TO SETTLE PASSENGER FEES DLNR sets meeting with boat owners

More than a year after the Outer Cove Marina began its operations, the Department of Lands and Natural Resources will meet again with boat owners on Feb. 25, 2000 in a last ditch effort to hammer out an acceptable departure passenger fee.

The department hopes to resolve the controversial issue after it received the results of a study conducted by an independent agency hired to determine the necessary average departure fee per passenger that will pay accrued liabilities, loan obligations and costs of operations from Sept. 1, 1999 to Oct. 31, 2010.

“We have always been sensitive to the concerns raised by the boat owners so the department hired a firm that will evaluate the financial issue. We hope we could arrive at something acceptable to all concerned in our scheduled meeting,” said Richard B. Seman, director of the Division of Fish and Wildlife.

Since the marina opened in November 1998, boat owners have been paying different rates. Currently, boats berthing at the marina are either paying $4 or $2.25 departure fee per passenger. The Revised Rules and Regulations of DLNR authorized a departure fee of $4 per passenger.

However, a study by accounting firm J. Scott Magliari revealed that boat owners must pay over $5 so that the Marine Revitalization Corp., the firm that built the marina, can survive the cost of operation. MRC president Anthony Pellegrino has told DLNR that he was not interested in charging more than $4 due to the decline in tourism economy.

The marina was built by the Marine Revitalization Corp., a non-profit corporation which was granted a 15-year lease by DLNR under Public Law 9-46 on some 16,394 square meters of submerged land.

MRC will pay 75 percent of the annual net earnings, which include deductions and adjustments related to loan obligations and improvements.

A separate concession was signed between MRC and the U.S. Department of the Interior’s National Park Service covering the dry land area from Nov. 1, 1996 to Oct. 31, 2010. The land leased was used for the marina facility were a mini-mart, fuel dock and picnic area where established. It is adjacent to the submerged land leased from the CNMI government.

MRC has been having difficulties in meeting operation costs and long-term debt obligations primarily because some boat owners have refused to move their vessels to the marina or to pay the $4 departure fee as well as construction costs in excess of costs budgeted.

About one-half of the 45 boat slips available are occupied by commercial vessels while three are for personal use. As of August 1999, total monthly revenue generated from docking fees reached $5,520.

Since there was insufficient cash flow to pay for operations and debt service, Mr. Pellegrino and his companies advanced money to MRC at various times. Total loans to Mr. Pellegrino and his companies stood at $1,162,571 as of Aug. 31, 1999.

Construction of the marina was made from funds borrowed from the Bank of Hawaii. The debt obligations were refinanced in July 1999 since MRC could not pay back the debt.