Troubling Developments in the City of Beaufort’s Lease with Safe Harbor Marinas

As concerns over the City of Beaufort’s lease with Safe Harbor Marinas continue to mount, new revelations have surfaced that raise critical questions about the ongoing “negotiations”. This article delves into the current issues that plague the lease and examines whether the city’s leadership is willing to address these concerns in an open, legal way, or if they are once again pre-baking a deal behind closed doors that will stick taxpayers with a heavy bill and little benefit.

The Safe Harbor Lease is Legally Invalid

When the lease with Safe Harbor was signed in 2019, proper legal procedure was not followed. According to South Carolina state law (SECTION 5-7-260), the city is required to pass an ordinance, with a minimum of two public readings, to lawfully enter a lease such as the one that exists with Safe Harbor.  The city did not pass an ordinance when the lease was signed in 2019.

With full knowledge of the  many deficiencies in the lease, the city has scheduled a first reading on Tuesday, August 27^th, 2024, to retroactively adopt an ordinance to somehow make the 2019 lease legal.   Why are our city leaders doing this? A first reading on the ill-advised nunc pro tunc (a legal term meaning ‘now for then’) ordinance is on the agenda for the upcoming August 27 council meeting. Buried in the agenda (VIII.d) in the New Business section, this “ordinance ratifying the leasing of real property owned by the City of Beaufort, South Carolina and known as Beaufort’s Downtown Marina to SHM Beaufort, LLC” is a political powder keg! (p. 173) For more information about the nunc pro tunc ordinance, you can read this editorial written by a local Beaufort attorney.

If this wasn’t bad enough, the city failed to comply with its prerequisite obligations in the 1976 agreement with the South Carolina Department of Parks, Recreation, and Tourism, the Economic Development Administration (EDA), and the Bureau of Outdoor Recreation. In other words, by failing to comply with its own agreement, the city privatized a public marina for 40 years in favor of a for-profit corporation.   

Council Knows the Lease Is Not In The Citizens’ Best Interests

Who Pays to Replace the Aging Fuel Tanks and Systems?   Hint: It’s not Safe Harbor

Beaufort’s taxpayers will pay big time to replace the marina’s fuel tanks and pump systems—an expense that will cost from $800,000 to upwards of $1.5M. Safe Harbor makes a profit.  Citizens pay the bill. During Beaufort Insider’s investigation, there has been no evidence that City leaders are even trying to renegotiate the lease to ensure that Safe Harbor, not the taxpayers, covers this huge cost. 

 Safe Harbor Rides on Back of the City’s Insurance Policies

City taxpayers bear the cost to insure the marina for property damage, liability and environmental liability, with NO reimbursement whatsoever from Safe Harbor.  Additionally, Safe Harbor is named as an “additional insured” under the city’s policies. In most commercial leases, the tenant reimburses these costs.  Safe Harbor only provides minimum liability and worker’s compensation coverage for itself. The city is not protected by Safe Harbor’s insurance.  Beaufort Insider has not uncovered any evidence that City leaders are trying to renegotiate the insurance defects. 

Termination Rights After a Hurricane: A One-Sided Agreement

If the marina is damaged or destroyed after a hurricane, Safe Harbor has the right to terminate the lease and walk away.  That option is not available to the city.  Instead, Safe Harbor takes control of the city’s insurance proceeds to rebuild the marina.  And here’s the catch: If the insurance is not enough to pay the actual cost of rebuilding at that time, Safe Harbor can bill the city for the balance. In other words, the taxpayer will get stuck with the bill.  Why didn’t the city negotiate the same right to terminate in the beginning?  This one-sided agreement places Beaufort at a disadvantage in the event of a natural disaster. The public nor Beaufort Insider have been made aware of anything City leaders are doing to correct this problem leaving its citizens exposed to unknown future costs. 

Parking Issues: A Strain on Downtown Beaufort

Parking has long been a contentious issue in downtown Beaufort, and the current lease (p.14) only exacerbates the problem. Under the agreement, Safe Harbor is allotted  “at least one parking space and corresponding parking pass for every boat slip customer at the Marina”, significantly reducing available parking for residents and visitors. Reducing the number of spaces allocated to Safe Harbor could alleviate some of the parking strain, but currently there is no defined limit to the number of parking spaces Safe Harbor can control (p.14). Parking is another issue where there is no evidence that the problem is being addressed by the city. 

Public Input: Too Little, Too Late?

In the past, the City Council has been criticized for authorizing a lease with Safe Harbor without any public input, and revealing the details only after the agreement was signed. Now, it appears the Council will again favor Safe Harbor, by offering a public forum on September 5th that will only give the public a chance to comment on a revised marina layout. That meeting is not designed to address the fundamental problems with the lease itself, and enables council to once again avoid accountability.

A History of Closed-Door Deals

The council’s failure to survey Beaufort’s residents about the type of marina they want or need only compounds the issue. In 2019, City Council formed a committee,  negotiated in secret, and the result was a disaster. Council and city officials are now in the process of repeating this fundamental mistake.

These are just a few of the glaring problems within the Safe Harbor lease. The overarching question remains: Can the current city leadership be trusted to address these issues intelligently and with transparency, or will they buckle under to Safe Harbor behind closed doors?

The city has given surveys, held work sessions, and had public meetings about other major projects. So why the pre-baked plan before the hastily planned September 5th meeting and, more importantly, why is the city rushing to push through a retroactive approval of the invalid lease? 

The Path Forward: Legal Guidance and Public Consultation

Before moving forward, the council should table discussion on the nunc pro tunc ordinance so that it can determine the most appropriate and legal path forward.

In the interim, the city should pursue the following:

1. **Survey the Citizenry**: The Council must engage with the public to understand what type of marina is needed and wanted in Beaufort’s small historic downtown.

2. **Renegotiate the Lease**: Armed with this knowledge, the Council should renegotiate the lease with Safe Harbor to secure a better deal for its Citizens.

In both scenarios, legal guidance and experienced negotiators are essential to protect the interests of Beaufort and its residents.

As August 27^th and September 5th approach, all eyes will be on the City Council to see whether they will finally act in the best interests of the taxpayers or if history will repeat itself with another behind-the-scenes deal that leaves Beaufort worse off.