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]

Oh come on now, X, where is your positivity? Party down and enjoy closing out the peon public while they pick up the tab?

Well displayed article that the CC will probably never let the public really know, if they can comprehend the finances of it themselves.  Just another burden on our heavy school tax and sewer repairs.  You should send this article to someone in the state who might give a damn.  Fix the damn ... governor who needs to fix the damn roads, dams, Pfas, and her need to be autocratic.

[XLFD]

I am absolutely positive that this isn't what the state DNR should be wasting their money on.  The city marina was constructed originally to meet the State's somewhat arbitrary 'harbor of refuge'  goals, that is to have a place for transient boat traffic to shelter during a storm.  Seasonal slips and charter boats were not part of the equation at the city marina, that's what the private marinas were told.  Over time, these became the normal users and city officials allegedly doctored some records to make the case for the state to make a new marina in 1998, so as not to run afoul of private marinas they let a private firm run the marina, paying their way and paying taxes (for a 25 year contract).  

It was understood by all but the most dense that when the change came, the COL was likely to take over, because otherwise the cost of refurbishing would be enormous.  That's why Harbor View LLC left early, the scheduled maintenance costs envisioned by the State would put them in the red for years.  The State DNR knows all of this too, but unlike private concerns, they have a veritable blank check for wasteful expeditions like this that should never be state ran in the first place.

[Du Wright]

Wow! A very analytical speech you gave, XLFD, with no mention in the minutes or media? Guess it's not the first time that has happened. And who says to "just speak up at a city council meeting"? Like that will make a difference.

I read this Edgewater report twice (only the excerpts included) three times before it "sunk in" so I wonder to what extent it sunk into the voters minds?

A few things that comes to my mind or that Edgewater seems to presume:

1) the economy continues as is, or gets even better to continue the capacity of tenants. This does not seem to allow for much economic downturn. And when economic sh...t hits the fan, boats are one of the first things to go in a household budget, and there goes municipal or state revenue.

2) Who knows the real thinking behind the decisions. I presume the marina board was heavily influential in decision making, and that may have been, not only, for personal gain but for a few secure new jobs too. And will the city pay these new positions benefits and pensions? Whizz kids with marketing power and influence or drunken sailors at the helm?

3) is the $6 million for dock repair over inflated for any political or grant revenue purpose?

4) does a lease-option give the city an option "out" at any time? And is this the fall-back plan?

5) meanwhile, the burden, as you say, falls to the city taxpayer, just like the splash pad, west end, heritage park maintenance, equipment, utilities, and salaries. Look at the increase also in the past few years in the city's parks budget. Don't tell me that the taxpayer is not paying for these luxuries.

[XLFD]

My speech is written verbatim in the meeting minutes, so it's there for posterity, unrefuted and staring them in the face for all time, as is the lack of a response from city leaders who enjoy the free rent and the freeloading at HVM.  Some notes on your observations:  

1) Future projection typically presume the average growth of inflation over time, so even if you have a bad year or two, it will likely even out to that average.  Right now, it's very volatile.

2) The costs of labor (wages and benefits) for the city marina in 2019 was budgeted at $166,400.  The combined labor costs of the two marinas is budgeted at $464,800 for 2020.  That's an increase by a factor of 2.8, when it should be considerably less than two.

3) I would guess that it may be underinflated if the COL opts to put in floating docks of the highest quality-- which is the most likely scenario.  Edgewater likely looked at comparable replacements to the existing floating docks. 

4) the COL can break the lease at any time w/o problems, however, it seems likely they would not do so with all the freebies and the worry that the State would withhold future aid from the other marina, which the City needs to maintain it.

5) exactly, and the ones with the most hurt are the private marina owners who can't possibly keep up with the marinas their taxes are heavily subsidizing, nor sell fuel for a profit, since they have to pay all applicable fuel taxes.

[Freedom Seeker]

Another question to ask is this: of the 82 or so "state owned public marinas" how many have swimming pools and what is their cost for admission?

[AQUAMAN]

You hit the nail square on the head on this thread and your posts X, thank you very much, for the real truth and accurate arithmetic. After last September's mtg. with the COL and Mayor/City Mgr., which X was invited to also, gave us all private marinas the strong impression any private marina owner objecting to a sale or lease, that we were all in need of anger mgmt. classes, esp. me I guess. Which is why I asked, with all the new current infrastructure debts we the people must live with, why the COL doesn't do something else than the status quo right now? As usual, they all had their minds made up before the mtg. to keep it theirs at any cost, regardless of the taxpayers. Another prime example of the COL short-sighted mindset and greed to continue as kings of the waterfront, no matter how it hurts and cripples private marina owners in a Capitalistic society. I just lost a long time customer/friend to HVM after about 8 years of transient docking with me because I raised my August rates to help offset losses last season, plus he said he liked the bonus of a pool/hottub there, which are very expensive amenities to compete with for 3 months a year, sad, but true.

[XLFD]

People think I love blaming the City of Ludington for everything under the sun, but I definitely see the biggest official jackasses being in the State DNR.  Prior FOIA responses have shown me that the State never considered the sale of the property, they had over a year to put it on the market.  There is no compelling reason out there explaining the state's interests in having two public marinas, in fact it's an ongoing liability.

Consider, the COL is expected to run it as a budget neutral expense, and will find ways to do that, letting the State pick up the tab when they need something new, shiny, and/or expensive.  Had they sold it to an entrepreneur, they would have immediately a couple million dollars or more in their pocket, lose a 'tax' liability of $80,000/year, and not be responsible for the millions in maintenance coming just around the corner.  With a sale, the COL would also gain that $80.000 back in taxes and would not have to be involved in a business it should never be running in the first place. 

The COL budget $60,000 for 'administration expenses' of the two marinas which is effectively what the City gauges as the amount of city hall labor time to help run this operation.  

Think about that: a business that runs effectively 1/3 of the year sets aside $60,000 for administrating what is supposed to be an independent enterprise fund with three managers already at the helm.

[Freedom Seeker]

It's almost unfathomable, the finances for two marinas.  Thanks for keeping up on this X and the clarifications, I hadn't had time to even read the minutes of your statement.  I'm glad it got on record.  Those that are suffering the most are the long-time private marinas, and that is a crying shame.  Upon further look into this, it does seem that the state is getting heavily into the marina business and maybe hopefully with the camping fees and marina fees the citizens might see some damn roads fixed in the state.

[AQUAMAN]

About 21 years ago when HVM was set up on the drawing board, I said it was a dirty rotten trick, to lease the marina to a private individual. This warped idea came down for the first and only time by the DEQ to fund such an enterprise with taxpayer monies. And now, sure enough, the COL is taking full control and ownership. A second municipal marina with over 100 slips is now taking place, never heard of nor achieved in any other port town in history.

[Willy]

Great job X. Has anyone in the chain of command ever stated why the City got into this deal? That's kind of a stupid question I just asked, since they don't explain anything they do. I can understand but not agree with the first marina but this second fiasco makes no sense. How can they possibly explain their actions and the cost to the taxpayers? 

[AQUAMAN]

Willy, the answer to that question has already been told to us during several CC mtgs. over past years. Once so and so is elected, they alone make the decisions about everything in that Ward, same with the Mayor. They require no public input nor approvals, simply do what the fixed agenda requires, period. That's the saddest story that continues for all too many years now, at the present, and into the future. We currently and for all too long have voters that are just pawns in the game of politics, voting for whatever is put before them, without analyzing and verifying the truths and negatives that result. The current infrastructure fiasco should have awoken people up, but obviously, it did not. WHY? Because the media and COL told us it's a normal thing to happen, which is so far fake news and lies, it's pathetic.

[XLFD]

Willy,

While I agree that Aquaman's response is a boilerplate for many Ludington issues, I have grown to believe that the State DNR has been the driver of both public marinas, and the City of Ludington is the beneficiaries of deals they would have been foolish to refuse.  

I have limited knowledge of the original city marina deal, but I do know state (and federal) resources were used exclusively to make the marina, and that the COL was tapped to manage an operation where success was guaranteed by the State.  There was no real outlay needed by the COL, the State would actually contribute each year and give out waterways grants and upgrades whenever they felt it would make the marina better.  The marina's enterprise fund was running a good surplus, so they were actually putting money elsewhere in the budget, even for sizable donations to the Stearns skate park creation.  Of course, they violated state law and their contract by renting seasonal slips to charter boats, but the State did not care one iota-- they would just make new improvements and maintenance with the same strictures that had always been ignored.

This last COL acquisition of HVM was even more friendly.  The COL would sign a 25 year lease w/o even creating an ordinance, that would cost them nothing, but guarantee that the State would continue paying in their usual 'taxes' of $80,000 (that had approximately matched the HVM LLC's tax rate) to the COL and allow the COL to receive grants in the future to pay for the maintenance and upgrades.  The COL only had to supply the work force to keep it running as it had been.  With their latest amendment, totally created by the State DNR in repugnance to the Michigan and Federal Constitution's Equal Protection Clause, they have sought to bar the general public from the public facility, ergo making it private for all intents and purposes.  

When this manufactured crisis runs its course, the DNR and the COL will be duly challenged.  But I find it difficult to assign blame to the COL for these public marina operations, when the State's hands are holding the bloody knife.