Harbor View Marina, Public Welfare Queen-a

[XLFD]

At the July 26, 2020 Zoom meeting of the Ludington City Council, I 'spoke' through the city manager in the first public comment.  After complimenting the police department on improvements in accountability, I brought up the issue of Harbor View's long term business plan by declaring:

"[The city council] passed a restrictive amendment to an agreement with the State at the last meeting which effectively made the two public marinas ran by the City and owned by the State, publicly-subsidized entities that the general public is being kept out of.  These are not private marinas, we had several of those before these public marinas were ever thought about, way before the State spent millions and millions of dollars to build and maintain them.  

The passage of Harbor View to a city-managed marina left a gaping hole of around $80,000 in the tax base, money that will manifest itself as either reduced local public services or an increased tax burden for the rest of the taxpayers.  I look at an Edgewater Resources LLC facility assessment for Harbor View and they estimate that just replacing the docks at Harbor View over the next ten years will cost about $6 million. 

Guess what: over the next three years the Harbor View revenues and expenditures are budgeted to be the same, with a total of $9000 earmarked for dock repairs; the City is not saving for dock replacement.  The City will need a complete $6 million rescue by the State, with money from your state taxes and fees, to do the projects that real private marinas have to do out of their own pocket and get increased tax liability for doing.  

Why wasn't there any reasonable attempt by the State to sell the marina to a private entity, so that the Ludington public would not only have to make up the $80,000 but also have to help pay the $6 million plus in repairs?  Simple, the State believes that it and the City can run two ostensibly public marinas in Ludington and not have to worry about any bottom line showing millions upon millions of debt being racked up while unfairly competing with the private sector-- even to the point of disallowing any use of their facilities by the general public [END comment]."

Even though my comment was e-mailed to each councilor along with the city manager and clerk hours before the meeting, a review of the meeting and the minutes has no refutation or other recognition of my comment (nor was there at the first August meeting).  City leaders seem to still believe that if they ignore a problem, it will disappear, but my persistence over the last two decades in getting them to be accountable and reasonable proves that isn't going to happen. 

As normal, the COLDNews reporter present, Editor David Bossick, thought it insignificant to include in his own recap of an otherwise uneventful meeting where the main issues were discussions of chickens and social districts.  Private marina owners, working hard in order to keep their businesses afloat in these difficult times, were in their busiest period of the year to even notice the meeting or the comment.  It is very significant to them, and should be significant to all others who may feel that subsidization by the state and private property owners of Ludington of these public pleasure craft gated communities is too much.  

Let me proceed to lay out the framework that supports my comment.  In the facility assessment of Harbor View Marina (HVM), Edgewater Resources LLC created a document that analyzes the assets and liabilities of HVM, including those of the future.  Summarizing the report, after describing the current status of the structures at HVM, future recommendations are given starting on page 15, concluding on page 18, noting:  "the docks, utilities, and fuel system, will require complete overhaul at some point over the next ten years." and offering this for dock replacement:  

The report assumes the City would be making a gross profit of $240K (in 2020 dollars) every year to divert to these improvements, and so if they did replacements of docks in 2030, they would need to come up with $6.1 million, and would be presumed to have about $3 million in savings for that expense by then.  Additionally:

It should be noted that other than using one marina manager for both facilities, the City has chosen to be fiscally irresponsible and added two additional seasonal assistant managers at a significant cost to their bottom line (the city budget has part-time wages just at the city marina alone jumping by $83,900 between 2019 and 2020, while HVM's payroll is $263,000 total) .  One only has to look at the 2020 City of Ludington (COL) budget in the HVM section to find out how much money the COL is (not) saving up for this eventuality of replacing the docks. 

According to the Edgewater report, they should have over $738,000 squirrelled away by the end of 2022, in order to just replace the docks in these next ten years.  A look at HVM expenses shows that dock replacement is a small part of it (see p. 95).  They assign $3000 each year for $9000 total, apparently for the purpose of 'small' dock repair projects, since they will fall $729,000 short of the bigger project in just three years.  

No other line item looks to be used for that purpose, which becomes significant when you realize that the HVM revenues are budgeted to exactly add up to their expenditures.  

And while we should be cognizant that the Edgewater report came out in February 2020, after the 2020 budget was drafted, there has been no budget amendment for the half year since that would create $240,000 a year excess in HVM marina funds in an already planned three year budget.

So even though the community is spotting the COL a cool $80,000 extra each year to run this marina, the COL is not creating a mechanism in their budget to 'enterprise fund' this future necessity, and achieve the aims of the State of Michigan DNR in improving their facility.  So where is that $6 million going to come from if the City don't pay it?  The State of Michigan will come through.

Rather than sell the facility to a private entity (which the Edgewater report analyzes favorably)...

... the COL is given a lease that costs them nothing, they will do what is minimally needed to maintain the marina, just like they have with the city marina for four decades-- until they need something.  They will then cry to the State, their landlord, for more money and the State is effectively forced to do the project, despite the cost, since they don't want their property to deteriorate so that private marinas across the City of Ludington have a chance to fairly compete with this ridiculous subsidization scheme that is crafted to kill private businesses.

Be confident that all those large tax bills you're paying to live in your small hovel in this City and State is going to the government so that they can waste millions of dollars of your money fixing up public marinas (ran as if they are private) that most will never be able to afford to use.  Rest comfortably in knowing that your State could have sold this marina and that other one, and saved all of us poor taxpayers a ton of money.

[Freedom Seeker]

Very interesting theory, XLFD.  Do you have access to any documents from the DNR or State, or signatures on contracts to support any part of the State/DNR involvement of drivership (or a marina analogy, perhaps, of being the captain of this ship or barge or rowboat establishing the marinas?)

Another question, you mention that the $80k (tax revenue equivalent of HVM) will be supplied by the State?  How is that, specifically?

[Willy]

Thanks for your response Aquaman and X. Your right X, for City officials who could not see past their noses this was to good of an offer to pass up. Unfortunately Ludington has a history of "live for today" politicians. Looking ahead at what might arise as problems just is not in there decision making process. We see examples of that all over town.

[AQUAMAN]

Thanks to you too Willy. And what you just posted about "live for today" is widespread in the COL mindset, together with the fact that they never keep up with routine maintenance for anything they acquire thru grants and freebees. This is exactly why we have the crumbling infrastructure today, and more will come into the future. Common everyday sense in any taxpayer says keep up with maintenance on your home, vehicles, property, and personal property. That notion is simply totally lost at the City Council membership.