The following provides key information for Marina tenants about the new base charges for power and water/garbage service that were imposed starting in 2015.
The Marina must be self-sustaining
The Marina has operated at a net loss for many years. In summer/fall of 2014, the Port performed an in-depth financial analysis of the Hood River Marina to better understand revenue and expenses. The ultimate goal was to ensure that the Marina would no longer operate at a net loss to the Port. The Port Commission mandated that Marina operations must be self-sustaining, and that the Marina cannot be subsidized by any other Port revenue source (i.e., Bridge Tolls or commercial building lease income). All capital improvement and operational expenses occurring within the Marina must be paid for by revenue generated within the Marina (moorage lease revenue).
Fundamental upgrades to electrical system and boathouse docks, combined with utility charge, create a significant cost burden to tenants
Between 2012 and 2014, the Port made critically necessary upgrades to address safety hazards in both the structural elements of some docks and the overall electrical system. The total cost of these improvements was about $700,000. The Port covered about 20% of the project costs with capital reserves. The rest was debt financed. The term of the debt was 15 years. A Special Assessment was imposed to cover the principal and interest payments on this debt. In approximately eight years the debt will be retired and the Special Assessment will no longer be required. The combination of special assessment and utility fee has meant the total slip costs have risen 16-17% in the last three years. The Commission realizes the aggregate costs impose a financial hardship on slip tenants. However, the need to improve safety in the Marina and achieve a break-even financial condition outweighed the financial hardship. Financially, the Marina should be reserving an amount for future capital improvements such that the percentage increases can be kept at a reasonable level.
Port staff and labor expenditures dedicated to Marina operations reduced
In an effort to reduce Marina costs, the Port reorganized administrative staff responsibilities to reduce Marina-dedicated administrative staff expenditures. The major operating cost of Marina is in administration—primarily the Marina Manager. This individual must handle waiting lists, betterment list, annual renewals and billing, and so on. Our goal is to lower this cost burden to 40% FTE. Maintenance and facilities crew staff time remains the same.
Marina Ad Hoc Committee, Port Commission review of financial analysis
Working within the closed-system requirement that Marina expenses be offset by Marina revenue, and in an effort to provide Marina tenants with the greatest degree of detail and transparency of the costs to moor in the Hood River Marina, the Port devised the following special assessment elements, billed separately from moorage lease billing:
- Special assessment for upgrades billed separate from moorage lease billing, with an extended (NET 120) billing period.
- Base utility charges billed quarterly, separate from moorage lease billing.
- Actual use utility charge per slip billed quarterly, separate from moorage lease billing.
- No increase in the moorage lease rates.
Utility fees are base charges, not correlated with usage
Just as there was a significant capital cost for constructing the electrical and water system, there is an ongoing maintenance and operational expense. This expense occurs whether someone uses the Marina utilities or not. The $5 minimum monthly charge for electricity is a base charge for maintaining the system and having it available for use when a tenant needs it. This is similar to the base charge one receives of their residential power bill. Although garbage/recycling is primarily available and used in the summer months, the cost during those months is extraordinary. The Commission decided to impose the fee over the course of an entire year rather than imposing much higher fees just during the summer months.
Notification of fees
All tenants received notice of the fees for 2015 via a memo dated November 28, 2014 (available here). This was prior to the annual renewal date and all tenants had the chance to decide whether to terminate their 2015 lease. Unfortunately, the Marina Rules & Regulations have not yet been modified to reflect the new fees and assessments and a large variety of other changes. These Rules & Regs will likely be approved by the Port Commission in May 2015 and will be immediately posted on the Port’s web site.
Aggregate slip costs and impact on marina occupancy
The Commission understands that increasing costs to slip tenants could mean some will decide to leave the Marina resulting in a vacancy rate. This is a fundamental dynamic of Marina management. It is the Commission’s desire to have an affordable aggregate cost burden that allows any local boater to occupy a slip in the Marina. However, the need to achieve break-even status and to improve safety conditions in the Marina were paramount. We certainly understand if tenants cannot afford to continue operating in the Marina. The Port now has seasonal slips on the South Basin Dock and continues to operate the boat launch for daily users.
For questions or comments, please contact
Marina Manager Laurie Borton via email to firstname.lastname@example.org or
Executive Director Michael McElwee (541) 386-1138.