Outer Cove Marina…Here We Go Again

It has been rumored and it is my opinion that the only reason we remain banned is due to lawsuit threats to DLNR and possibly CRM and maybe the local government, because they had ‘signed off’ on something almost five years ago: Public Law No. 9-46.

On July 24, 1995 Public Law No. 9-46 approved a Submerged Land Lease Agreement between DLNR and MRC. Under this agreement, 16,394 square meters of submerged land was to be used to construct a $1.2 million, 76-boat marina. The pictures and drawing of the proposal presented at the time represent OCM as a marina with a breakwater (a man-made landfill on submerged land to block wind and wave action to create a shelter for a vessel; this is what defines a marina or a harbor in the dictionary). Also, floating docks were represented in this proposal to the Legislature (floating docks, like in Smiling cove, rise and fall with the tide, are forgiving for commercial use, are generally safe because of the above, and accommodate all sizes of boats). The lease also touched on fees for its occupants. It states that MRC can only recover its construction costs through the charging of slip rental fees or docking fees to boat owners. There was no stipulation in the agreement authorizing MRC to collect departure fees from the public to recoup additional costs which may be incurred by MRC. This is what your leaders (who look out for your best interests) approved. I think I d have done the same, looking at this superficially.

Additional costs? You ask…Yes, to the tune of $2.4 million. Outer Cove Marina, something’s fishy here. Here is what we got: The marina was triple ($3.6 million or more) of that which was approved. The marina was completed with 45 slips (not 76). It has concrete fixed docks and no breakwater. It is unsafe, is not what our leaders approved, and to add insult to injury, is the most expensive marina we can find in the Pacific. In effect, we were forced into this above mess because upon being booted from Smiling Cove, where else may we go?

Additionally, it has been discovered that MRC’s submerged land and coastal engineering report was a plagiarized report generated for an entirely different project several years prior. Some singulars were changed to plurals in the interest of specifics, for example, but the entire report that our government and CRM based their approval on was geared toward a different area nearby, with entirely different criteria, needs, safety concerns, construction considerations. When this was discovered, to my knowledge, MRC got a slap on the wrist from CRM and a directive to have a new engineering study (not plagiarized this time please they may have said) that addressed, the marina in its current state in regards to, among other things, safety. We, of course, were to continue to use OCM while awaiting this critical professional assessment of what we were using.

As for the breakwater, it was deemed too expensive by MRC and bypassed. The floating docks? My source tells me that two contractors commissioned to install floating docks refused to do so due to the exposure that the lack of a breakwater would create (yet another testament to the exposure without a breakwater issue). I despise those who say “I told you so,” so I won’t. The exposure the lack of a breakwater creates coupled with fixed concrete docks were ingredients for disaster. Each of the large boats have been damaged and there are numerous injury reports (no deaths) to date. I get a kick out of MRC s comment Where were you all when these plans were promulgated. . . where were your complaints then? I was diligently running my business and remember no promulgation. Let’s say for the sake of argument that there was a public hearing and I had attended. The ‘wool would have been pulled over my eyes’ as well. I would have had no complaints. What was promised and signed off on and what we now have is the issue.

Simple math tells us that a $1.2 million marina with 76 slips would equate to $15,790 per slip. The lease is for 15 years which equates to a $1,052 per slip per year rate (this would be comparable to Smiling Cove). I have run my own business for the last seven years in Saipan and I understand that things are not this simple.
However, I guarantee I am not the first person to make this crude computation and it is from this basic promise to the government that their approval was derived.

Of course, the facility built by MRC has several other ways to generate revenue other than the slips and, oh, did I mention that MRC is a non-profit organization? MRC happens to be owned by Mr. Tony Pellegrino, a competitor of many of us. I have nothing against Mr. Pellegrino personally and respect his longevity as an established business man and community contributor. But where do we draw the line? I must ask where else in the free world may we find a non-profit organization given the power to impose fees (his “head tax”) on his competition to the point of forcing us out of business? I guess a comparable injustice may occur for a short time somewhere, but eventually a government or legal entity would step in and squash such anti-trust behavior. This is not an issue of my profitability, in these trying times it is an issue of ‘survivability’ for everyone.

The fees referred to would be imposed by applying a price per linear foot to the vessel, and also, via the most ridiculous notion Saipan has ever embraced, through Head Taxes. Now, the price per foot alone would create headlines anywhere, as the rates were discovered to increase our previous fees by 300%. to 400 %. It is the head tax issue that is ludicrous and the entire notion should be retired only to the reference of what our ancient ancestors did to its foes at times of war.

A marina head tax will never work. Here is why. In these volatile times of our economy, we must do all that we can to remain competitive (as Mr. David Sablan and Mrs. Vicky Benavente of MVA so eloquently expressed in our hearing last Friday). Guam has no such head tax, nor does Hawaii or Bali or anywhere else that a tourist may opt to go. Secondly, the Commonwealth Ports Authority already thought of this and a substantial tax at our airport is already levied. We cannot double tax the very same tourists. They are not going anywhere other than to Managaha Island and to enjoy other activities. Secondly, are you aware that we operators are taxed by the Department of Public Lands upon the arrival at Managaha? Each of our customers must pay $5 when they reach the island. How in the heck are we to survive if we pay $5 (or a penny for that matter) to depart for Managaha, $5 when we arrive at Managaha, and anywhere from 25% to 50 % commissions to our agents on a $20 retail price for the aforementioned service. Again, simple math . . . we must drop the notion and remain competitive in the tourism realm and allow for our operators to survive. (To be continued)

Bill Owens
BSEA Inc.