Marina Advisory Commission

M A R I N A A DV I S O RY C OMMITTEE November 1, 2021 Marina Advisory Committee Meeting 11.1.2021Master Page 1 of 17  Marina Advisory Committee November 1, 2021 at 6:00 p.m. Committee Members Ken Hulett, Chairman J.J. Jones, Vice-Chairman Steve Hucke Ryan Bradley Curtis Adams Due to COVID-19, there will be NO physical meeting location per WA Proclamation 20-28. To listen to the live meeting, please call 1(650)242-4929, Meeting ID: 147 322 9451 (NOTE: Audio Only, No Comments - For Comments, Email csublet@oakharbor.org) 1. Public Comment 2. Review of the October 4, 2021, meeting notes 3. Marina Dredge Bond Rate Increase – Discussion 4. General Marina Update 5. Marina Advisory Committee Comments 6. Next Meeting – December 6, 2021 7. Adjourn Marina Advisory Committee Meeting 11.1.2021Master Page 2 of 17  REVIEW OF M EETING N OTES F RO M O C T O B E R 4 , 2021 Marina Advisory Committee Meeting 11.1.2021Master Page 3 of 17  City of Oak Harbor October 4, 2021 Marina Advisory Committee 6:00 p.m. Regular Meeting Agenda Virtual Meeting Roll Call: Mr. K. Hulett __X__ Mr. J. Jones __X__ Mr. S. Hucke __X__ Mr. Ryan Bradley_ X____ Mr. Curtis Adams __X__ Staff: Mr. Chris Sublet Public: Mr. Byron Skubi 1. Public Comment: • None 2. Review of the September 13, 2021, Meeting Minutes: • Approved, as written. 3. 2018, 2019, 2020, 2021 Revenue and Expenses Update – Discussion Mr. Hulett introduced the agenda item and Mr. Sublet explained that this information was provided in response to questions from the September meeting. He also explained that Mr. Goldman was unable to attend but would be at the November meeting. Discussion The MAC discussed the marina revenue and expenses and had several questions regarding the Indirect Cost Allocation and other fees paid to the City. They talked about how the Indirect Cost Allocation went up to $217,000 in 2020 from $120,000 in 2018. The MAC discussed how they are concerned with how much the marina pays the City for the Indirect Cost Allocation and other fees. They questioned if these fees are why the marina cannot build up substantial reserves year after year. Action No action was taken 4. Marina Dredge Bond Rate Increase – Discussion Mr. Hulett introduced the agenda item and Mr. Sublet explained that was a carryover item from the September meeting. He explained that there were options for paying off the bond and that everything was on the “table.” Discussion The MAC discussed the different rate increase options such as using reserves and not increasing the dredge fee and increasing the dredge fee and saving the reserves. They asked why the financial burden of the marina is on the tenants when it is open to the public. They also discussed looking into starting a port district, inquiring if sales tax money from the sales of boats could be diverted to the marina and asking the City Council for “general” fund money to help pay for the bond and next dredging effort. Action No action was taken. Marina Advisory Committee Meeting 11.1.2021Master Page 4 of 17 5. General Update • Mr. Sublet gave an update on the Wi-Fi, log boom replacement, breakwater, fish pens and Neil Ketchum’s retirement in January. 6. MAC Comments • Mr. Bradley explained that he has seen some people confused by the Maylor’s Point trail sign and asked if it could be taken down since the trail was closed. 7. Next regular meeting— November 1, 2021 8. Adjourn Marina Advisory Committee Meeting 11.1.2021Master Page 5 of 17 M A R I N A D R E D G E B O N D R AT E INCREASE Discussion Marina Advisory Committee Meeting 11.1.2021Master Page 6 of 17  City of Oak Harbor Oak Harbor Marina Memo To: Marina Advisory Committee From: Chris Sublet, Harbormaster CC: Date: 11/01/2021 Re: Marina Dredge Fee Rate Increase – Discussion At the July 5, 20021 Marina Advisory Committee (MAC) meeting the MAC was presented with three options for refinancing the dredge bond. The three options were: A. Level Savings – 10 Year. This would reduce the amount of the annual payments to provide a savings each year. B. Consistent Payments – 10 Year. This would keep the payments at the current level and shorten the final maturity, realizing nearly all savings in year ten. C. Accelerated Payments – 5 Year. This would increase the payments for the first five years to pay off the debt in half the time. This provides the greatest level of interest savings over the life of the loan. The MAC made a formal recommendation to adopt option C. At the July 13, 2021, City Council meeting, Staff presented the Dredge Bond refinance options to the City Council. The City Council discussed the options and determined that they needed more information before they could decide to raise the dredge fee rate or not. At the July 28, 2021, City Council Workshop, the options were again presented, and the City Council adopted option C. At the September 6, 2021, Marina Advisory Committee meeting the MAC discussed the dredge fee rate increase options and requested to review the marina revenue and expenses. They also asked to review the bond refinance details and the amortization schedule. At the October 4, 2021, meeting staff presented the MAC with 3 years of historical financial information as well as the options for repaying the refinanced dredge bond. Staff also included answers (attachment A) from the City of Oak Harbor Finance Director Dave Goldman, that were asked by the MAC at the September meeting The next step in the process is to determine the appropriate rates for the dredge fee to fund the new dredge bond payments. The options are: 1 Marina Advisory Committee Meeting 11.1.2021Master Page 7 of 17  A. Do nothing, leave the dredge fee at $1.03 per foot and pay the fees out of the marina reserves. a. This option will result in approximately $709,661 being used from the marina reserves. b. It is likely that a significant rate increase will be needed in the future to build the reserves back up and to pay for the new dredge effort. B. Increase the dredge fee to $2.16 to completely pay for the dredge bond fees. a. This option will not utilize any of the marina reserves. b. This option may put a financial burden on some tenants and force them to leave the marina. c. It is likely that the dredge fee may not have to be increased once the new dredging bond is purchased. C. Incrementally increase the dredge fee to $2.16 over the next 4 years. a. Will utilize some of the marina reserves. b. This option may result in some tenants leaving the marina. c. An example of this option, using a 32’ boat (average size of boat), is: Rate Per Foot 32 Foot (plus Additional Reserves Used tax) Funds Generated Current $1.03 $37.19 $0.00 $157,000 Year 1 $1.31 $47.39 $39,250 $117,750 Year 2 $1.60 $57.59 $78,500 $78,500 Year 3 $1.88 $67.79 $117,750 $39,500 Year 4 $2.16 $78.00 $157,000 $0.00 Total Reserves $392,750 Used In effort to aid the MAC with making this difficult decision, staff has also included the following documents with this packet. • Common size rates including a 3% per year increase to both the average rate and OH Marina rate, plus the incremental dredge bond increase compared to the surrounding marinas (attachment B). • The amortization schedule (attachment C). The MAC had asked if The City of Oak Harbor Finance Director, Mr. Goldman does plan on attending this meeting and will be available to answer questions. Staff is providing this information to the Marina Advisory Committee as an informational update. This may be an action item at the December meeting. Please contact Chris Sublet at 360.279.4576 if you have any questions. Attachments A. Questions and answers from the October meeting. B. Common size rates and comparison C. The refinanced bond amortization schedule ⚫ Page 2 Marina Advisory Committee Meeting 11.1.2021Master Page 8 of 17 Attachment A. Questions and answers from the October meeting. Marina Advisory Committee Meeting Dredge Fee Increase Answers David Goldman – Finance Director  What is the new monthly/yearly obligation?  How was the proposed $2.16 dredge fee calculated? o The current Dredging Fee is $1.03 per lf. This fee is projected to generate approximately $143,000 in 2021. o The annual debt payments on a $4.5 million dollar 20 year bond at 3% interest is approximately $300,000. o The formula $1.03 x $300,000 / $143,000 = $2.16.  What is the formula or estimating what we will need to cover the costs of refinancing the debt? o I used a spreadsheet that was provided by our financial advisor. It works pretty much the same as going to any on-line amortization calculator.  How many total feet of moored boats are paying the fee vs the actual amount we’ll pay for principal and interest on the new dredge bond? o Clarification needed.  When do we start making the new bond payment? o First payment of $101,000 Principal and $3,913.75 Interest is due on December 1, 2021.  Will the planned regular 3% rate increase in the spring, change our cash flow enough to handle the higher loan payment so we can perhaps delay future rate increases? o No.  Can we receive a copy of the amortization schedule? o We emailed this to them the next day. Final Amortization Schedule Attached  Would it be possible to get “general” funds to help fund the dredge effort? Marina Advisory Committee Meeting 11.1.2021Master Page 9 of 17 Attachment A. Questions and answers from the October meeting. o Budgets are adopted taking into consideration the costs of operating different City programs, funding needed capital improvements, and other governmental obligations. Unlike the General Fund, the Marina Fund is an enterprise fund and according to the Washington State Auditor, enterprise funds encompass activities that are funded almost exclusively by user fees. Taxes are the primary sources of revenue for the General Fund. While it is possible to use General Funds on a short time basis to subsize other funds, the City Council would have to determine what they think would be the best use of the City’s tax dollars based on competing needs.  Can we seek dredge funding from the federal government? o Chris Sublet is an excellent Harbor Master and he has been extremely thorough and diligent in obtaining grants and I know he would perfect person to pursue any and all Federal government assistance related to dredging.  Are there enough marina reserves to make the increased bond payment? o The Marina Fund had $1,115,327 of unrestricted fund balance at the beginning of 2021. While it would be possible to draw down those funds to make the increased bond payment for the next four years, it would not be advisable because it would not be a sustainable practice and might raise red flags with the State Auditor and rating agencies. However, a phasing approach might be pursued, where a portion of fund balance is used for the first few years while the rates are increased gradually.  Will the $2.16 be enough to fund a new $5,000,000 dredge bond (once the current one is retired)? o No. Using the formula discussed above, the rates would need to be set at $2.40 to cover the estimated $333,000 annual debt service on a $5,000,000 bond.  Can we review the revenue and expenses at the next meeting? o Sure. Additional Questions from MAC Answered by Chris  How much will income increase after the Next 3% increase What does the income versus expenses year-to-date look like? o I estimate the increase to be roughly $50,000 based on a 3% increase.  What big expenses do we have coming in the next few months? o These are just estimates:  $20,000 for new payment machines in the restrooms and laundry room  $30,000 for insurance deductibles  $20,000 for new marina management software  $50,000 for security cameras.  Have there been any further conversations or ideas about City help in paying for dredging or any grant ideas or possibilities? o No, not yet I will talk to them at the workshop then again at the subsequent workshops and meetings. I am not really sure how this will go, but hopefully we can get something from them. Marina Advisory Committee Meeting 11.1.2021Master Page 10 of 17 Attachment A. Questions and answers from the October meeting.  Cost detail on the Fish Pens and when that might happen? o I estimate the fish pens and nets will cost about $8,000 to construct and get operational. We (Tracy Loesher) are activily seeking donations. We received a $3,000 donation from the Fidalgo chapter of the Puget Sound Anglers club last night. Tracy is also going to solicit Ace, Home Depot and Frontier. At this point I am not sure how much we will get in donations.  What do you see about the future of fuel prices? o Typically we see prices drop during this time of the year. We are not certain if there will be a commercial crab season this year, which if cancelled will have big impact on our winter fuel sales and moorage. Marina Advisory Committee Meeting 11.1.2021Master Page 11 of 17  Attachment B. Common size rates and comparison MOORAGE RATES COMPARISON 2022 - 2024 Monthly Rates Proposed Monthly Rates - Includes 3% increase, dredge fee increase and all taxes and fees 24 foot 28 foot 32 foot 36 foot 40 foot 50 foot 60 foot Open Cov Open Cov Open Cov Open Cov Open Open Cov Open 57' Cap Sante $256.53 $359.81 $423.86 $487.78 $645.51 $1,050.46 Everett $216.34 $249.07 $359.65 $335.95 $462.33 $416.07 $609.02 $482.64 $711.14 $922.72 $1,001.71 30' 30' 35' 35' La Conner $269.00 $339.00 $336.00 $517.00 $644.00 $549.00 $850.00 $750.00 very limited $11 per ft South Whidbey $264.00 $308.00 $352.00 62' Des Moines $185.76 $237.36 $244.16 $311.92 $304.64 $394.24 $363.24 $505.44 $431.20 $609.00 $861.00 $783.68 Anacortes $385.00 $560.00 $535.00 $720.00 $1,245.00 $1,085.00 Best Average$222.03 $237.36 $265.35 $336.86 $347.48 $472.19 $384.79 $543.82 $516.12 $646.93 $969.68 $934.17 OH existing $193.20 $251.12 $239.28 $307.25 $276.90 $368.30 $317.71 $455.99 $358.37 $491.49 $735.33 $610.80 Difference -28.83 13.76 -26.07 -29.61 -70.58 -103.89 -67.08 -87.83 -157.75 -155.44 -234.35 -323.37 % of Average 87.0% 105.8% 90.2% 91.2% 79.7% 78.0% 82.6% 83.8% 69.4% 76.0% 75.8% 65.4% Proposed 2022 rates with $1.31 Dredge Fee + 3% rate increase to OH marina rates and surrounding marinas rates. Best Average228.69 244.48 273.31 346.96 357.90 486.36 396.34 560.13 531.61 666.34 998.77 962.20 OH 206.81 266.47 255.57 325.58 295.62 389.76 338.41 481.39 382.14 522.51 773.87 636.10 Difference -21.88 21.99 -17.74 -21.38 -62.28 -96.59 -57.93 -78.74 -149.47 -143.83 -224.90 -326.10 % of Average 90.4% 109.0% 93.5% 93.8% 82.6% 80.1% 85.4% 85.9% 71.9% 78.4% 77.5% 66.1% Proposed 2023 rates with $1.60 Dredge Fee + 3% rate increase to OH marina rates and surrounding marinas rates. Best Average235.36 251.60 281.27 357.07 368.33 500.52 407.88 576.45 547.09 685.75 1027.86 990.22 OH 221.16 282.55 272.73 344.78 315.33 412.21 360.43 507.58 407.16 555.07 813.75 675.44 Difference -14.20 30.95 -8.55 -12.29 -53.00 -88.31 -47.45 -68.87 -139.93 -130.68 -214.11 -314.78 % of Average 94.0% 112.3% 97.0% 96.6% 85.6% 82.4% 88.4% 88.1% 74.4% 80.9% 79.2% 68.2% Proposed 2024 Rates with $1.88 Dredge Fee + 3% rate increase to OH marina rates and surrounding marinas rates. Best Average242.02 258.72 289.23 367.17 378.75 514.69 419.42 592.76 562.58 705.15 1056.95 1018.25 OH 235.68 298.81 290.09 364.18 335.27 434.90 383.35 534.67 432.46 605.83 854.31 736.62 Difference -6.34 40.09 0.86 -2.99 -43.48 -79.79 -36.07 -58.10 -130.12 -99.32 -202.64 -281.62 % of Average 97.4% 115.5% 100.3% 99.2% 88.5% 84.5% 91.4% 90.2% 76.9% 85.9% 80.8% 72.3% Proposed 2025 Rates with $2.16 Dredge Fee + 3% rate increase to OH marina rates and surrounding marinas rates. Best Average248.68 265.84 297.19 377.28 389.18 528.85 430.97 609.08 578.06 724.56 1086.04 1046.27 OH 250.66 315.53 307.98 384.10 355.84 458.20 406.64 562.12 458.51 640.20 895.52 778.13 Difference 1.98 49.68 10.78 6.82 -33.34 -70.65 -24.33 -46.96 -119.55 -84.36 -190.52 -268.14 % of Average100.8% 118.7% 103.6% 101.8% 91.4% 86.6% 94.4% 92.3% 79.3% 88.4% 82.5% 74.4% Marina Advisory Committee Meeting 11.1.2021Master Page 12 of 17 Attachment C. The refinanced bond amortization schedule EXHIBIT Amortization Schedule Payment Date Principal Interest Rate Interest Total 12/01/2021 $ 101,000 0.890% $ 3,913.75 $ 104,913.75 06/01/2022 6,324.34 6,324.34 12/01/2022 350,600 0.890% 6,324.34 356,924.34 06/01/2023 4,764.17 4,764.17 12/01/2023 353,700 0.890% 4,764.17 358,464.17 06/01/2024 3,190.21 3,190.21 12/01/2024 356,900 0.890% 3,190.21 360,090.21 06/01/2025 1,602.00 1,602.00 12/01/2025 360,000 0.890% 1,602.00 361,602.00 $1,522,200 $35,675.19 $1,557,875.19 FG:54219090.2 Marina Advisory Committee Meeting 11.1.2021Master Page 13 of 17 G E N E R A L M A R I N A U P DAT E Discussion Marina Advisory Committee Meeting 11.1.2021Master Page 14 of 17  City Administrator's Report October 2021 Marina Reporting Period September 1 - September 30, 2021 Occupancy Dock Total Slips Total Total Vacant Percent Occupied Occupied A 53 53 0 100% B 82 81 1 99% C 55 53 2 96% D 85 76 9 89% E 71 68 3 96% F 52 43 9 83% G 15 14 1 93% S 8 8 0 100% Totals 421 396 25 94% 94% Aug-21 Total Slips Total Total Vacant Percent Occupied Totals 421 396 25 94% Sep-20 Total Slips Total Total Vacant Percent Occupied Totals 421 393 28 93% Summary *There are the same amount of slips occupied in August and September 2021. *The overall occupancy of the docks was 94% * 0.0% Compared to August * 1% gained Compared to September 2020 *The average percentage of occupancy on each dock was 94% in August * 0.0% Compared to August * 1% gained compared to September 2020 Marina Monthly Revenue SLS Moorage $64,228.08 Storage Unit $11,459.74 Fence line Storage $2,423.15 Gasoline $11,336.28 (2780.278 Gallons) Diesel $36,131.45 (13077.536 Gallons) Total $125,578.70 Marina Advisory Committee Meeting 11.1.2021Master Page 15 of 17 M A R I N A A DV I S O RY C O M M I T T E E C OMMENTS Discussion Marina Advisory Committee Meeting 11.1.2021Master Page 16 of 17 Next Meeting—December 6, 2021 Adjourn Marina Advisory Committee Meeting 11.1.2021Master Page 17 of 17