for extra data from the private and public entities.  The Commissioners claimed some empathy to the private marina owners due to the board members being private businessmen too, Jess Karboske, (Ray Jr.'s wife) bringing up some points about what she considered unfair subsidization. 

 

The private marina owners are presenting a very united front in this cause, and it is hard to argue, using common sense and fairness, against them.  One can hope that they can win the hearts and minds of the state DNR and Waterways Commission, which may be a hard fight, since they have historically backed the Ludington Municipal Marina in their endeavors.  But hope may be in the air, as Ron Olsen, chief of the DNR's Park and Recreation Division had this recommendation in a letter written on June 17:

 

[Willy]

I must compliment you again on your fine work as a journalist X. I would like to hear Aquaman's opinion on this since he has experience in this area. Though I agree with the private marina's situation I'm concerned that both parties are putting the Charter fishery in the middle of this conflict. That's really not fair to them. Where is their right to obtain dock space they consider best for their business.

[XLFD]

Some charter boat captains used to the amenities offered by the City Marina and Harbor View could very well come out against this arrangement.  David Even, the President of the Ludington Charter Boat Ass'n. has already declared sides at the June 20, Municipal Marina Board meeting and says he is not alone.  These are the "kids" in this custody battle that could get ugly. 

Also note at the bottom of page 1:

"J. Henderson strongly recommends that the Marina Board make a FOIA request to obtain the complaints against our marina so we can fully understand the picture being painted. He believes that Jason Flemming has been too forward in his responses to us and his actions. 

J. Henderson said that the ultimate goal is for fairness of letting boaters make a choice where they conduct their businesses. He stated that by the Waterways eliminating our charter boats it would pacify a few people, but ultimately it will not help the economy of Ludington if these 12 charters were to move their businesses outside of the area."

Mayor J. Henderson argues the concept of fairness and choice.  He, who has a lot of real power over the marina and had his three daughters all work full time at the Municipal Marina during his tenure without those jobs being fairly posted or decided on as noted here:  http://ludingtoncitizen.ning.com/forum/topics/marina-and-the-hender.... 

[AQUAMAN]

As to Jim Christensen's comments, they are biased and intentionally deceitful. That "enterprise fund" wasn't made possible until the State of Michigan, thru the Waterways Comm. and DNR Trust Fund, created the funding for the City Marina to begin with. We can easily see that just now, the entire City Marina was dredged out in about the last 3 weeks. Where, Jim, did the money come from for this $1/2Million or so project? You will NOT see any COL checks for that project. Nor the north wall project of about 2 years ago that was just under $1Million either. Personally, I complained to the COL Council numerous times in the 1980's thru about year 2000. It all fell on deaf ears too, just like they now wish it to continue. I wish the numerous marina owners then would have made the same stand as they are now. As it stands now, the extreme financial damages are done, and the COL still proclaims it's innocence. This is pure BS on their part, and the record and history presented by private enterprise proves it without a shadow of doubt. If the COL were to compete with other private enterprises, there would be strong protests in streets for sure. Why just compete with private marinas? The whole notion and concept on which the COL Marina was originally built was a farce and lie all along. When the COL attempted to buy out many of the private marinas along the route many years ago and were denied, they then dreamed up this idea of creating their own marina, digging up the old ball field on Loomis St. for the facility you now see. There were also commercial fish tugs down there where you could buy fresh smoked fish that also was cast aside in favor of the new marina. The COL now wants the public to believe that they are somehow funding ALL their projects at the municipal marina, and always have. I say "put your money where your mouth is". ALL the money the city and state have are afterall, from all of us taxpayers to begin with. Waving a flag of innocence and trying to say it aint so, well, how stupid does the COL think the average taxpayer is nowadays? I guess what it always comes down to is, oh well, it doesn't affect my pocketbook, so I won't worry about that issue. However, as we have now seen in this dismal economy many whom are affected, and are worried about their own financial future. Funny how what goes around, eventually comes around.

[XLFD]

Christensen's comments rankled a few of the attending Ludington businessmen, because of his portrayal of the data, and I don't blame them.  Private marinas don't get $60,000 for dredging, $500,000 for transient docks, and up to 50% of the costs of dock replacement in the near future, of which the State taxpayers (you and I) take the bill for, even if we never see or use the facilities. 

These guys never see my money, unless I use their services.  The City marina, like a bloated barnacle or leech, takes money from your federal taxes and state taxes, while they pay no taxes, and get their gas cheaper than you or I because of their public status.  And as for local taxes, they may not get the money directly out of the general fund, but when you take a look at all the public official time and resources put into this area's administration and maintenance, it becomes substantial quickly.

[XLFD]

That competition for alcohol sales is correct and documented.  At City events like Octoberfest and the New Year's Eve Ball Drop, DDA money has been used to purchase beer and wine from bottlers and retailers, and resell at a profit in their North James area.  These purchases are from City Officials Budde Reed and Les Johnson. 

My ward's city councilor, Les Johnson, also serves as the secretary for the DDA, and yet doesn't feel it's worthy enough to put on the DDA minutes that he is engaged in a conflict of interest for doing this, but at least he's consistent.  He never noticed the major conflict of interest with former DDA member/current co-councilor Nick Tykoski doing the downtown signage, and getting his checks signed by his fiance and sent to their home address. 

This is what passes for ethical in my town, without a batted eyelash from any of our officials.  So does the City of Ludington reneging on their past promises to the private marina owners surprise me?  Does them engaging in unfair competition with these private entrepreneurs and denying it shock the living daylights out of me?  No, ethics and legality have only been ignored, mocked or ridiculed when it comes to our public officials, while the messengers get set upon by the grifters. 

[AQUAMAN]

Thanks for the compliment EyE, I'm glad we're on the same page this thread, welcome aboard. As for the "grifter" comment, I also believe this is accurate. And, as for the Henderson comments, he's so full of himself and BS it's a hoot! I guess his "Nepotism" is perfectly okey-dokey, and that all this mess is just coincidental, and justified by the passage of time since this started, pure crapola! Lastly, I would hope EyE would clarify exactly what the deal was with the original purchase of that particular parcel on Loomis St. that is also suspect and perhaps, noteworthy to get posted.

[XLFD]

I think you'll find this 2015 parable enlightening, but nothing much has changed.  The city/state has all the advantages in the game of marinas. 

[AQUAMAN]

This was one of the recent major mtgs. that involved unfair competition in the Lud. Marina business. Both the current Municipal and Harbor View Marinas had strict St. of Mich. written charters to operate when they were created and built, first in 1980, then again in 1998. Both marinas were NOT to rent to any commercial vessels, and that would clearly include Charter Boats. Between the two of them, they take about 20 boats in yearly, against their very existence to operate legally. That's about $2K/boat for 57 years totaling $114K just for rent, not including other sales of gas and supplies. This doesn't even include pleasure craft also, which would bring damages 10X this, or over $1 Million, and that too doesn't include interest and inflation factors. The only updates is that several private marinas have been sold recently, both Lunde's and Abrahamson's, and others are also being marketed for sale to finally get out of unfair competition. If these two marinas hadn't been built, all the remaining six private marinas would have expanded and benefited the local economy greatly due to State financed 250 slips that didn't exist without State taxpayer funds.