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Are municipal marinas moneymakers or losers?

3K views 15 replies 15 participants last post by  saltydog4 
#1 ·
The Municipal Marina in Riviera Beach Fl was the most expensive marina I have ever been in, over $800/month for my 28' boat. The docks were really nice and looked to be very strong in event of a storm. The place was undergoing some major renovations. However, it was half empty. These were probably the most expensive marina docks to build that I have ever seen. I assume that the reason for this sort of building is liability for the city but with this sort of cost to build, do they make money if they're half empty?
Other municipal marinas I checked along the way were also a bit above average in cost too. ANy guess at what fraction make money?
 
#2 ·
The cost/benefit for any public authority to build a facility such as a marina, park, bike path, landscaped median strips or other public facility, is not for the direct return on investment for that particular facility, but more for the increased quality of life for the public. A better living environment will tend to attract or keep people and commerce which may in turn produce more revenue for a municipality/county/state, and a better visitor environment may encourage visitors to spend more time and money in a municipality.
 
#3 ·
Froggie, there's no way to tell if a particular marina is a money maker or not. That can be, and has been, decided by the local politicians on their own agenda. It can be a sweetheart deal to someone's nephew, or a concession that has been way over-priced by a couple of crazy bidders. The town may think it is nice to have a marina, so they may sell the concession cheap. Or they may want to discourage trash, and intentionally price it high.
You just never knew, unless you spend a lot of time and money digging up the answers. If you think it is exceptionally overpriced, see if the local newspaper is interested in sleuthing out the costs with you.
 
#4 · (Edited)
What municipal agencies almost always forget are the laws of supply and demand. Fundamentally, demand is pretty mature and set for the services we boaters consume. When you increase the price, without altering (shifting) supply or demand...then you move DOWN the demand curve.

So you have these municipal commissions with hair-brained ideas that the marinas they're building and mooring fields they're putting in will pay for themselves without doing any fact checking on where the market rate is for supply and/or demand. True to form, they put in these facilities...and because they have such high capex to recoup, they price them ridiculously and guess what...they sit empty. Meanwhile dumbo city council starts bitching about the ongoing costs that were well out of expectations for the original plan submitted for the marina.

Sure as rain, then the discussion comes to privatization. Then a smart vendor comes in, gets a below-market rate lease (way below the cap-ex required to build such facilities) and runs the business properly...albeit still at prices that make cruisers cringe. They do whats required to stimulate/shift demand (alter packaging, price, promotions, etc) to fill up the marina because they dont care about having to keep aside capital to keep the facilities in order...they're just leasing it. And you know what they say..."dont be gentle, its a rental!!!"

People need to get wise about their "demands" for high end muni facilities. Have to be VERY VERY careful about asking any amenity and evaluate it truly for Total Cost of Ownership. Otherwise, you'll get smart businesspeople just waiting for muni-failure to take over the waterfront.
 
#6 ·
What municipal agencies almost always forget are the laws of supply and demand.
Boy, ain't THAT the truth!

Worked in a consulting position with the transit authority of a large, northeastern, U.S. city some years back (I'll let you guess which one). Ridership was down, as were revenues. So they decided they needed to increase their rates. I tried to explain supply and demand to them. The conversation went something like this...

"You do understand, don't you, that if you increase the rates the ridership will go down even further?"

"But our revenues are down, so we need to raise the rates so that we will bring in more money."

But the point is that if you raise the rates, more people will choose other alternatives, and your total revenues may actually go down, rather than up."

"What? No. If we raise the rates then we will make more on each rider, so our revenues HAVE to go up!"

"No, they don't have to go up. If the ridership goes down even more--which is very likely--then the revenues can go down."

They still didn't "get it." It was like talking to a brick wall. The idea that people might make a rational choice to stop riding when they increased the rates was just completely beyond their comprehension. It really got to the point where it was hard not to laugh at how dense they were. I walked away from that gig when I realized that the only reason they hired a consultant was so that they would have someone to blame when the inevitable happened.
 
#5 ·
In most things retail, there exists a per-customer or per-sale cost. And this is rarely fixed. It tends to fluctuate based on many factors (among them is them socio-econonomic class of the customers). In a rental property, for further example, you have a lot of costs associated with each turnover of the property -- cleaning, painting, advertising, and so on.

The end result is that it is universally more profitable overall to sell (or rent) at a price that is too high for 100 percent sales (or rental occupancy). As the volume or occupancy goes up, so do the costs, and at some point the marginal gains go down. This creates a tangent line on a graph, and that price at the tangent line is the most profitable price (and is never the full-occupancy price). Where this tangent line is varies between products; and further based on how you estimate all the factors that go into the graph.

Municipal marinas tend to be required to be self-supporting; and have a secondary requirement in most cases that they not cater to low-brow guests. You know who they are -- boats that are covered in so much junk they look like a floating yard sale, stuff spilling over onto the dock, loud and obnoxious drunks, and so on. Keeping the price high tends to keep out that element, which is valued even at the cost of maximizing profits.

Economics is almost as much of a downer as evolutionary biology. Somebody always gets ground under the wheels of the machine while somebody else gets to ride above in style.
 
#7 ·
Can't comment on profits but I have been going to Riviera Marina for over 25 years. For those not familiar with Riviera Beach,Florida, it is well known for prostitution and drug trafficking. The marina itself was full of crap boats with don't give a sh*t liveaboards. Pretty ugly place with sailboats without masts inhabited by groups of people. Many sunk boats abandoned by owners. The marina a few years ago started requiring evidence of liability insurance which caused a lot of angst. It forced many of the liveaboards to leave and the City started to to rebuild the marina. It was/is a major redevelopment project that a poor city is trying to make go of it. Given he number of vacant slips and the economy going in the tank, it was poor timing. Unfortunately, the prior issues drove many people away and regaining the boat population will be difficult.
 
#8 · (Edited)
We have four municipal marinas within twenty miles of each other, each with roughly the same amenities, same access, same everything. Their prices, though, run from $3.50 per foot per month (one that is two thirds full) to as much s $9 a foot (for one that is 3/4 empty). Obviously, either some are over or under priced. I have a friend on the city council of one of the marinas that is very expensive and almost empty. She keeps asking me why I won't move my boat to their marina (in the town I live in instead of one five miles away) and when I tell her it's not worth it to me to pay more than double the slip rent I'm paying now, she almost looks offended.

You have to remember, that the people who run cities are rarely business people. Because business people rarely have time for politics as a second job. In our towns, I find that real estate brokers are the dominant class who become small town politicians. They generally don't care about boats, or the people who own them.
 
#9 ·
The answer is clearly all over the map, just like all municipal services. There is no real business sense in government. All municipalities do their budget on a cash basis. As long is the near term is cash neutral or positive, they're fine and the next administration can deal with any deferred mess. Then, of course, is pandering to the voter.

Democracy would be the greatest invention of all time, if not for the money.
 
#10 ·
I once button holed Mike Bloomberg (former Mayor of New York) about putting some dockage along Manhattan's East River as there was none available for cruising boats. He listen as I mentioned cities like Oswego have transit dockage for cruising boats. Never saw anything come of it. But, did see a plan for a marina in the future renovation of the South Street Seaport. We'll see if that actually happens.
 
#11 ·
My city has a very basic marina with no services to speak of. We basically get a slip and a 20 amp circuit for $450 a year. No restrooms, no boat lift, no water, diesel or gasoline pumps. No harbor or lake patrol. The docks were built well back in the 50's and it doesn't appear that any maintenance has been done since. So with about a hundred boats in the marina bringing nearly a half a million a year, I can't help to think that ours is making a crap ton of money for the city.
 
#12 ·
Municipalities don't necessarily have the same motives as a for-profits.

Minneapolis doesn't have city marinas exactly, but we do have three lakes with sailing docks and mooring balls. My $450 / year gets me a ball that's pulled and inspected every year, a reasonably clean dock, and access to a row boat for getting out to my boat.

There is more demand than supply, so every spring the city holds a drawing where everybody meets in a local gym, they put postcards into a big brass tumbler and draw out the winners for mooring permits for that year (priority going first to prior permit holders and Minneapolis residents). It's old-fashioned and kind of fun.

If this were a for-profit operation obviously they'd just keep charging more and more until a handful of buoys went empty, and that would be the market value.

But the motive is not profit, the motive to provide a service to the city. So they price it to just cover costs, and keep the opportunity open for people with a wider range of incomes. I like the system.

(We also provide added worth to the park system, in that people think sailboats are pretty. Lots of people get engagement/graduation/prom photos taken with our boats in the background. Every time I see a photo shoot setting up I think "Maybe the city should pay us to keep our boats here…")
 
#14 ·
Lake Michigan--from Chicago on up to Milwaukee and beyond, nearly all the marinas are public (Chicago, Waukegan, Winthrop Harbor, Kenosha). There are a couple of small private marinas. But, nearly everything else is public.

On the Michigan side (St. Joe, Saugatuck, etc.), there are some larger private marinas.

On the IL / WI side--rates are ok. I've read some of the Waukegan Port Authority Board meeting minutes. I get the sense they are happy when their income covers their expenses.
 
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