Lingering Slip Vacancies on the Great Lakes --Lessons Learned for Export to Marina Developers in Emerging Boating Market

Transcription

1 Lingering Slip Vacancies on the Great Lakes --Lessons Learned for Export to Marina Developers in Emerging Boating Market by F. Ned Dikmen, PhD. and James L. Stevens, MAI International Marina Consultants Not so long ago a person who wanted to become a boater on Lake Michigan would have to know someone with connections in order to attain a hard-to-get mooring. When there were none available, the desperate boater-to-be would be put on a waiting list or partake in a lottery in hopes of securing a mooring. Chicago's late Mayor Harold Washington changed this system not only for Chicago but for the entire Great Lakes. A 50 percent boat mooring tax he levied on users of Chicago's nine harbors -- 5,200 boaters in backfired. Disgruntled boaters began a mass exodus, seeking a warmer, friendlier atmosphere in adjacent cities. Many cities around Chicago created new harbors to greet those wealthy refugees and their large crafts. These coastal cities embraced the idea of marinas as a vehicle to better times, plus more, including the refurbishment and nourishment of their decaying downtowns and lakefronts. Among the early groundbreakers of these new jumbo high-tech marinas were The Harbor at Waukegan, Illinois; New Buffalo, Michigan's South Cove Marina and Reef Point Marina of Racine, Wisconsin. South Cove received between 600 and 800 of the suburbanites from areas south of Chicago, and Reef Point received a similar number of the north suburbanite boaters. The marinas were filled like magic. There seemed to be no end to the boaters coming... and no one asked if there was ever an end. This ignited the marina buildup mania with its "just build, but build big" philosophy. East Chicago, Indiana's Robert E. Pastrick Marina was among the next wave of successful marina developments with between 500-1,500 slips. After 1988 followed North Point Marina at Winthrop Harbor, Illinois, and Hammond Marina in Indiana, but by this time the boater population had begun to dry up. Neither marina appeared to come close to filling the number of slips they had expected to fill based on the research that had been provided to warrant their creation. They all were declining in occupancy, from 30 to about 50 percent. North Point Marina, a lavish, state-of-the-art operation, has no equal in terms of size and the amenities it offers to make boating both convenient and fun. Built at a cost of $41 million (1988 dollars), it is owned and operated by the state of Illinois. Presently it has been running at approximately 73 percent occupancy. Kenosha, Wisconsin's Southport Marina was put into operation in 1990 at a cost of $21 million and Sheboygan, Wisconsin, opened its marina in 1993 with an $11 million price tag. These arrived at a time when the migrating boater population had evaporated - and also when the economic climate, luxury tax and recession had put a mammoth dent into the sales of larger craft. Wisconsin's jumbo marinas, with a collective number of approximately 2,000 new slips, stood at less than 50 percent occupancy. Filling up these jumbo marinas has been challenging at a time when Indiana's Lake Michigan shoreline beckons boaters to marinas that have been built or expanded to take advantage of close proximity to the area's casino gambling. Few of the Wisconsin marinas were built with private funds. Most came about through state and local government initiatives utilizing public funds. Ironically, today, Kenosha is contemplating unloading its marina for $3 million to private developers who can integrate it into adjacent lakefront development. A catalyst for the buildup of public marinas in Wisconsin and elsewhere around the Great Lakes has been millions of dollars in state grants from motorboat fuel tax revenues dedicated by state legislatures for public boating facilities and safety improvement programs. Municipalities and counties have matched this form of state aid in financial or in-kind services contributions. Commonly, the marina development was envisioned as a major part of the economic revitalization of the community's downtown area, and was expected to be financially 221

2 self-supporting without burdening local general taxpayers. The marinas have not always achieved total self-sufficiency, however, due to lower than anticipated slip occupancy. And then there is the aftermath of unloading the overbuilt marina at some unforeseeable future date with the hopes of at least breaking even financially. Many mayors and county executives entrusted with these marinas have had to carry the red ink on their annual budgets, often resentful of the financial burdens. Some have even resorted to TIF districts in an attempt to piggyback financially afflicted districts on healthy, buoyant ones. Others have resorted to straight out sale of their marinas to private hands just to get the red ink out of their budgets. Was it a sound decision to build marinas that arguably may never reach full occupancy or become selfsufficient? Many analysts blame the shortfalls in marina occupancy on a declining rate of boat sales in times of economic downturn, such as during the recessionary years of the late '80s and early '90s, when lack of consumer confidence in job security caused cutbacks in discretionary spending on leisure time activities. The more critical question begging analysis is: What factors initially went into the equation for determining the size of the jumbo marinas? Apparently, decisions were made at a time when borrowing was easy. It was easier, then, to sell the size of a proposed new marina without critical examination of the population of boaters in adjacent areas who were the best bet for filling the slips. According to some industry sources, the size of a marina should be proportionate to the fleet of boats 26 feet or longer that are potential customers. Boats of less than 26 feet in length, which generally are trailerable and not good prospects for marinas which base slip rental fees on vessel length, should not be seriously considered in the design phase. Any decline in boat sales in the larger vessel category is a legitimate reason for seriously considering downsizing the size of new marinas. Unfortunately, many feasibility studies that encouraged marina buildup in the past decade seem to have overlooked that. Contemporary University of Wisconsin studies, which cautioned against building jumbo marinas so closely spaced together that they would aggravate competition for business, were evidently ignored. With 95 percent of the nation's registered boats falling into the less than 26-foot trailerable category, one would think that the states providing grants to develop public municipal or country marinas would have taken the little guy into consideration and used the money to build more boat ramps for trailerable boats instead. Furthermore, was per capita income taken into consideration to determine whether there were enough boaters in the area to fill closely placed marinas, or were the marinas built with the conviction, more hopeful than factual, that distance is no object to boaters in pursuit of a nice place to keep their boat? The word "marina" is now causing bankers and bond issuers concern. What legislator would promote a marina for his downtown that lost its chance back in the late '80s? No one would take him too seriously because he would lack recent success stories to substantiate his case. As sentiment and money dries up for marina buildup on the Great Lakes and other parts of the United States, what's next? Can available financial resources and technical expertise for recreational boating facilities development be constructively channeled elsewhere? Yes. There are indications that the "elsewhere" is overseas markets - developing nations with growing segments of their population with the discretionary income to afford boating and other leisure time activities. The 50+ generation is also becoming more numerous, soon to be the largest portion of the population globally. Serious marketing efforts should be made to excite their interest in recreational boating. Idle marina experts/developers should soon see unexplored money havens all around the globe as premium shoreline becomes available to transfer from public to private hands for development. Will the same theme of "build as big as you can when money is no object, they will fill in no time" prevail? 222 Here again we are at a crossroads we did not anticipate. Where are the feasibility studies to substantiate the need, marina size, amenities and boat type? As the marina market expands into new areas, special local needs will have to be identified and addressed. Therefore, well-researched and prepared feasibility studies will be a key to creating a correctly sized marina for each location. By proper planning prior to construction, the present overbuilding of marinas on the Great Lakes can be avoided

3 elsewhere. F. Ned Dikmen, Ph.D., has extensively written and consulted nationally and internationally on marina-related matters. He publishes Great Lakes Boating Magazine, Chicago, Illinois. Tel: , James L. Steven, MAI, developed the South Cove Marina at New Buffalo, Michigan, and has since developed and consulted with various other marinas. Together, and with other experts in the marina field, they have formed International Marina Consultants to provide careful studies and planning for marina sites worldwide. Their emphasis is upon a healthy, expanding marina industry. 223 Reef Point at Racine, Wisconsin Reef Point at Racine, Wisconsin

4 South Cove at New Buffalo, Michigan full to capacity 224

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6 Harbor Centre Marina, Sheboygan, Wisconsin 225 Southport Marina, Kenosha, Wisconsin 226