The lease agreement between the City of Beaufort and Safe Harbor Marinas imposes substantial financial and environmental liabilities on the city that raise concerns about the burden on taxpayers.
Parking Spaces: The city is required by the lease to provide Safe Harbor with at least one parking space for every boat slip customer at the marina. This agreement only serve to exacerbate the ongoing parking issues in downtown Beaufort.
Fuel Tanks and Environmental Liability: The city must maintain and replace the marina’s fuel tanks and systems, and is solely liable for any environmental conditions arising from this. The 2023 Capital Projects Budget allocated $800,000 for marina fuel tank replacement, but the total taxpayer cost remains unknown.
Insurance Costs: The city is responsible for “All Risk” property insurance, Commercial General Liability Insurance, and Environmental Insurance, covering various liabilities, including those potentially caused by Safe Harbor. Despite the significant insurance costs, the city must name Safe Harbor as an “additional insured” without reciprocation.
Destruction and Insurance Claims: If the marina is damaged, insurance proceeds maintained by the city must be used for restoration and remediation. If the insurance is insufficient, the city must cover the shortfall, adding further financial strain on taxpayers.
Building Maintenance: The city is obligated to maintain and repair the marina’s roofs, structures, HVAC units, and more, with costs currently unknown.
Potential 40-Year Obligation: The initial lease term is 10 years, with Safe Harbor having the option to renew for three additional 10-year terms, potentially extending the city’s obligations for 40 years.
The city’s annual rent from Safe Harbor is approximately $120,000, composed of percentages of dockage rental, fuel sales, and marina store profits. However, deducting insurance, building repair, and other costs, the actual financial benefit remains unclear. The estimated $800,000 for fuel tank replacement alone underscores the enormous financial liability.
These facts allow Beaufort citizens to assess the prudence of this lease. The Beaufort Insider will continue to report on these critical marina issues.
For more information, read our previous two articles about Beaufort’s lease with Safe Harbor: The Secret Negotiations Behind Beaufort’s Lease with Safe Harbor; Questionable Authority in Beaufort’s Lease with Safe Harbor
It doesn’t appear that the City of Beaufort has had effective legal counsel, and now finds itself having to answer for millions of dollars in misspent funds. To my knowledge, there has been no explanation forthcoming about the need to spend multiple millions of tourist dollars earmarked for a park that is not a tourist attraction. Is there an engineering survey available to the public which outlines the needed repairs and associated costs to the submerged Waterfront Park support structure? How can the City mitigate the costs incurred for what sounds like a very poorly negotiated marina contract?
Sounds like the city is going into the lease with a lost. Do whatever number of boat owners moored at the marina cause enough revenue thru taxes that is spent in merchants shops to justify the total cost of running the marina. The city of Beaufort needs to negotiate the lease as a triple net lease as do Real Estate Investment Trusts. Why does the tax payer always face the brunt of the cost.
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