My turn: City's marina lease process unfair

Posted: Tuesday, October 14, 2008

More than one year ago, we, at the Fisherman's Bend and Andrew's Marina, began talks with the Juneau Docks and Harbors Board about the renewal of the lease we held on ATS 1324. This is a parcel of submerged lands in Auke Bay, which does not adjoin the uplands, but does abut our other tidelands. We leased this from the state when we expanded our moorage facility in 1986.

The board's Finance Committee advised the fee would be 8 percent of the assessed value or some $62,000 per year. We objected that the property was over valued and were told we would need to have an income approach to value appraisal made by a qualified Alaskan appraiser. We did. The appraisal established a fair market rental value of $12,700 per year for the parcel.

The Finance Committee refused to accept the appraisal even though Ken Miller of the Juneau Assessor's Office concurred with the methodology and "market rent valuation," given the highest and best use as a marina. The committee then engaged Charles Horan to provide them a different assessment of the value, which he did. He stated the annual rental value should be $35,800, or 11.6 cents per square foot.

We objected for cause. Horan is not only a former staff assessor for Juneau, but also has provided the Docks and Harbors Board with all of its appraisals of privately leased tidelands since the state transferred title to these tidelands to the city about five years ago. His conflict of interest should certainly have disqualified him from having anything to do with the valuation of this parcel.

In addition, we think his work contains major errors. There is only one other parcel of land in the borough directly comparable to ours, in that it is leased for use as a small boat marina, does not adjoin any uplands and access to it is across private land. That parcel is valued at 5 cents per square foot. Horan argues ATS 1324 is more like the commercial loading facility or seafood processor in Auke Bay for the purpose of determining the "market rent value."

The board operates three downtown small boat harbors and acquired our neighboring competitor, DeHart's Marina, a couple of years ago. Downtown harbor rates are about 60 percent of our rate and the board lowered DeHart's to 70 percent, stating it didn't need the money. It can do so because it has no obligation to return to the community any of the funds expended for the development and maintenance of the harbors. Our customers are required to cover the cost of development, repairs, taxes, acquisition and lease fees as well as day to day operations. Horan does not even address the issue of the chilling effect to our business of the board's predatory pricing or its unfair competitive position.

The city's marinas and adjacent uplands constitute some of the most valuable lands in the borough and they are permanently removed from the property tax base. Not one dime goes to support our schools, police and fire departments or snow removal and street maintenance. I think there would be some anti-trust considerations here if our competitor was a private entity. As it is, I truly believe, the Docks and Harbors Board is in need of some constraints.

It is surely an improper use of government authority to force a private citizen to expend thousands of dollars to comply with its ruling when there is no intention to accept the findings if they don't agree with the agency's preconceived notions of reality. We even offered to split the difference and accept a lease fee of $24,250, but the board remained adamant and has forwarded its recommendation to the Assembly.

This item is on the Assembly agenda for action at its meeting at 7 p.m. Monday, in the Assembly Chambers. If the Assembly accepts the board's recommendation, our customers will be further disadvantaged at a time when the economic situation is worse than at any time since the Great Depression. We need all the help we can get and even if you don't agree with me, I urge you to comment directly to the Assembly.

• Sharon Andrew is co-owner of Fisherman's Bend and Andrew's Marina.

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