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Presentation to City Commission
29 March 1999
D. Joseph Buys
"I was originally led to believe the launch fee increase to $5 and $100 season pass for 1999 was in the proposal stages. I was later told it was a done deal as it was approved by Marquette City Commission in 1998 and was not a proposal. I was somewhat confused as certain city officials also thought it was not locked in.
If you had raised our launch fees from $2 to $2.50 I wouldnít be here tonight. I probably wouldnít be here if fees were raised from $2.50 to $3 or seasonal pass from $45 to $55. However, a 100% - 122% increase caught my attention.
Iíve jumped a lot of hoops to surface this issue, received a fair portion of misinformation along the way, and been lead down a lot of bureaucratic blind alleys. As you know, Iíve spent lots of time addressing these fees before you and directly with you.
I thought I was beginning to understand the process but now Iím somewhat confused again. Today I called the Michigan Waterways Commission and was informed of several things perhaps you already know but I didnít. Please correct me if Iím wrong on any of these.
- Iím told Marquette signed an agreement when we got our marina grant, that the Michigan Waterways Commission has to approve all fees - rental, transient, and launchĖ period.
- Iím told the Michigan Waterways Commission has not yet approved the Marquette $5/$100 launch fee request yet. That review is scheduled for a 9 April Michigan Waterways Commission meeting.
- Iím told any changes you make tonight will be too late to be considered at their 9 April meeting.
- Iím told private citizens may attend their Michigan Waterways Commission meetings or provide input to them via letter or fax not later than today. I took the liberty to fax them today.
I hope you know why Iím now confused. Can anyone correct me if any of this is not true? I didnít have time to check on it with any City officials.
If I am misinformed and you wish to proceed with readdressing launch fees, then I ask you to establish a $2.50 daily rate at Presque Isle, $3 fee at the Cinder Pond, and $45 seasonal launch fee.
As a designated representative of Central U.P. Sportfishing Assn. (CUPSA) to speak to this issue, I would offer we are willing to help the marinas promote seasonal passes and/or slip rental at any boat or recreation shows where we have booths. We also wish to offer representation to or on the Harbor Advisory Committee primarily for launch issues. I would also offer to address our membership to explore if there are any opportunities for us to provide volunteer help or even limited financial donations to the City, primarily in support of the Presque Isle launch facility."
Following my presentation and considerable discussion amongst the Commissioners and City officials, the Commission voted 6 for the following launch fees (the Mayor was the lone dissenting vote as he wanted a $5 launch fee.):
Presque Isle $3.00 daily, Cinder Pond $3.50 daily, $60.00 seasonal pass, $15 weekly pass.
Joe's Observations and Opinions: The Commission failed to deal with the real problem - the marinas. By my computations, the marinas (as opposed to the launch facilities) have been operating at an annual loss of roughly $35,000. This is made up by roughly a $25,000 subsidy from the City and roughly $10,000 ($12,000 income less $2,000 operating expenses) from the launching facilities. Instead they attacked the launching rates and made token adjustments to the slip fees, which won't solve the marina financial probems.Michigan Waterways Approval. The City Manager agreed my statements were true but questioned whether the Waterways Commission had full say over the launch fees in that written agreement. The question was not asked why the City submitted the $5/$100 fee to them if that were the case. Ignoring Past Launch Profitability. One Commissioner expressed his/her job was to represent the City residents and was concerned about non-City boaters being supported by Marquette taxpayers, implying this was the case with launchers, which it is not. We don't need this parochialism against launcher, city and non-city residents, who already paid way over their expenses. No one addressed the $12,000 launchers paid in 1998 while related operating expenses were probably less than $2,000. There was no mention of Michigan taxpayer monies funding 95% of the Presque Isle and a significant portion of the Cinder Pond. I've said from day one, marinas are community resources, run by the City that should not be subsidized by City taxpayers. Equity. I felt the Michigan Waterways Commission was used as a crutch to go after the launchers, with some Commissioners expressing the Waterways Commission fee schedules were maximums instead of minimums or some seemed to think of them as goals. It didn't appear they felt responsible for making marinas self-supporting by establishing all fees based on related investment/operating costs. In other words, if slip rentals are losing money we want to give the impression we are following Michigan Waterways Commission guidelines so we can raise rental fees a little and jack up the launching fees for which we have no guidelines. Disregard launches are already making money for the marinas. Tax and Spend. Double standards were obvious, one minute talking about using roughly $85,000 from the reserve fund for the Presque Isle marina fuel tank (which is not used by launchers) and later saying they have to raise launch fees to support future launch facility improvements. Considering launchers probably put half the money in the reserve used for repairs that do not apply to us, I guess they think that's fair. We've had promises to fix the ramps for 15 years and it hasn't happened yet. They admitted a past grant was erroneously not timely closed and made us ineligible for grants all that time. City officials expressed if the Michigan Waterways Commission disapproved the launch rates, the City would not be responsible for resultant losses in revenue. "Tax and spend" thinking showed with several comments of "we haven't raised launch fees in several years", as though it (apparently it is) was something that must be done whether warranted or not. Ironic, our Board of Light and Power has not raised its rates since I believe 1984. Maybe they should raise electric fees just because it's time, and disregard they've managed their expenses well. Tax means increase the launching fees and spend means to subsidize the marina. How do you deal with that kind of thinking? Money vs. Launches. At no time did I hear a projection of how much more money the increased launch fees would raise or equally important, its possible impact on number of launches. You can't reasonably expect to raise fees and not expect the number of launches down - probably significantly. What kind of marketing is that? The thinking apparently is if you raise the launch fees, you'll automatically realize more income. It isn't necessarily so! This is on an activity already providing positive income to the marinas. Disregard you may now have 30% less people using launch facilities that were making money before. How unrepresentative and unbusinesslike! Is that their goal? The launch fee structure has then effectively shifted to those who can afford or are willing to pay higher fees, and cutting out those who are not. I wonder if that rate thinking has been applied in establishing slip rental fees? I guess it's easy to go after those that don't have representation such as the launchers. It obviously works. If the launches were losing money or were taxpayer subsidized, I'd be the first to endorse an increase. They are not. Fee Structure. The fee structure is something to behold. Presque Isle was raised from $2.50 to $3.00, requiring spending approximately $5,000 for a ticket machine. I figure that will take 5 years to pay off ($5,000/2,000 launches/year*$.50) if launch activity stays the same which is unlikely with each increase in fees. Next, the ticket dispenser at the Cinder Pond, which is fairly new and takes dollar bills, will be reset to $3.50 for the new rate. This was a perfect opportunity to eliminate loose change - now it's gone. The new $60 season pass requires 18 Cinder Pond launches ($60/$3.50) or 20 Presque Isle launches to break even. The Harbor Advisory Committee recommended a breakeven of 11 ($55/$5) to promote buying season passes. The old breakeven was 18 launches ($45/$2.50). Now we have a high seasonal pass breakeven points, right after several Commissioners agreed they should be promoted. The weekly rate of $15 is a real prize. Who do you think is going to buy one of those passes expecting to get 5 days of good boating weather on Lake Superior, let alone be available to go boating each of those days, just to break even? I'm betting the City will spend considerable money coming up with these passes and will sell under 5 all summer. No wonder the marinas are not making money. With that rate structure, pretty soon launch facilities won't either. This is what happens when politics interferes with sound business and marketing strategies. Go figure!
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