Position Paper on Marina Launch Fees

22 February 1999

By: D. Joseph Buys

Commissioners, as you will recall, on 11 February, 1999, I sent a letter to the City Manager and a copy to each Commissioner requesting launching fees be placed on the agenda. I didn’t get very far with that. As a result, at your special City Commission meeting on Wednesday, 19 February, I spoke to you and cited the following reasons why I felt this issue deserved further attention. You graciously allowed that. Thank you. For others not present, here’s what I said:

• I recognize the overall marina has financial problems and those problems become your problems. However, I feel there is clear evidence that launch fees for the past many years have already been subsidizing marina operations and doubling those fees only serves to compound those inequities. I feel fairness goes hand-in-hand with fiscal responsibility.
• I don't feel there was adequate opportunity for public input or at least public knowledge of the scheduled rate increases to permit citizens to present a balanced presentation of facts at that time. As a result, I don't feel several significant factors were presented and that adequate exploration of alternative means, such as cost savings, were adequately explored.
• I feel the huge scheduled increase, if implemented, will have several adverse effects, including greatly discouraging boating and even resulting in labeling Marquette as a "Boater Unfriendly" place.

The launching facilities are not contributing to the overall marina financial problems and increasing launching fees should not be used as the solution to these problems.

1. I obtained the individual marina financial statements for 1996, 1997, and 1998. I understand the marinas are on a fiscal year (1 July – 30 June) accounting cycle but the Harbor Advisory Committee obtains financial statements for calendar years for overview purposes and simplicity, which makes lots of sense to me. However, I did not run across a combined statement so I sat down with my computer and consolidated the two 1998 individual marina statements so we all can look at them by marina or consolidated. I have included a copy of my statement for your convenience.
2. I think it is most unfortunate launch facilities are lumped in with the marina financial operations. For all intents and purposes, we are a completely separate function that just happens to be co-located. Many places have launch facilities and not marinas. Marinas have a manned building, radios, refueling facilities, finger docks, bathrooms, electricity and water (unlimited use), pump-out facilities, picnic tables, and so forth. People who launch don’t get involved in these things. From an administrative standpoint it makes sense to consolidate operations but it seems to cloud the issue when it comes to financial issues. Therefore, I’ll try to distinguish between the two.

1. Rather than go back several years, I’d like to cite just 1998 financial data for now. Total revenues generated from launch fees in 1998, were $11,908 or let’s say $12,000. Looking through disbursements (expenses) I’m hard pressed to see where any of these expenses relate to the launch facilities. You might think salaries ($57,153) include some but marina personnel rarely go to the launch except to collect money and check passes. Several times I have complained about the lack of supervision at the launch facilities, including letters to the Harbor Advisory Committee and by attending their meetings. I don’t see any expenses in supplies except perhaps purchasing season passes and ticketing machine stock, which probably is pretty small. There can’t be much launching expense in water and electrical expenses of $15,658 with the two little dingy lights for the Presque Isle parking lot. Let’s allow $20 for that. Telephone expenses of $3,368 are for phones located in the marinas and are rarely ever used by persons who launch. Rather than beat this to death, I think it’s rather obvious that there are very few operational expenses related to the launching facilities. My guess is that related expenses are less than $2,000, leaving a net profit of $10,000 last year for the launching facilities. However, you won’t see that in the financial statements. You will also be hard pressed to find anyone else breaking these expenses out. Projecting back several years, I would guess the launching facilities have contributed (make that subsidized) to the marina fund in excess of $50,000.

3. The next issue is to determine how the launch fee schedule of $5/$100 was arrived at. What was the rationale? As I dug through past minutes and various official correspondences, I found some interesting items and made some observations I wish to share with you.

1. The marinas have been headed for financial trouble for some years now. That’s no secret to anyone. Even the City auditors commented on this. There appeared to be a need to do something strong to turn this around and assistant city manager Dan Smith was apparently charged with finding a solution. Dan Smith attended several Harbor Advisory Committee meetings last year. I wish to quote to you extracts from Dan Smith’s letter to the Marquette Harbor Advisory Committee dated March 24, 1998. On the first page, paragraph 5 he stated "…For those persons who trailer their boats, they are getting to use that facility for $2.50 a day. This is regardless of City residency and is an unrealistic price. Consider what you pay for most forms of entertainment and it is readily apparent that we should consider increasing this fee…" He went on to say "…I would suggest that the Committee consider raising the daily launch ramp fee to $5.00 this year and $10.00 next year. I would also suggest that the season pass be increased to $100 this year and $200 next year…" While this may seem extreme it is only so because the rates have been artificially low for many years. It is not unrealistic when compared to other forms of entertainment where initial investment in the facility is similar. The boating public may see this as a money grab, but in reality we are just trying to break even…"

1. Obviously, my first comment is what does paying for other forms of entertainment have to do with a decision like this? Does Mr. Smith expect to pass judgement on what forms of entertainment people use? Well, maybe my entertainment is to go to a video store and get a movie for $2.50. I guess my launch fee should be $2.50 and so should everyone else’s who rents movies. If any of you Commissioners or others out there enjoy golf and plan to launch, your fees should be higher. Commissioners, this is not business-making logic – this is a value judgement. Frankly, I don’t feel a value judgement should be the basis for establishing marina fees.
2. The statement of "…regardless of City residency…" greatly concerns me. I would like to think of Lake Superior as an asset to be enjoyed by all of us. That includes Ishpeming, Negaunee, Gwinn, Palmer, and anyplace else around here. We in Marquette are very fortunate to have launch facilities to this wonderful lake. Many others do not and I feel we have a responsibility to provide access to our neighbors and friends out of town at a reasonable cost. By reasonable, I mean adequate to cover operating or investment costs. Speaking of investment, I believe Mr. Smith in another letter said, "Presque Isle Marina was built at a time when the State of Michigan was funding marina construction almost entirely with state funds. That was the case with Presque Isle, and there was no debt involved." It sounds to me that all Michigan residents helped pay for that investment. On top of that, as I recall the Steelheaders, a no longer existing fishing organization, performed considerable volunteer work on the launch facilities.
3. The statement that $2.50 is an "unrealistic price" is a value judgement by the assistant City manager. What does that mean? I tend to question unsupported statements such as that. Lots of people feel a $2 launching is realistic. Whose values should apply? Is this the best basis we have for an educated business decision?
4. "Rates have been artificially low…" I love this statement and have even heard it more than once. However, I really I don’t know what that means. "Relative to what?" might be my question. From that statement one might get the impression that the marina has been subsidizing the launch facilities when really I feel it’s been the other way around. Maybe that statement again relates back to entertainment costs and you know where I stand on that.
5. Let me interject here some other 1998 marina rates around the U.P. so you have some type of feel of the structures. I do not guarantee they are 100% accurate. I’m told Escanaba is $2, Gladstone is free, Sault is free, Portage $1, Black River Falls (Ironwood) free, Autrain is free, Big Bay $1.50 and Munising $2.50.
6. Let me skip Mr. Smith’s proposed fee hike and address his comments on "…where initial investment in the facility is similar..."" Well, I previously mentioned Presque Isle was basically "free" as an investment to Marquette. Let me address then the Cinder Pond Marina launch facility. First, I think as a launch facility it is very poor and I seldom use it because I find it hazardous with any kind of wind. I know others who do not like that launch also. For those of you who are not boaters, it might appear as though there are three or four places to launch. In reality, there are only two, those on the right as you look from the lot. On the left side is a launch, designed and built for a carry-lift-type vehicle that would pick up large boats and transport them to carriages or whatever. However, the marina doesn’t have a carry-lift. Best of all, regular boats have an extremely difficult time to launch there because the docks are so high as to make it nearly impossible to get in and out of a boat. Jet skis and small boats sometime use it because they don’t use or need the dock. My point is that probably 2/3 of the investment in what some might consider "launching facilities" were costs associated with facilitating boats that moor, not launchers. Ironically, it rarely used. In addition, designing the facility that way not only costs considerable extra money but also probably greatly compromised the space needed to make the launch facility a safer place to exit and egress. I tried to get involved when that project was being designed but doors were quickly closed on me.

3. It is my understanding that originally the Harbor Advisory Committee rejected these rates. I understand they have several times expressed their unhappiness to the Commission in writing regarding the launch fee situation. However, from all indications in correspondences and minutes, it seems Mr. Smith persisted with the Harbor Advisory Committee until that Committee came up with a recommendation of $5 per launch and $55 for an annual pass. I was told the Committee knew a significant increase was expected of them. I’m told it was their compromise and they reluctantly came up with that plan because Mr. Smith was pushing for $10 fee per launch and $100 for a season pass. The Commission in April 1998 adopted the rate of $5 per launch and $100 for a seasonal pass.
4. Why should the launch fees remain $2.50? Someone I talked with on this topic who is closely affiliated with this process said to me when I mentioned launchers should not have to pay exorbitant fees "Well, the money has to come from someplace!" I felt that statement certainly lacked a sensitivity for fairness, and I like to think not many people feel that way. I don’t think I ever saw projections or even speculation on how much additional revenue would be raised by increasing launching fees and seasonal passes. I also don’t believe any surveys were taken on how such increases would impact on revenues. This may all have been done and I just didn’t see it. I’d bet against it. I like to think the average business person at least scratches out the possible impact of changing his pricing in any significant way. Now if he were to double his fees or increase them by 167% as was done here, he probably wouldn’t bother because he probably wouldn’t expect to be in business for long. However, when you’re a monopoly or the government… I consider the apparent lack of statistical projections or even rough estimates to be akin to shooting from the hip. I think having some kind of projections or estimates are a rather important thing to do, preferably some based on credible data.
5. Since there doesn’t appear to be any figures projecting changes in revenues from fee increases, I wish to jump in the game and you give my opinion. I contend if the currently scheduled $5/$100 fees are applied in 1999, you won’t realize $1,000 more in total revenue, probably less and maybe less than in 1998. To support that, I offer you Commissioners these petitions containing 888 signatures objecting to these increases. I can’t tell you how many people have told me and others, with this increase they’ll go elsewhere to launch but not to Marquette. These petitions were started as just a grass roots thing and we apparently struck a nerve. They took off in every direction and people were looking to sign them. I suspect we only have 3/4 of them back. By the way to all those that signed them, thanks from Jim Price and me. By the way, I want everyone to know that even if the seasonal fee is $100 this year, my wife will insist that I buy one to get me out of the house. So please don’t call me a hypocrite if you see me launching.
6. Do we as a community want to saddle, e.g., one of our many boaters of modest means with a 14" boat probably worth $700 who wants to go fishing at 6:00 a.m. for an hour before he goes to work with a $5 launch fee in an attempt to further subsidize the overall marina operation? What about a canoists that doesn’t even have a trailer? How about the boater who might take his family out boating in the evening but now will say "I’m not going to pay $5 to plop my boat in for an hour or two."
7. This is a good opportunity to address boat costs, especially to our non-boating and taxpaying public. I sometimes feel there is a perception that "boaters have bucks and they can pay." Boaters encompass a wide range of incomes but all you have to do is watch the launchers to see the variety of boats. Some are pretty fancy but some are probably not worth $500. However, to those fishermen and fisherwomen (don’t want to leave them out) and just boaters, they are the best investment ever and provide one of the best pleasures of life. I’m speculating but I’d bet the average boat launching, cost under $4,000.
8. Remember when the Federal Government got a brainstorm several years ago to raise the tax on luxury boats? That stupid move almost killed the industry and the Government ended up losing instead of gaining, not counting the damage done to the boating and related industries. I hope this rings a bell with all the business people around Marquette who get business when boaters come to town and from Marquette boaters too.
9. I know life isn’t always fair but the mooring fees were raised 5% in 1999 and launching fees from 100% to 150%. If a 5% launch fee increase had been passed, even if it was not fair, at least it might have been palatable.
10. In summary, I wish to say the following:

1. I respectfully ask this Commission to reopen discussion on launching fees and reinstate the $2.50 daily rate and $40 seasonal. I feel there would be some unhappiness but if you feel you have to increase something, I feel most launchers could live with an increase to a $50 seasonal pass this year.
2. I suggest not going to a $3 daily fee because that would necessitate new and costly ticketing equipment at Presque Isle. That might not prove cost effective. I have been told no equipment is currently on order as of last week.
3. I suggest marina fees for the year 2000 be reviewed by the Commission in January or February 2000 and in January or February in following years. There are several reasons for this. The Commission has full authority in this regards. Financial data to make an educated decision would be current versus the way it’s handled now, e.g., fees effective in 1999 were approved in 1998, based on 1997 data. Waterways Commission data arrives around January of each year. Rates apply on a calendar year, not fiscal year. This change sounds very logical to me.
4. It appears there will be a vacancy soon on the Harbor Advisory Committee. I have long cited the lack of representation by boaters who launch and I ask the Commission to balance that Committee with at least one or two launchers. To those in the boating public who are interested, please come to City Hall and put in an application.
5. I wish to express how fortunate I think this City is to have Hugh Leslie III who recently came on board as Director of Parks and Recreation. I already see very favorable and sorely needed changes made in the relationship between that position and the Harbor Advisory Committee. In addition, he promptly returns my calls and I like that.
6. Should you as a Commission decide not to change the launch fees in 1999, I request to speak to this issue in April 1999 regarding the year 2000 fees.
7. Marquette doesn’t seem to hesitate to hire consultants when they feel the need. Perhaps this is what should be done here to help resolve the marina financial troubles. If that isn’t done, perhaps tap the assistance from some former marina officers or former Harbor Advisory Committee members, some of whom have very good knowledge of funding and operations. Everything should be looked at – objectively. Look at cutting expenses as well as other opportunities to increase revenue.
8. Have we ever really surveyed launchers? How about potential launchers? How about going to the recreation shows and having a recreation booth and selling season passes? Slips? Recreation in general? Just some thoughts (Dan Smith suggested this previously but only for slips). How about setting up a table for a day or two at a launch facility to sell season passes? How about the marina offices selling season passes? A little innovation might go a long way here.
9. My final comments and questions: Is $5 fair? Do we want to saddle the person who can least afford it with a $5 fee for an hour of pleasure that costs Marquette practically nothing? Do we want Marquette to be known as "Boater Unfriendly"? Even if we gain a few dollars, and I doubt we will, what will be the real cost to our community? Who will it hurt?
10. I wish to again thank the City Commissioner for allowing me to address this issue. I may have missed several worthwhile points. I would now like to ask if there is anyone else who would like to speak on this issue with something new to add. I ask you to please avoid repeating ourselves as best you can.