This Memorandum of Understanding is essentially the only card the City has left in negotiating details of an agreement that will expire in 2047. Surely that deserves some serious attention to detail. As Ronald Reagan famously said years ago, "Trust, but verify." Particularly when agreements are being made that will span decades, it is the City's fiduciary responsibility to its citizens to ensure that public dollars and property are being protected.
Here are some of the main issues that have not been resolved:
Rates for using the mooring field. The figure most frequently cited is $15 per day with a 10% discount for longer stays. Many of the current residents can't afford this. They are being asked to transition from a place where they can anchor indefinitely and for free to one where they can stay only a maximum of six months at considerable cost. No distinction is made between large and small craft. As Hilson said, "Happy Jack runs that marina like Admiral Jack's Private Yacht Club. How do you do that? Simple: charge the hell out of the public and in that equation you'll end up with just those folks who can afford to romp around on public land and water."*
How much has Marina Jack already invested in this project? Numerous comments have been made at the City Commission table about the $450,000 that Marina Jack has "already contributed" to this project by expanding the showers and other facilities. Marina Jack currently supplies these services to its customers, but a mooring field will require additional facilities. Not only was there confusion as to whether Marina Jack had "donated" this money, but there were no clear statements about exactly how much had been spent and on what it had been spent. Were they simply improving services for their existing business or was it really all for the mooring field? Since it turns out that Marina Jack will get this money back from the mooring field revenues, and the expenditures were never approved or reviewed by the City, these are details that turn out to be pretty important.
Profit vs. non-profit: Since Marina Jack is a for profit enterprise and the mooring field must be non-profit, how will the accounting for these two entities be managed? Particularly since the City is obligated to pay 90% of any losses for the mooring field, there is an incentive for Marina Jack to shift costs to the mooring field. (That 90% would be deducted from the rent which Marina Jack pays to the City.)
On 1/7/08, Commissioner Clapp renewed questions about the agreements, stating that there were widespread concerns about Marina Jack's "sweetheart deal" and emphasizing the public's need for openness and transparency. Three items were agreed upon:
1. Audit the claimed expenditure of $450,000 to determine how much should be allocated to the mooring field (ie., should some be allocated to Marina Jack or O'Leary's?)
2. Audit the proposed operating expenses of the mooring field to make sure only those costs directly associated with the field are allocated to it. This is to ensure that no costs for operating Marina Jack and O'Leary's are charged to the mooring field.
3. Do an "appraisal" of the use of City land and resources used by the Marina Jack and O'Leary's operations to make sure the lease payment to the City is fair and equitable. Determine the fair value of the use of this land and resources. This will require comparison to similar agreements elsewhere (in real estate terms: comparables).
This measure passed on a 3-2 vote, supported by Commissioners Clapp, Kirschner and Atkins. Mayor Palmer stated that, even though many hard questions needed to be resolved with the Memorandum of Understanding, there was no point to conducting an in-depth analysis since the lease did not expire until 2047. She also noted that Marina Jack had invested a great deal of money in the bayfront and had helped make it a great community asset. Commissioner Shelin said he could not support the proposal because it was "putting the cart before the horse", (i.e. the Memorandum of Understanding.) The three Commissioners voting in favor of the measure all stressed that public confidence and trust in the City and its agreements demanded greater clarity.
As an outside observer, one has to note that asking these questions two years ago before extending the lease would have been even more timely, but better late than never. Fortunately, several of the Commissioners are asking hard questions and we can only hope the answers are forthcoming. Unless these details are fully worked out and there is some independent review of the numbers, it should not be surprising that many members of the public will continue to view this as another sweet deal and giveaway of public dollars.
*Ahoy City Hall or throw me a line i'm sinking, Harry Hilson 1980, J.R. Isgur Co., Houston TX