Opinion: Berkeley needs to address Marina’s structural deficit

The structural deficit has been reported to the city council and the waterfront commission since the early 2000s. 

On March 16, Berkeley held the second public workshop for the Berkeley Marina Area Specific Plan, or BMASP. Included was a report on the financial condition of the marina, which is far worse than anticipated. Slides showed that the structural deficit, despite deferring maintenance and reducing staff from 21 to 14, is now $1.1 million.

The pandemic contributed to this, but the structural problems at the marina have been known since at least 1998. The presentation showed that the marina fund has been exhausted, with a shortfall of $2.5 million for the next two fiscal years and over $130 million in unfunded capital needs. The entrance channel to the marina hasn’t been dredged since the Loma Prieta earthquake, and the lack of dredging, poor condition of docks, and security concerns have led occupancy to drop to 78%.  

How did it come to this?

The structural deficit has been reported to the city council and the waterfront commission since the early 2000s. The city started a planning process in 1998, and Commissioner Paul Kamen warned the council of a structural deficit of $200,000. The council pulled the plug on any new leases while doing nothing to address the slowly increasing structural deficit and the rapidly increasing capital needs. 

Postponing maintenance has been a practice in Berkeley since Proposition 13 passed in 1978. While that was understandable in the wake of the precipitous drop in city revenues, it is time to make structural changes to maintain our infrastructure.  After dredging the harbor channel with federal grants, the city did not establish a reserve fund to accumulate funds for maintenance dredging. Estimates are that it might cost $6 million to dredge the entrance channel. If the city had deposited $200,000 a year into a reserve for maintenance dredging, it would have provided ample funds to maintain the channel well before now.  That would have amounted to roughly $200 per slip per year, or about 60 cents a day.  

The marina was once part of the Bay, and the submerged lands were granted to the city of Berkeley for uses consistent with the public trust. Residential development is not allowed, and revenue generated within the trust must remain in the trust and be used for public trust purposes. However, taxes generated from businesses in the marina like the Doubletree Hotel are not seen as lease revenue and can be used for other city purposes.  

The accounting practices at the marina were set up long ago and have compounded the problems that we see now.  Taxes from the Doubletree go to the city’s general fund rather than the marina. In FY 2019, the Doubletree provided $4 million in revenue to the city’s general fund but only $1.45 million to the marina fund.  That is the most lucrative lease at the marina, accounting for 17% of the marina’s revenue. It is unclear how much of the annual Doubletree taxes pay for services or whether some could remain in the marina for reinvestment.

Most marinas have leaseholds that pay for the public amenities in the marina and rent slips for fees that cover the maintenance costs for the marina itself. Slip holders are the largest source of revenue, accounting for 61% of the marina revenue. Berkeley is unusual in the large area of public amenities that do not generate revenue and the relatively small area that can be developed as leaseholds.  Among those amenities are Cesar Chavez, Shorebird and Horseshoe parks and Adventure Playground — over 100 acres. Public docks and sailing centers in the South Basin support recreational use and education but generate no revenue.  For the fiscal year ending June 30, 2020, the personnel costs for the marina were over $3.65 million. Some have speculated that half of the landscaping staff at the marina work on park areas. I have no idea how much money from the marina trust is spent maintaining parks in the marina that elsewhere in the city are maintained by the parks tax. But such an accounting is due.  

There are several other ways the city charges the marina fund for routine city services. Until the rebuilding of University Avenue, the marina fund paid for the maintenance of marina roads — even though Cesar Chavez is a closed solid waste facility. The marina has many recreational programs for children as well as Adventure Playground. In other areas of the city, those are paid by the general fund.  The marina and all the parks paid $812,000 estimated for FY 2021 for garbage collection. Police overtime for marina events like the fireworks is paid for by the marina fund and far exceeds the parking revenues from those events. The city moved its parking division to the marina, saving the cost of renting space near the public safety building. Measure WW, a funding measure for the East Bay Regional Park District, provided $500 million in direct grants to local cities. Berkeley received $4.88 million, but none went to the marina.  

Solutions

While the Berkeley Marina Area Specific Plan (BMASP) was intended to update the plans for the marina and identify opportunities for additional revenue, it doesn’t appear that there will be any new revenue from new leases for many years. The planning process has slipped, and the pandemic has added uncertainty to enterprises that rely on the hospitality industry.  While the contract for the BMASP requires the consultants to identify “feasible opportunities for revenue generation,” the discussion on March 16 didn’t include an assessment of the feasibility or even the footprint of any of the land uses presented. Some, like a maritime museum or aquaculture, seemed quite speculative and risky.  Others, like hotels, may be overbuilt in Alameda County, with 1,552 rooms under construction, 2,968 proposed. With the recently completed Residence Inn in Downtown Berkeley, it is not clear how much market there is for new rooms at the marina.  

The city has no choice but to absorb the shortfalls in the marina fund for the next two years. If the city did not charge the marina fund for routine city services or those paid with the pars and solid waste funds, the deficit would shrink or disappear. The city has an interest in maintaining the tax revenues from the Doubletree, but putting all of those revenues in the general fund, no matter what it actually costs to provide city services to the hotel, risks killing that golden goose.

The marina has a strong potential for increased revenue; it currently provides 61% of the funding in its dilapidated state. Westpoint Harbor in Redwood City has less than half the number of slips and generates about the same revenue by catering to larger boats. While it might be sad to see Berkeley’s long-time sailboat marina filled with luxury yachts, it would be sadder to see the marina close. What is certain is that the BMASP process needs to make more of an effort for steely-eyed analysis of feasible alternatives and less naïve boosterism.  

Jim McGrath is a former Parks and Waterfront commissioner, who also served on the Bay Trail Board for about a decade. He has windsurfed and kayaked out of the Berkeley Marina for more than 40 years.