Ludington's Marina Parable

[XLFD]

At the February 23, 2015 Ludington City Council meeting, the council approved seeking a $135,000 DNR Waterways Commission grant for use in the initiation of replacing and upgrading four of their docks.  The city marina would be responsible for half of the other costs in this project, the first of six phases of dock upgrades that will cost at least $1.8 million dollars in marina improvements.  The city is planning on seeking matches from the Michigan DNR in the other five phases over the next five years to cover roughly half the complete costs, which will probably top $2 million due to inflation. 

All councilors present voted unanimously for this grant application resolution, including Third Ward Councilor Les Johnson whose ward contains the City Marina, and council-appointed Fourth Ward Councilor Michael Krauch, whose ward contains numerous private marinas who both remained mum through the discussion of it.

A Parable

Councilor Johnson is also the owner of the City of Ludington's only 'party store', AJ's Party Port, some of the old-timers on here will remember it as the old Captain John's Party Port, fixtured on the corner of Danaher and James Streets.  They specialize in liquor, beer, wine, tobacco, Lotto, cigarettes and provide other products that make life worth living.  Some spots around town may offer some of these amenities, but none are as comprehensive in the above provisions.

Let's say the Michigan Liquor Control Commission (MLCC) receives a new directive from the state legislature under the aegis of 'economic development' to provide distributors of alcoholic beverages in areas of the state where they are under-served by private outlets.  Let's further say that they look at the big increase of alcohol-centric events cropping up in Ludington, the fact that there is only one liquor store servicing the Ludington area, along with other factors and conclude that a regional distributing center in the city is called for.

Let's say the MLCC's research shows them the perfect spot for a state outlet would be at the corner of Foster and James, one block north of AJ's.  After telling the City of Ludington that their store will bring a lot of money into the area, and allow some renewal of the downtown area, the city council is almost forced to give their okay, even with Councilor Johnson's objections.  After the state concedes on the issue of ever selling tobacco or cigarettes, the council passes the appropriate resolution to allow the outlet to proceed.

  

The MLCC buys up some of the financially stressed buildings in that area and develop a party super-store (like the picture above), using state funding to do so.  They use those same funds to stock the store with the area's widest selection of liquor, beer, and wine, though they need to put the money earned through sales back into restocking the inventory. 

The superstore is able to acquire its replacement inventory without needing to pay liquor taxes (13.85%), wine taxes ($.51 per gallon), beer taxes ($6.30 per barrel) nor does it pay property taxes.  Each year, state money is granted to the store to renovate the building and its stock, and in a short while the store, begins to sell the area's widest range of tobacco products at the cheapest price, complementing its ability to do the same with alcoholic beverages.  They are immune to the $.75 a pack tax on cigarettes after all.  They only seem to expand to offer anything AJ's has, but offers it at a much better price, because they can.

One block to the south, AJ's Party Port is suffering, losing almost all of its business to the upstart company with all those advantages it has.  To get any business, they have had to cut their profit margin to a point where they cannot sustain their business and need to borrow money just to stay afloat.  Councilor Johnson complains that contrary to agreement, the MLCC store is selling tobacco and must cease immediately. 

The rest of the council and city management, content with the success of the state superstore and getting special grants and privileges from the state because of the MLCC venture, decide to limit the new store to being able to sell only twelve tobacco types, even though the city agreement with the state bans their sale.  None of Johnson's fellow councilors can understand why he doesn't like the progress that has happened, because now there's even more people coming to the city to buy the products he is selling (albeit they're buying it from the much more inexpensive and nicer-looking MLCC Store).  Unable to compete in the unfair playing field that the state created, Councilor Les Johnson closes his business up.

The Moral of the Parable

The above scenario is unlikely, but not impossible, and is a mirror of what has happened with marinas in the Ludington area.  The Pere Marquette bayou and beyond were the birthplace of Ludington marinas, where entrepreneurs of the community saw the great potential of the area to create private marinas where they could offer berths for area boaters and fishermen, and house charter boats so those without boats could experience fishing, water sports, or just getting out on the lake. 

The success of the burgeoning private marinas also caught the notice of others in the city and state who began to envision a public marina for the city.  After many years of private marina success, millions of state and federal tax dollars were invested to dig up the current city marina and place those original docks they now want to replace with almost the same amount of 2015 dollars as it took 35 years ago for everything. 

They swore to the private marinas that they would never permit charter boats at the city marina, but that promise was broken within the first few years.  They then changed the rules to permit such boats with express written permission from both the state and the city.  The city never allowed such written permission until last year, breaking that covenant for over 30 years. 

The city marina does not have to pay property taxes for their expanse, they do not have to pay Michigan's oppressive gas taxes on their fuel, and are immune from most other taxes the private marinas have to diligently pay to play.

The city marina routinely gets upgrades gifted to them by the state which the private marinas can't get.  When the water levels were low in 2013, guess which marina got over $200,000 in dredging courtesy of the state?  Do you love the city marina's amenities like the bathhouse, and the fish cleaning station that were funded and created by the state under the condition that members of the public would have access to them?  Those facilities where members of the public are strictly forbidden by lock and sign erected by city personnel proclaiming that they cannot use them?

Most people can look at the parable and relate some empathy for Councilor Johnson, who gets ran out of a lucrative business by an unfair intrusion into the local economy by the state using an almost exhaustive amount of state dollars.  But this parable has been playing out on another playfield for about thirty-five years, and not enough people are aware of the unhealthy incursion of the city marina and the mostly-public funded Harbor View Marina into what was a healthy local private marina industry before the 1980s.  

The incredibly unjust system currently being condoned by the state and the city is so contrary to economic development just like the MLCC party store in our parable was, that it is almost undebatably so.  I have heard from a reliable source that the Waterways Commission is unlikely to grant money to marinas for such projects over the next five years, but I'm sure if Ludington leaders shop around enough, they may eventually get some state agency to give them money to 'help' the city in their enterprise.  The best help, however, would be to wean them from their Lansing nipple forever.

[Willy]

You had me going on this one X. I was scratching my head because I had never heard of a State store that you described. Your point is well taken and highllights a real hardship creating policy and stance taken by Federal, State and Local Governments against private enterprise. Another fine article. I noticed the LDN is up for more awards for it's newspaper. To bad they don't qualify for fair, honest and accurate news gathering and reporting.

[XLFD]

In 2013, I had occasion to attend and observe a DNR Waterways Commission meeting, along with a host of Ludington private marina owners and some other concerned Ludington residents.  It was an eye opening experience in seeing the way the state and city looked at the situation of charter boats and private-public entity competition.  Revealing was that the commissioners claimed to be either established private business owners or in the private sector for their 'day jobs', but almost exclusively had a myopia and reluctance about how to remedy the unfairness policy-wise. 

The City's representative, Marina Manager Jim Christensen spoke with an amazing amount of misrepresentation of facts that City Manager John Shay could be proud of.  Chief among these were the claims that the city marina was not in direct competition with the local marinas, that 100% of the operations funds for the city marina came from within, and that the City was allowed charter boats from the get go.  This would be akin to the state liquor store manager in the above scenario saying the same thing about their business, replacing tobacco with charter boats.