|Effort Launched To
Help Shore Up Marina Business
January 10, 1999
WEST COUNTY TIMES
* RICHMOND CITY OFFICIALS COMMIT $3 MILLION TO REPAIRS AND SERVICE IMPROVEMENTS AND CONSIDER PRIVATIZATION OF THE PUBLIC FACILITY
Saturday, January 10, 1999
RICHMOND City officials are launching a multimillion-dollar effort to salvage the floundering Richmond Marina.
The decision to move full-speed ahead with plans to keep the marina afloat comes as city leaders grapple with an ever-tighter budget while maintaining a commitment to making an upscale suburban playground of Richmond's southwest shoreline. But residents in less affluent nearby neighborhoods complain that the money could be better spent.
A key strategy to save the marina could be privatization. The city last week decided to seek proposals for a private owner to buy, operate or lease the approximately 30-year-old public facility. Richmond's management of the marina long has been criticized. The city hasn't focused on making a profit or providing services that help generate income, critics have said.
Privatization could make the 750-berth marina profitable and attract more boat owners, supporters say.
"We're going to make the most of it," Mayor Rosemary Corbin said. "We can't just walk away from it. That's not an option at all."
City commits $3 million
The marina is the centerpiece of Marina Bay neighborhood, Richmond's largest redevelopment project and a symbol of efforts to remake its southern shoreline. It was built in the 1980s, when there was a shortage of berths in the Bay Area, and was considered a success at first, said David Thompson, director of the city's Redevelopment Agency.
But an economic downturn, a lack of amenities such as shops and restaurants in the vicinity and Richmond's crime-ridden and poverty-stricken image combined to keep occupancy rates low. That, in turn, sank the marina's finances.
In the past four years, the marina hasn't generated enough money to pay for its upkeep and make an annual $647,000 loan payment to the state, so it has been subsidized by about $2.5 million by city taxpayers.
Although the marina will reel in an estimated $867,000 this year in rental income, it needs to make at least $1.5 million to meet annual expenses and repay $10 million in loans made by the state Department of Boating and Waterways, Thompson said. The loans paid for construction of the marina and for the city's acquisition of a private dock nearby.
The marina is just a few blocks away from some of Richmond's poorest neighborhoods. It is separated from them by Interstate 580, and its New England-cove feel is worlds away from the decaying atmosphere across the freeway.
"You can see the division in the city when they make it look better, and the community next door is impoverished," said Joe Fisher, who lives in the nearby Coronado neighborhood.
Fisher, a lifetime Richmond resident and president of the Coronado Neighborhood Council, said he's worried that the city's plans for the area makes it even harder for most people to gain access to the city shoreline.
"They're making a greater separation from our neighborhood to the water," Fisher said.
City officials bristle at that notion, however. They say Marina Bay is for all residents, not just a select few.
"We've been very careful to make sure that all the parks out there are public parks and not only used by Marina Bay residents. That's true, too, of the marina," Corbin said.
In the past few years, Richmond has been suffering through a budget crisis, and that has been driving efforts to find a way to keep the marina solvent without a subsidy from the city.
Early last year, the city hired a consulting firm, Wald Realty Advisors, to evaluate the marina and make recommendations about its future. The firm's advice: If the city wants to improve the marina's performance, someone else needs to take charge.
If the city decides to follow the firm's advice, it wouldn't be the first time a municipal marina has considered letting a private owner take over. The city of Martinez, burdened by about $2 million in state loans, is close to finalizing a deal with Westrec Marinas, a Southern California management company.
Most Richmond council members see privatization as a viable solution to the problem. Private marinas have an incentive to provide better services because they have to make money, Councilman Tom Butt said.
"That's the only way to maximize occupancy at the marina," Butt said. "There is an element of service that people don't get with publicly run marinas."
The city plans to start looking for proposals from private owners by the end of this month, Thompson said.
Wald said in order to make the marina more appealing and profitable the city will need to restructure its debt to the state and cut annual loan payments in half. But Richmond is one of several public marinas having trouble making loan payments, and the state has been willing to make such arrangements, Thompson said.
Some Richmond boat owners said they don't see a problem with the way the city has operated the marina.
"I think the city can make this a profitable venture, with all the other development planned around here," said Vic Reyes, a four-year Marina Bay resident.
Although occupancy rates recently have increased from a low of about 50 percent in 1996 to 61 percent in December, Richmond continues to lag behind the average for Bay Area marinas. Most have an occupancy rate of between 80 and 90 percent.
Image could change
But that image could change soon.
Because of an agreement with waterfront developer Penterra Co., Richmond had not been able to offer the niceties commonly found at other Bay Area marinas. But recent negotiations with Penterra have allowed the city to recover commercial operating rights, which could pave the way for new revenue-producing ventures including a gas dock, sailing school, boat brokerages and commercial fishing boat operations, Thompson said.
With a hotel, restaurants and other businesses planned nearby and construction of several office developments projected in the area, more boat owners are expected to drop anchor.
"The marina is something that we've worked long and hard on," Corbin said. "We want to make it a success, but we haven't been able to do what we knew we needed to do because we couldn't put in the amenities."
The city also is planning other revenue-generating operations at the marina, such as 75 live-aboard berths, which are expected to bring in about $100,000 annually. And in March the city will start charging people $5 to use the launch ramp and nearby parking area, which is expected to bring in about $15,000 annually.
The city has long needed to upgrade the marina, but this is the first time it has come up with the funds without putting the marina deeper in debt. The marina owes the state $7 million. But the new state loan will be paid back through redevelopment tax increments generated by future development at Marina Bay, Thompson said.
Revenue still needed
About $2.8 million in improvements and repairs to the breakwater and entrance channel are needed, Thompson said. The Redevelopment Agency plans to borrow about $2.5 million from the state to pay for the major work and will loan the marina approximately $112,000 for other essential repairs. The money also will pay for additional part-time staff to do the repair work and to help out in the harbormaster's office, he said. The agency loan could eventually be paid back by a prospective buyer.
"The revenue picture is looking better," Thompson said.