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The future of government marina leases and concessions by Darren Vaux MARINA LEASES Marinas provide essential boat storage, vessel maintenance, supplies and amenities that support the boating community and the broader community through employment, economic activity, tourism and the social wellbeing arising from the human interactions associated with boating activity. In many locations, they drive tourism as they continue to transition from ‘boat parks’ to tourism destinations. As a consequence, they require higher levels of management expertise and capital investment. A marina is essentially privately funded and operated public infrastructure essential to support the significant economic contribution and employment of the boating and tourism industries and the recreational lifestyle needs of a large proportion of the general population. But marina investment is not easy. Marina investments and businesses are characterised by challenging/high risk government planning controls (which delay investment), large initial capital requirements, high maintenance costs, and high management costs. They are not passive investments and require attention to detail and customer service. They require ongoing adaption to market needs through additional capital investment and change in offering and management approach. In many respects, they are similar to hotels from a management intensity viewpoint with the added complexity of the marine environment and the technical aspects of meeting the infrastructure needs of large vessels. Marinas also have the added complexity of having all or some of their property rights derived from government leases and concessions. To attract and retain capital for marina investments, marina investors and operators need to achieve a return on investment commensurate with risk and effort and the nature and fluidity of government policy has a significant impact on this risk profile. Consequently, marina investments require the support of government agencies in the provision of leases or concessions that support the development, operation, maintenance Fig 1 – impact of ratchet rents. and re-investment required to deliver and maintain high quality marina infrastructure in the best interests of the community. To establish a sustainable leasing framework between government and the marina industry the objectives of each party need to be understood. Government agencies seek to provide boat storage, servicing, amenities and access to the waterways to meet the needs of the boating and general community in a selffunding way that minimises the risk to government and provides a fair return for public assets. They also want to create tourism destinations that facilitate the creation of economic activity and maximise the quality of life of their community. Marina investors and operators want a leasing framework that promotes attractive and sustainable private sector investment in the development, operation, maintenance and ongoing enhancement and adaption of maritime properties and the development of value in business goodwill to meet the current and changing needs of the boating public and broader community. Like all investments, marinas rely on an economic model where there is a demand for services that is not met by existing suppliers or competition. Having satisfied that fundamental issue, the key challenges that marina investments face are as follows: • Project and investment: the physical aspects of the proposed anchorage. Factors like water depth, fetch, exposure, tidal movement, current, access and ecology all have significant impact on the complexity and capital requirements of the marina infrastructure. This is particularly important where long term marina investments need to contemplate the ability to adapt to the consequences of accelerated climate change. • Planning: planning law and environmental constraints are often a significant impediment and cost imposed on marina development. The planning complexity of building over foreshore and water invokes complex planning law challenges that often mean that planning consents for marinas take many years and are much more difficult and expensive than comparable landside developments. This directly affects both the access to, and return on, capital for marina investments. • Lease contracts and funding: the availability and terms of government concessions/leases affects both the www.marinaworld.com - January/February 2020 17
