Berkeley Waterfront Commission

Notes from the Chair, for the meeting of October 9 2002

Pertaining to the discussion item on long-range financial planning.

Largely as a result of reduced lease revenue due to the economic downturn, financial projections for the Marina suggest that a significant shortfall may develop over the next few years.

I suggest the following strategies be explored for increasing Marina revenue:

1) Charge Correctly for Overhangs

Reconcile the billed length for each berth with the actual boat length, as now clearly defined by the Marina ordinance.

This has come up before, but has never really been addressed to satisfaction. New boats are being measured as they open new accounts, but a large number of old boats are still paying for significantly lesss space than they actually occupy.

In order to fully assess the severity of the problem, we need a list showing specifically what the billed length is for each berth, at least for a representative sample of the Marina berths.

My estimate is that many tens of thousands of dollars per year are being lost.

2) Optimize Berth Revenue

The design of new Marina berths should consider optimal revenue generation (in addition to other factors) when selecting the range and distribution of berth sizes.

The Berkeley Marina encloses a fixed amount of water area that can be used for berthing. But berth fees are charged by the linear foot, not by the square foot. This discrepancy was partially corrected by the mildly progressive rate structure introduced two years ago, but it still leaves larger boats using up much more of this fixed resource than smaller boats for every dollar that they pay.

The included spreadsheed compares berth revenue for various sizes of berth in terms of revenue per square foot of water surface required.

The calculation of area required for each berth includes half of the 8 ft wide main walkway, one of the two 4 ft wide berth fingers (assuming double-finger berths in all cases) and includes half of the required space between rows of berths, set at 1.75 times the berth length by state guidelines. Width of the berth between fingers is assumed to be 0.4 times berth length.

The results demonstrate how much more revenue is available from small berths than fron large one. In fact, a marina filled with 20 ft berths generates 2.6 times as much revenue as the same size marina filled with 85 ft berths.

To account for fixed costs associated with ach account, the last column estimates $35 per berth as the "marginal overhead," i.e. the additional administrative costs associated with maintaining each additional account. This shows a drop in revenue per area for the smallest size, but a peak at around 25 ft. This size still generates 1.9 times as much revenue as the largest size in the table, and 22% more revenue than 40 ft berths.

The numbers indicate that if revenue maximization is the only consideration, we should design new berthing for the smallest berths that are marketable.

This policy is consistent with other goals for the Marina, e.g. serving boat owners of more modest income.

The other factor influencing vessel size is water depth. As the Marina channel becomes more expensive to maintain, and as the bottom shoals outside the Marina where large-scale dredging is infeasible, the marketability of the Berkeley Marina to large boats may become a seriously limited.

3) Use All Existing Berthing Areas

Revenue can be enhanced by aggressively marketing the large number of vacant "skiff berths" that ring the marina. These have been limited to small powerboats 20 ft or smaller, but in reality many of these boats measure longer than 20 ft as defined by the ordinance.

The Marina should relax the size and boat type limit for these berths (as it has already done informally in a few cases), and charge correspondingly higher rates.

Other miscellaneous areas of the Marina could be converted to regular berthing.

4) Increase Economic Activity

Improving the Marina's viability as a commercial center will improve the revenue from commercial activity, especially under-performing or non-performing leases (Hs Lordships, Dock of the Bay).

One example of a new activity that would help do this is a ferry terminal near the fishing pier, as has been proposed.

Another strategy is to lobby for the inclusion of any new commercial development on the North Basin Strip within the geographic boundaries of the Marina Fund. This area may include a mix of activities and services that are similar to those offered in the Marina, and there is no legitimate reason to exclude new waterfront development from the Marina Fund.