ACQUISITION OF JUNE PARKER MARINA SITE Factual Analysis, Acquisition Plan Action Items, and Potential Uses

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1 ACQUISITION OF JUNE PARKER MARINA SITE Factual Analysis, Acquisition Plan Action Items, and Potential Uses 1. The County s Goals, Vision, and Strategic Planning Essex County is evaluating the possibility of purchasing a waterfront access property that is currently operated as a marina which lies within the boundary limits of Tappahannock, its County seat. One of the primary goals of the County, which it has not been able to realize, is to provide public access to the Rappahannock for its citizens and visitors. This is a goal that has been stated in the County s Comprehensive Plan for several years. It is based not only on the desire and need of citizens for recreational opportunities on the Rappahannock, but also in the recognition by the County and Town governments that river access is a critical component of the business objective to increase tourism revenue. The subject property is only one of two marinas in the County which provide direct access to the Rappahannock. There are 2193 boats registered in Essex County. The tax revenue received by the County on these boats is $277,284. There are 115 boats registered in Tappahannock. The revenue received by the Town on these boats is $3,494. The evaluation of the potential property acquisition which the County is now considering takes into account the mission of the County, its strategic goals and core values, the need for public access to the river, the County s budgetary constraints, and the short and long term vision of County leaders to achieve these objectives through strategic planning. 2. Property Description The Parker family (the Seller) has offered to sell the June Parker Marina site to the County for $1,100,000. The property offered for sale at this price includes 3 contiguous tracts totaling acres and is improved with various physical structures and buildings that support the operation of the marina. All fixtures, structures, and improvements on the property are included in the sales price. The gross building area of the existing fixtures, which include a large maintenance shop, two rental offices, a ships store, and boat storage structures comprise approximately 23,000 square feet. There are 22 floating boat slips and 10 stationary slips. The marina provides water access for recreational boat owners and for several commercial watermen. The marina site also includes a

2 beach area and parking areas that are used intermittently for community events. The property is situated in an excellent location for its intended use and is easily accessible by visitors or citizens who travel to Tappahannock on Highway 17 or Highway 360. According to the Virginia Department of Transportation, the property has a traffic count of 22,000 vehicles per day which makes it one of Essex County s highest traversed areas. 3. The Proposed Purchase Agreement The County and the Seller have agreed to a contingent purchase agreement whereby the County has a stated feasibility period allowing the County to terminate the proposed agreement for any reason for a period of 120 days after the effective date of the agreement. The effective date was May 12, 2017 which is the date the County Administrator signed the agreement. The County has paid an initial deposit of $3000 to an Escrow Account. If the County does not terminate the agreement in a timely matter at the end of the feasibility period, an additional $3000 must be paid by the County into the Escrow Account as a deposit, and the full amount of $6000 is to be paid by the Escrow Agent to the Seller. The 120 days for the feasibility period was extended by mutual agreement of the parties for an additional 20 days and is now September 29, The closing date of the agreement is December 31, 2017, unless extended to June 1, 2018 at the County s election by payment to the Escrow Agent of $5000 as a deposit against the purchase price. The obligation of the County to purchase the property at closing is subject to certain conditions precedent which include the following: the County has received a grant in the amount of at least $400,000 from the Land and Water Conservation Fund administered by the Department of Conservation and Recreation of Virginia, the material obligations of the Seller have been performed, the representations of the Seller contained in the agreement are true, and no contamination of the property by hazardous substances and no violation of environmental law or damage to the property by fire, flood or natural disaster have occurred. If the conditions precedent are not satisfied, the County has the right to terminate the agreement and the amount then held by the Escrow Agent as a deposit must be returned to the County. 4. Action Items Completed and in Progress The County has appointed a group of citizens to serve as a Parks and Recreation Advisory Commission to assist the County in its assessment of the suitability of the marina site for acquisition and the uses that might be made of it to meet the County s long standing goal of providing a river access location for its

3 citizens and to promote increased tourism to the County and the town of Tappahannock. The County has engaged an independent appraisal service, Colliers International Valuation & Advisory Services, to prepare and deliver an Appraisal Report on the June Parker Marina. Colliers International delivered that report to the County on June 23, 2017, The report established an appraised value of the property at $1,130,000, which exceeds by $30,000 the proposed purchase price in the agreement between the Seller and the County. The Appraisal Report also contains an analysis of the recent income and expense history of the June Parker Marina and a projection of the income and expenses of the marina that would be generated in 2017, assuming no unanticipated disruption of the business. The income and expense analysis showed that the income generated in 2014 from boat slip sales, storage sales, commercial rents, and other sales was $122,837 and that the expenses for that year totaled $92,161, resulting a net operating income of $30,676. The analysis for 2015 and 2016 showed an operating loss in both years primarily due to the right-of-way project over Ticknor s Creek which severely impeded the Subject s access and caused operating losses. The Appraisal Report also projected revenue for 2017 of $122,389 and expenses of $86,172, resulting in a net projected operating income of $36,217. It is noteworthy that some of the expenses listed for the June Parker Marina would not be expenses incurred by the County, e.g. interest on debt carried by the marina and real estate taxes. The County has engaged an environmental consultant to perform an Environmental Site Assessment (ESA) of the June Parker Marina property. The consultant engaged for this purpose is APEX Companies, LLC. The initial site assessment by APEX has been completed and a further site assessment which involved subsurface ground samples has been performed. The County anticipates receiving APEX s report on the subsurface analysis by September 22, Representatives of the Essex Parks and Recreation Advisory Commission have consulted with various state and federal agencies and local organizations to obtain their input regarding the County s proposed purchase of the June Parker Marina site and the uses that could be made of the site for the benefit of Essex s citizens. The topics have included a wide range of water access activities, educational activities, ecological and earth science studies, and grants that may be potentially available to help fund those activities. The agencies and organizations include: VA Department of Conservation and Recreation, VA Department of Environmental Quality,

4 VA Institute of Marine Science, VA Marine Resources Commission, VA Department of Game and Inland Fisheries, Middle Peninsula Public Access Authority, Middle Peninsula Planning District Commission, James City County Parks and Recreation Committee, Department of Parks & Recreation for the City of Richmond National Park Service Chesapeake Conservancy US Fish and Wildlife Service Friends of the Rappahannock 5. Grants to Assist Essex with the Acquisition and Operation of a Waterfront Recreational Activity Center The Essex Parks and Recreation Advisory Commission has worked with Trent Funkhouser, Essex s Economic Development Director, to identify potential grants for funding the acquisition of a waterfront public access property and specifically for the potential acquisition of the June Parker Marina site. Trent Funkhouser identified the Land and Water Conservation Fund (LWCF) as the best source of potential funding for the County s possible acquisition of the June Parker Marina property. LWCF grant applications are initially processed and administered by the Virginia Department of Conservation and Recreation, and if recommended by VDCR must ultimately be approved by the National Park Service. On May 26, 2016, under Mr. Funkhouser s guidance, Essex submitted its application for a LWCF grant to help the County fund the potential purchase of the marina property to VDCR. Essex s application for the LWCF grant was updated and resubmitted to VDCR on March 2, On April 6, 2017, Essex County received notification from VDCR that it had recommended approval of Essex s grant application to the National Park Service. If approved by the National Park Service, Essex could receive a grant equal to 50 percent of the purchase price up to a ceiling of $500,000. The Parks and Recreation Advisory Commission is continuing to work with Trent Funkhouser to identify other grants that may be available to assist the County with funds to support maintenance and potential public uses on the site. As a general proposition, applications for such grants cannot be submitted prior to the actual acquisition of the subject property. 6. Management Plan for Operation of the Property if the Proposal for Acquisition is Approved by the Board of Supervisors On March 6, 2017, Fred Birchett, Director of Parks and Recreation, prepared a

5 draft of a Business and Management Plan for the marina property based on information that was then available to the County. Since Mr. Birchett s preliminary draft was prepared, the Appraisal Report by Colliers International Valuation & Advisory Services has been received and the other action items referenced above have been completed or are currently in progress. As a consequence, Mr. Birchett s preliminary draft is being amended to reflect the Parks and Recreation Advisory Commission s current assessment of options for operation, utilization of contractors and vendors, and updated revenue and cost projections, both short term and longer term. Revenue and cost projections will obviously vary substantially depending on the operational options and uses the County may choose. It is this Commission s recommendation that the actual marina operations which include launching of motorized recreational boats, sales of ethanol free gas, fueling, the leasing and maintenance of wet slips and boat storage, and the operation of the ships store should be performed by an independent contractor. The Commission projects that these activities which all relate to motorized boats will generate approximately $165,450 or more in annual revenue, assuming the amount of slips and boat storage are not reduced. The contract applicable to the independent contractor should take into account that the bulk of the motorized boating activity on the site takes place during a five to six month period that commences in May and ends in late September or early October. It is the Commission s recommendation that the large bay area of the metal building where maintenance of boats is currently performed by the Seller should be transformed into office space and perhaps house a County Welcome Center. The Commission recommends that the two offices which currently exist on the South side of that facility should continue to be leased. The Commission projects that those two existing offices which have a bathroom and are the same size could each be leased for approximately $450-$500 a month. Only one of the existing offices is currently leased out by the Seller. Assuming both offices were leased, the annual rental payments to the County for these two offices would be approximately $12,000. Assuming the large bay area of the metal building was converted for office space, there exists ample room for several offices in that area, which could be leased out to tenants or used by the County for its own business needs. Depending on how the bay area of the building was fitted out, it is not unreasonable to assume that it could produce rental income to the County of an additional $18,000 to $20,000 on an annual basis, while still affording room for a Welcome Center. 7. Potential New Uses and Special Events The foregoing paragraph already discusses the potential new use of the bay area

6 of the large metal building where the Seller currently performs boat maintenance. The beach area of the site should be reserved and utilized to support a range of recreational activities that do not involve motorized boats. The beach area is not only an attractive location for general beach activities, but it also provides an excellent launching site for kayaks, canoes, paddle boards, small sail boats, and crew shells. A daily launching amount could be charged for non-motorized boats. Members of the public who do not own non-motorized boats may wish to rent them for daily use if they were available for rent at the site. This provides a sales opportunity for a vendor/outfitter, such as the Virginia Outdoor Center, who may wish to rent office and storage space at the site from the County. The beach area provides an excellent opportunity for the County to advertise and market a number of special events which are likely to attract Essex citizens and tourists to the site. Such events include competitive kayak, paddle board, sail boat and crew races. An entry fee could be charged by the County to the competitors who participate in such contests and local merchants could be solicited to provide prizes for such events. Parking fees could be charged to the members of the public who come to observe competitive events. The County may also want to use the site to host fishing tournaments for Croaker, Striped Bass, and Catfish, and to allow charter boat captains to market fishing opportunities to the public. The beach area serves as an excellent location for special community events. An example is the Wine on the Water event. Another special event which attracted large crowds to the site was the reenactment of Captain John Smith s voyage up the Rappahannock. The shallop used in that event was anchored just off the beach and the reenactment crew came ashore to greet and talk with members of the public. The site also provides the County with an opportunity to promote important educational and earth science events pertaining to the Rappahannock, the general ecology of the river, its tidal marshes, and the wetland plants which can be observed here. Students from St. Margaret s, the Christchurch School, and our local public schools have attended out-of-classroom events conducted at the site s beach area. The Parks and Recreation Advisory Commission has met with Friends of the Rappahannock, the Virginia Institute of Marine Science, and the Virginia Marine Resources Commission to not only discuss past educational programs but also to confirm willingness to participate in future educational programs at the site for students and the public in general.

7 The site can be used to promote natural resource educational programs which include guided river excursions for Essex residents and tourists to observe wildlife habitat, waterfowl, Bald Eagles, Osprey, the natural resource environment of our tidal region, and traditional working watermen activities. The site can also be used for educational programs and water tours which promote the Captain John Smith National Historic Water Trail, the Rappahannock Tribe heritage, the Rappahannock Indigenous Cultural Landscape Project, and historical events in Essex, Tappahannock, and on the Rappahannock from the 1600s to date, which include early settlements on the Rappahannock, the Revolutionary War, the War of 1812, and the Civil War. The Parks and Recreation Advisory Commission has identified non-profit organizations to partner with the County to help coordinate and contribute to the presentation of such educational initiatives. The non-profit partners include the Chesapeake Conservancy, US Fish and Wildlife Service, the Chesapeake Bay Foundation, Friends of the Rappahannock, VIMS, VMRC, DGIF, the National Park Service, the Middle Peninsula Planning District Commission, the Essex County Countryside Alliance, the Virginia Department of Conservation and Recreation, and the Virginia Department of Tourism. The Advisory Commission has also considered the possibility that the site could be used as a location to host the Tappahannock Farmers Market or RivahFest. The site s high visibility and easy access make it an appropriate location for events of this nature and for other community events. 8. Projected Revenue and Expenses Essex s Board of Supervisors has asked the Commission to help the County project revenue to the County and the expenses it is likely to experience should it proceed with the option to acquire the June Parker Marina property. The Commission s projections cover the 24 month period following the closing date and are based on the premise that the budgetary constraints and general economic conditions which the County is currently experiencing will continue for the period in question. As a consequence, the Commission has assumed that the County will not make material physical improvements to the site or alterations to the existing fixtures and structures during this period, but will instead focus on maintenance of the grounds and facilities as they currently exist which are necessary to preserve the marina s present revenue stream. In making its projection of revenue and expenses, the Commission has interviewed the site owner and current operator of the marina property, reviewed the Appraisal

8 Report prepared by Colliers International Valuation & Advisory Services, and consulted with the County s Parks and Recreation Director, the County Administrator, each member of the Board of Supervisors, several contractors who have worked on the site, several tenants who use the site, and a large number of community residents who have familiarity with the site. As noted in paragraph 6 above, the County has operational options to consider once it takes ownership of the site. The options selected by the County will greatly affect the projections the Commission has been asked to make. For example, one option would be for the County to step into the shoes of the Seller at closing and take over the operation of the site in essentially the same manner as the Seller has operated it. If that were to occur, all revenue related to the use and storage of motorized boats, incidental boat maintenance, fuel and ships store sales, and the current office lease to Friends of the Rappahannock, would flow directly to the County, but the County would bear all the operating expenses and would have to use its own personnel to perform the marina activities. The Commission has recommended that this is not an option the County should consider in the first 24 months. Instead, it is the Commission s recommendation that the County utilize a contractor to perform all motorized boat activities, except that the contractor would not have use of the bay area in the large metal building closest to the entrance to the site for boat maintenance. Under this option, we believe a realistic and somewhat conservative projection of revenue from motorized boat activities, including ships store sales and fuel sales, is approximately $165,450 annually. We believe that the ships store could be stocked with additional products which would increase its sales to boat operators and others who visit the site. Since the County will own all the physical structures and fixtures on the site, the County will bear the maintenance cost of those assets. The maintenance cost to the County will include normal maintenance and repairs to structures and docks, if needed, road maintenance, gravel and fill materials, telephone and utilities, and other normal building maintenance expenses. The Commission has assumed that the County s existing maintenance staff together with the Parks and Recreation Department staff would be sufficient to perform the normal building maintenance functions, and the mowing of grass on the site, and that gravel and fill material would have to be obtained from a contractor. The Advisory Commission has attached a chart of the projected annual revenue from the motorized boat activities, including fuel charges, which is incorporated into the update of the preliminary business plan prepared by the Director of Parks and Recreation. The chart also projects the direct flow in revenue to the County

9 from other activities on the site which include annual rental payments applicable to the two existing offices on the south side of the large metal building. The Commission has also projected expenses associated with the motorized boat activities, which include proposed fees to be paid to the independent contractor engaged to handle marina operations and to manage the ships store, the purchase of fuel for boats, the purchase of stock for the ships store, and the expenses of general site maintenance, building maintenance and related building operating expenses in the first 24 months of full operation by the County. These projected expenses, like the revenue numbers, are shown in the Commission s chart that has been incorporated into the update of the preliminary business plan. The revenue/expense chart shows a projected net operating income to the County, for the first 12 months of full operation after the closing date, of $42,850. The Commission s projections assume a three to six month transition period prior to full operation by the County to enable the Seller to cease its operations and to enable the County to negotiate lease agreements with boat owners and make the other contractual and business arrangements necessary for the County s operation of the site. It is reasonable to expect that the revenue and expense numbers for the second full 12 months of operation will change to some degree based on market conditions that then exist and the operating decisions that the County makes. Unless those changes are material in nature, the Commission believes its projection of the annual net operating income should remain relatively constant during this period. The Advisory Commission does not believe it can reliably project revenue and expenses beyond the initial 24 month period of full operation by the County without direction from the County as to site changes the County may wish to make. The bay area of the metal building, which the Commission has suggested that the contractor not have access to, is very valuable space with water and electrical connections and its own rest room. The Commission has already observed that if this area was fitted out for office space, we believe it could produce annual rental income of $18,000 to $20,000. The cost of fitting out this space can not be projected until the County determines the use it may want to make of the bay area. This is the only physical improvement of an existing structure on the site that the Commission has identified for possible alteration in the initial 24 month period of operations. None of the Potential New Uses and Special Events described in paragraph 7 require new construction, or site improvements, or involve significant expense to the County. They are all events which can take place without any physical alteration to the property. The educational and earth science events for students and the general public, which address the ecology of our tidal river environment and the relationship of living organisms to their habitat, are

10 important not only for their educational value, but also because they help the site qualify for grants. There are particular potential expense items which the Commission believes warrant additional comment. The first pertains to the amount of gravel and fill material that may be required on an annual basis to maintain the road and parking areas on the site, and to address high tide flooding of specific site areas. Gravel and fill material can be used outside the jurisdictional wetlands line to address the flooding issue in low level areas and for general road and parking area maintenance. The Commission s projections for the first year of operation assume 250 tons of gravel to be spread on the site. The Commission s chart specifically addresses gravel as a distinct maintenance expense and is based on the estimated number of truck loads and the grade of the gravel. The second item which warrants further comment is the potential cost of dredging the channel in Ticknor s Creek, if it should become necessary at some point in the future, to improve the depth for boat access in typical low tide situations. The motorized boats using the marina, with the exception of the working watermen boats, are recreational boats which are typically 16 feet to 23 feet in length with drafts of less than 2 feet. The Seller states that he believes there is no near term need to dredge the channel in Ticknor s Creek because the depth is adequate for the type of recreational boats and watermen s boats that use the marina. The engineering drawings of Ticknor s Creek which the Advisory Commission has reviewed show depth levels at mean low tide. The water depth at mean low tide in the areas where recreational boats are moored at the floating docks ranges from about 2.5 feet to 3.5 feet, and the creek channel which the boats use to reach the river from their mooring slips ranges from 3.5 feet to 4.5 feet at mean low tide. The Advisory Commission has not projected a near term dredging cost for the marina because we do not believe there is a present need for dredging, either for the recreational boats or the watermen boats who use the marina. The Commission recognizes, however, that dredging may be required at some point in the future for maintenance of the depth necessary to support the marina s normal boat use. The Commission has assumed that when maintenance dredging is performed, it would be a periodic expenditure, perhaps once in a five year period or longer, not an annual cost. In assessing dredging costs, it is important to note that the cost of dredging varies depending on the number of feet of dredge material cut from the channel bottom, the variable depth of the channel, the length and width of the navigable area designated for dredging, and the cost of transporting the spoils to an off-site location, should that be necessary. The Commission has projected that the expense range for periodic maintenance dredging in Ticknor s Creek, in order to support a

11 consistent 3.5 to 4.5 foot depth at mean low tide in a navigable channel 25 feet wide, would be approximately $35,000 to $50,000. The Commission has assumed that most, if not all, of the spoils from dredging at the marina site can be placed in its non-wetlands areas, rather than hauled to an off-site location. If the County were to receive a dredging proposal to widen the area of the navigable channel and increase the mean low tide depth to a range of 4.5 to 5 feet in order to support use by larger boats, this would constitute enhancement dredging, not maintenance dredging, and would require a significantly larger expenditure which the Commission projects could range from $100,000 to $150,000. The Commission has identified no present or future need for enhancement dredging, and would recommend against any such expenditure. The Advisory Commission has also considered whether acquisition of the site would necessitate any material expense to the County for security. After consultation with the County Sheriff, the Commission has concluded that the County s ownership of the site would not impose additional security issues for the Sheriff s Department beyond those that it has already been able to adequately manage under the Seller s ownership. It is the assessment of the Commission that security related expenses to the County applicable to site ownership would not be material.

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