Port Whine

Miami-Dade County's proposal to privatize public marinas has mariners up in arms

On August 23, 1992, the day after Hurricane Andrew decimated parts of South Florida, Robert Hammel arrived at Matheson Hammock County Marina, where he works as a park attendant. He found twisted metal piers and 40-foot boats marooned in parking lots more than 100 feet from the shore. Some craft were skewered on pilings, staved in, totaled. Sea grapes, palms, and other trees were stripped bare.

"Hiroshima, that's what it looked like," he recalls, standing in the second-floor dockmaster's office, which survived only by luck. The Miami-Dade Marine Patrol facility, on the first floor of the same building off Old Cutler Road, was inundated by a fourteen-foot tidal surge and destroyed.

Up and down the coast, county marinas were damaged. At Black Point in South Miami-Dade and the Hoover Marina in Homestead, losses were substantial. Docks and equipment at Haulover Park just north of Miami Beach and Crandon Park on Key Biscayne were swamped by storm surges. Only one county facility, Pelican Harbor on the 79th Street Causeway, escaped destruction. The storm left in its wake not just wrecked planks, vessels, and electrical systems, but reluctance on the part of many boaters to return their crafts to the water.

After Andrew marina revenues plummeted. Both Matheson and Black Point operated in the red for three years and profits at Hoover declined sharply. The Federal Emergency Management Agency and the Florida Inland Navigational District (FIND) contributed $11.8 million to help rebuild the facilities. As a result much of the county's marina infrastucture is new. In addition FIND approved $1.4 million to expand Haulover and build a breakwater there. Today the number of available berths almost equals the pre-Andrew total. Overall county-owned marinas turned a profit of more than $2.2 million in 1997, according to Bill Cutie, director of the county parks and recreation department.

Nonetheless on December 1 Miami-Dade commissioners began a process that could end with a private company taking over operation of the six county marinas. The commissioners approved a request for proposals (known as an RFP) for the task without discussion. They cast that vote despite a petition signed by 85 privatization opponents and faxed to their offices. The opponents had also expressed their displeasure to Steve Spratt, senior assistant to the county manager. One petition signer, Darlene Oliphant, a Crandon tenant, attended the county commission meeting but was not given a chance to voice her opposition. Oliphant complained after the meeting, received an apology, and was permitted to address commissioners on December 15. On that date the commission confirmed its earlier decision to issue the RFP.

Why would the county, after using taxpayer money to build the marinas and to rebuild them after Andrew, offer them to private enterprise to operate? As one veteran county marina employee put it: "If you just renovated your house, would you give it up to your in-laws?"

County officials insist the RFP is just a way to test the waters. "We are not necessarily going to privatize," emphasizes Spratt. "What we are trying to do is determine how private enterprise would run things and then see what we can learn." Cutie emphasized the same point in a letter to marina tenants. In fact, parks department employees will submit a plan to keep control of the marinas.

But some marina users aren't convinced. They fear docking fees will rise and county coffers will be drained. They are particularly suspicious of one potential bidder: Westrec Marinas, the United States' largest private marina management firm, which garnered revenues of more than $50 million in 1997. Though the company has hired two lobbyists, state Sen. Ron Silver of North Miami and Susan Fried of Coral Gables, to make its case, Westrec president Bill Anderson is still deciding whether to bid.

Privatization opponents are extremely wary of the Encino, California-based firm. They insist other South Florida marinas that Westrec manages, Harbour Towne in Dania Beach and Hall of Fame in Fort Lauderdale, charge much more for docking space than publicly controlled facilities. Some county tenants also doubt Westrec's management abilities, noting the company has forfeited ownership of at least four South Florida marinas during the past three years after failing to make loan payments. Anderson denies any mismanagement and insists Westrec's former owners assumed too much debt in the 1980s, which made it impossible for the company to profit from those marinas. Anderson points to Westrec's success in increasing revenues for the city of Chicago, where his firm manages 4500 municipal boat slips.

Anderson also challenges Miami-Dade's present docking charges. "Is the county subsidizing a limited number of boaters?" he asks. "That's one question people there have to ask."

Boating is serious business in South Florida. A total of 53,330 vessels are registered in Miami-Dade, according to the Florida Marine Patrol, more than in any other county in the state. Of that number 50,591 are pleasure craft, ranging from skiffs to multimillion-dollar luxury yachts. Most of those vessels are stored on trailer hitches in driveways or back yards, or are tied to private docks behind waterside homes. But as of 1997 private marinas offered at least 12,820 berths, both wet slips and dry storage racks, according to the county's Department of Environmental Resources Management (DERM), which issues permits to such facilities. That figure does not include operations smaller than ten slips, which are unregulated by DERM.

The county operates 1311 berths, both wet and dry. They are considerably cheaper than private dock spaces and some county marinas have waiting lists. The majority of marina tenants live in Miami-Dade, but some Broward residents (Oliphant is one) take advantage of the lower rates in public facilities to the south.

"The county does not have to pay property taxes," explains Bob Cristoph, a private operator who leases the 400-slip Miami Beach Marina. "That gives them an advantage. I'd say they are at least a third cheaper than anyone else, in part because of the tax question."

Cristoph estimates that the average private marina has to charge at least 40 cents per foot per day for each vessel. (If a boat is 25 feet long, its owner pays ten dollars per day [40 cents X 25 feet = $10] or about $300 per month.)

But county marinas charge from 23 to 28 cents per foot per day, which computes to between $175 and $210 per month for a 25-foot vessel. The amenities are bare bones, however; in some cases the marinas do not even include showers.

Westrec's two Broward marinas are much more expensive. Harbour Towne, which includes 145 wet slips and 365 dry-storage spaces, charges 90 cents per foot during the season (October through April) and 50 cents per foot the rest of the year. Luxurious Hall of Fame, with 42 slips, charges $1.40 during the season and $1.30 the rest of the year. For that money Westrec offers onsite repair shops, swimming pools, access to onboard telephones and cable television, and free newspapers.

Gary Groenewald, Westrec's southeast representative, insists that it is not valid to compare the Broward operations with the company's potential management of Miami-Dade marinas. But when asked how Westrec would make money on the Miami-Dade facilities without raising docking rates, Groenewald demurs. "We haven't had time yet to study the RFP," he says. When told of the present rates, he pauses: "Twenty-eight cents. That's darn low," he exclaims.

During the county commission meeting December 1, Commissioner Jimmy Morales raised the issue of Westrec's history in South Florida. "I have been contacted by many boat owners and operators who have expressed concern about that company [Westrec] -- failures at other ports, bankruptcies," he says.

In 1996 Westrec forfeited control of Thunderboat and Banyan Bay marinas, both in Dania Beach, rather than make loan payments on those properties. "The company just paid too much for them," Groenewald admits. Westrec relinquished control of Tavernier Creek Marina in March 1997, when a balloon mortgage payment came due and company officials decided revenues did not justify the investment. On November 1 Westrec gave up control of Faro Blanco Marina in Marathon. Hurricane Andrew had sharply reduced the property's earning power, Groenewald explains.

According to an article published in one industry magazine, Marina Operator International, and circulated by privatization opponents, at least three Westrec International marinas in Europe also failed in recent years, one each in France, Holland, and Britain. The 1996 report included charges by John O'Hanlon, reportedly a former Westrec International employee. O'Hanlon claimed he lost $200,000 after Westrec International backed out on financial commitments in Europe. "Westrec is purporting to be something that it isn't," O'Hanlon charged, according to the magazine. "Nobody questions it because it's a big company, but it really has little money and few assets, only a series of short-term marina contracts."

Anderson terms O'Hanlon's charges irrelevant to his company. He insists the European operation was a franchise, that his firm did not manage any marinas in Europe, and that it had no legal or financial commitments there. "It was a totally separate operation," he says.

As for the South Florida failures, Anderson contends those marinas were all purchased before the company changed hands in 1991, and that Westrec's former owners lacked financial expertise.

Darlene Oliphant remains wary. "These are the people who want to take over our county marinas, which are working just fine right now," she says.

Privatization of the publicly owned marinas would betray the idea of parks, says 41-year-old boat owner Anthony Chiocca. "People in this county have been voting for years to buy park lands for public use," explains Chiocca, a contractor who says he lives aboard his 48-foot powerboat, Survivor, at Crandon Park Marina. "Now those same taxpayers are going to be asked to pay for profits that will be taken by some private company. It isn't fair."

"It's an outrage," insists Martin Ury, age 66, whose 40-foot motorized yacht, Moonraker 2, is docked near Chiocca's. "I think the county could end up giving away more than it's taking in. How does that benefit taxpayers here?"

Twenty-six-year-old Danielle Egizi works as an assistant dockmaster at Crandon. "They will have to raise rates in order to make profits," she insists, "and all that will happen then is that the average person will no longer be able to use the county marinas. And that's who they were meant for."

All county marinas exist in public parks. Miami-Dade County bought the tracts or received them as donations beginning in 1930. In that year the Matheson family handed over part of the land that now makes up Matheson Hammock. The county also initiated purchase of submerged lands off the 79th Street Causeway, where Pelican Harbor Marina is now located. In 1935 the started to buy the land for Haulover Park. In 1940 the Matheson family again donated land, this time for Crandon Park. Marinas were constructed on all those sites using public funds.

In 1972 county voters approved a bond issue that helped pay for facilities at Homestead Bayfront Park and Black Point, in South Miami-Dade. State environmental concerns delayed construction and it wasn't until 1988 that all the marinas were completed. The total investment of public funds over the years was at least $20 million. By 1991 county marinas were turning a profit of $2.3 million.

Then Andrew hit. The storm knocked all of Black Point's 224 slips out of commission. Over the next three years the marina lost $294,000. Matheson's 252 berths were unusable, and over the same period it lost $188,000. At Hoover Marina profits dropped from $125,151 in 1991 to $50,579 in 1992.

Many of the destroyed piers were balanced on wooden pilings. They were eventually replaced with floating docks that are much less vulnerable to large storms. That construction forced the county to temporarily close some marina slips, so profits fluctuated. This year, because parts of Crandon will be closed for renovation, revenues are expected to dip again, though overall profits for county marinas are expected to remain at current levels.

The marinas have only nine full-time employees. Part-time workers, mostly attendants who oversee parking lots and boat ramps, put in 49,000 hours per year.

"I don't know why they think they need to change anything," says Wes Puller, captain of the Sea Vous Play, a charter fishing boat docked at Crandon. "The county is making money and the people who use the marinas are happy with the way they are being run. We don't understand what this [privatization] is about, except that somebody is going to be making money that the county could make. Explain that to me."

The idea of privatizing the marinas can be traced to a December 1997 memo by Miami-Dade County Mayor Alex Penelas proposing the Efficiency and Competition Committee. The mayor predicted that government would have to economize. "Much discussion has occurred about the benefits of privatizing certain public services," Penelas wrote. He said private enterprise should be given a chance to propose ways of running selected services. RFPs would be issued and county employees would be allowed to bid. In practice those employees enjoy certain advantages: They aren't required to pay for expensive performance bonds, which private firms must purchase; they receive help from other county departments in formulating proposals; and they get special consideration because they are county employees.

The mayor cited Indianapolis's experience using a similar cost-cutting strategy in the 1990s. In one example municipal employees submitted the winning proposal and retained the job of servicing a fleet of cars. In another a private firm took over a water-treatment facility.

Penelas appointed Commissioner Jimmy Morales to head the committee and named four private-sector representatives, two labor leaders, and two senior county officials to the body. The mayor anticipated opposition: "Frankly, I am aware of numerous potential changes that will be politically contentious and difficult to implement, but we must be prepared to make these decisions," he stated.

Since inception the committee has twice issued RFPs for public services. In both cases county employees won the contracts. One instance involved meal service in county jails and the other, management of the county water and sewer department.

The notion of extending the idea to marinas started to circulate last spring. Restaurants, fuel docks, and bait shops are already leased to private contractors at most marinas. Some private concessionaires have been awarded contracts to run dry storage services because they were willing to make capital improvements, explains Bill Cutie of the parks department. For example, Westrec already runs the boat racks at Haulover. It took over the contract from another firm two years ago and has invested about $500,000 to fix damage caused by Andrew, Groenewald estimates. Cutie praises Westrec's performance.

But basic services at most marinas, wet slips, and dry storage have always been run by the county. Even if those services are privatized, the county will retain control of boat ramps, which earn eight dollars every time a vessel is put in the water.

County Manager Merrett Stierheim approved the marina RFP in November. It requires interested firms to bid on at least two marinas, including Haulover Park and Pelican Harbor. The choice of those two facilities makes privatization opponents suspicious that Westrec has the inside track. The company already manages Haulover, and Pelican Harbor is nearby. Moreover, Pelican Harbor has run in the red for several years, making it ripe for privatization.

One key provision of the RFP: The county commission will have the power to control the maximum leasing rates for boat slips. Opponents don't believe that will hold down rates. "This is a no-brainer," says Anthony Chiocca, who docks at Crandon. "It's simple mathematics. In order for a private firm to give to the county what the county already makes now and earn a profit on top of that, it will have to raise rates. We will all be forced out."

"Of course they'll raise the charges," insists Jay Silbert, a Matheson Hammock tenant. "Given what the county charges now, it will be the only way."

"We have the same concern," says Dwayne Powell, head of a boaters organization at Hoover, who wrote a letter to Cutie decrying privatization.

Eric Stuart, president of the Key Biscayne Charter Boat Association, represents ten operators of fishing boats docked at Crandon. They currently pay $400 per month in rent. "We're adamantly opposed to this and we've said so to the manager's people," he says. "We're very good for tourism. We do one million dollars in business every year and we create hotel, restaurant, and tax revenue. But once a private firm comes in, you're at their mercy."

Westrec has made money in many other marinas across the country. The company has an annual revenue of about $50 million and operates about 30 marinas in eight states. It is also overseeing a $35-million-taxpayer-funded renovation of Chicago's facilities. Since late 1995 when Westrec took over, that city has seen profits from municipal marinas rise from $2.6 million to $6.6 million, according to Eleanor Lipinski, Chicago's director of lakefront services. "Our arrangement with Westrec has been one of the most successful privatization ventures the city has tried," she contends.

But the increased profits are the result of higher rates for docking, Lipinski says. She adds that, as is the case in Miami-Dade, Chicago's publicly owned marinas charged less than private ones before Westrec took over. Scott Stevenson, a Westrec vice president based in Chicago, says rates have increased between 10 percent and 36 percent since the takeover. But he insists that upgrades have helped to increase occupancy rates. "We have found that boat owners are willing to pay for the improved services," he says.

Bill Anderson, Westrec's president, says Miami-Dade will present different issues than Chicago, where almost the entire marina infrastructure needed replacing. "In a place like Miami, we might increase the attractions at a marina," he states. Among the possibilities: family centers with diversions for children, fishing tournaments, and rental of small motorboats.

Miami attorney Dan Paul, who has criticized wasteful government policies in the past, is appalled. "One of the reasons we pay taxes is to have amenities like parks and marinas and I don't think those facilities should be used as revenue producers," he says.

RFP opponents say privatization is already creeping into Miami-Dade. In December Marine Funding Group Inc., which runs the PGA Marina in Palm Beach and the Palm Beach Polo Club, assumed management of most facilities at Black Point. The previous tenant, Marine Management Inc., operated it until it declared bankruptcy in 1996.

Darlene Oliphant and other privatization opponents have raised questions about Marine Funding's relationship with Westrec. Marine Funding holds liens on Westrec properties and took over former Westrec holdings (including Tavernier Creek Marina and Faro Blanco) when debts came due. "In cases like these, people get sweetheart deals when another company can't pay its bills," says Oliphant. "You wonder if that won't happen again with Westrec."

County Commission Chairperson Gwen Margolis was also unhappy with the arrangement at Black Point. She was angered at what she considered the small amount of money that would come to the county for a ten-year lease that includes a waterside restaurant. Marina Funding won the contract with a bid of $2.25 million, or $225,000 per year.

"If people are willing to purchase that lease for two million dollars, then Dade County should see more (money)," she says. "I say send it back to the parks department so we can make a better deal."

But in the end, Commissioner Katy Sorenson, whose district includes Black Point, championed the motion. Sorenson cited the chaos caused by the bankruptcy in 1996. After Margolis was assured the deal would come up for review next year, she dropped her opposition and it passed.

Pelican Harbor is the next marina ripe for privatization. It lost $90,000 in 1997. Only about twenty percent of its slips were used during that year. The marina shares the grounds with a Florida Marine Patrol station and the Pelican Harbor Sea Bird Station, which nurses injured birds back to health. Recuperating pelicans sit on pylons and share the docks, apparently amicably, with stray cats.

On a recent day inside the marina office, dockmaster Mike Brescher is busy trying to reverse the facility's fortunes. Brescher is a veteran marina manager and has participated on county committees to design new marinas.

His two-way radio crackles with an inquiry from a sailboat owner asking where the marina is located and if there is space for another boat. "Oh, we always have room," Brescher answers. The caller says she found the marina on the Internet. Brescher gives her directions and hangs up.

Brescher credits a new parks department Website, which went up this year, for augmenting the number of year-round tenants. He may also be getting boats from Crandon, where some slips have been closed for repairs. "We got only one new boat all last year [1997] and now we've gotten twelve in just the past three months," he asserts. "We'll be $20,000 to $50,000 in the black by the end of this year."

Brescher, like the other dockmasters, won't speak on the record about privatization. A gag order went out because the parks department will submit a proposal. But many of Brescher's colleagues privately express opposition to the RFP, despite a parks department guarantee they will be given other jobs in case of privatization.

Brescher attributes some of the past losses to expenses unrelated to marina operation. Pelican Harbor pays electricity bills for the bird sanctuary because it is on marina property. It also shells out money for a licensed boat captain to ferry visitors to an island near the marina. "[The captain] costs us $20,000 per year and it's not really a marina expense," he says. "We really only lost $40,000 last year and we'll wipe that out this year. We'll make money."

Jay Silbert, a Matheson Hammock tenant, also questions the county's accounting practices. "The records need to be audited," he says. "There appears to be money coming in that's not being credited to the marinas and expenses that belong to the parks that are charged to the marinas. There are a lot of funny things going on and a lot of questions."

A big question raised by Silbert and other RFP opponents: Why is the county leasing out some marina services in the first place? Several veteran dockside employees agree the county should reduce its contracts with private companies. In fact, they say, it should take on more responsibility. They point to the lucrative marina fuel docks, which are leased out and allegedly earn hundreds of thousands of dollars each year.

The employees also criticize the bidding process for those services. For example, Westrec was allowed to renew its lease on the fuel dock at Crandon Park this year without competitive bidding. "Why does the county do that? You tell me," demands a county employee, who declines to give his name.

Parks department officials say Westrec was given the contract on a short-term basis, which didn't require competitive bidding. They also say that they don't operate fuel docks because that would force the county to run retail operations, which it is not equipped to do.

In an open letter to commissioners, Oliphant criticized the handling of potential money-making assets, such as the fuel docks. She also attacked a section of the RFP that would require the county to foot the bill when repairs cause slips to close. If privatization goes through taxpayers could get nailed, she contends. "So if we have another Hurricane Andrew type of event and all the slips at Crandon and Matheson Hammock are destroyed, the county would have to pay/credit the operator approximately $1.2 million per year until the slips are reconstructed and the operator would have little or no costs during that time," she stated in her letter.

"That's a lousy deal for the county, isn't it?" asks Oliphant.
Anderson believes Westrec can propose a good deal for Miami-Dade, but only if the public agrees. He understands marina tenants' concerns. "[Miami-Dade] may very well find that privatization isn't the way to go," he concedes. "You can't do it unless it's a win-win situation for both the company and the county. That's what people down there will have to decide.

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