Overview
The Marina Steps project we voted on last year came in way over budget and has been scaled back by a process called Value Engineering. To avoid confusion, from here on out, I’m calling the Marina Steps, ‘Project VE’. There are four options for Project VE – A, B, C, D. Option A is basically ‘Project VE’ so let’s just call that Project VE. Options B, C, D each cut something else out to save even more money.
Assuming all the funding sources come in, and neither Redondo or the Docks run into unexpected costs, the Council will likely choose Project VE. If those projects run into higher costs, we may be forced to select B, C, D.
Still with me? 😀
Funding
- One of the funding sources, besides our bonds, is a $1M King County parks grant we applied for, but we will not know if we’re getting it until 2mid-June.
- The other two funding sources are from our future budget:
- Sound Transit payment – originally set aside for roads
- REET – which is usually set aside for capital projects
Read again: we’re taking money from other potential uses in order to fund Project VE. We’re doing everything possible to ‘move money around’ from other needs in order to do the Steps now.
For example, let’s say we do get that King County Parks grant. $1,000,000 is enough to build a completely new park in a part of the City that has none. Same thing with the Sound Transit and REET money.
So, next time anyone from the City tells you how each fund is somehow sacred? Raising an eyebrow is perfectly appropriate.
That was my tantrum. What is the point of having a ‘two year budget’ when we move money around like this just to ‘make it happen’?
We truly cannot afford this. And what is so chronically frustrating is that the public assumes that because we are doing its we can afford it. In other words, as individuals, we all know that people send what they cannot afford all the time. And most of us are capable of saying ‘no’Â – even if it’s something we really want. But since it’s ‘the City’, people seem more than happy to go nuts.
The Enterprise Fund Tantrum
The Marina is an Enterprise Fund – that means a self-sustaining business. By ordinance it is supposed to cover all its own costs. It has not done that in many years. If it did, we would not have had to borrow $10,000,000 to replace the docks. At one time, the entire Marina floor was a part of that Enterprise Fund. In other words, the entire Marina Floor was expected to pay for itself. Over time, we’ve subdivided it into separate ‘zones’ – basically converted more and more of it into park space – so that it was not subject to that requirement; so that we could borrow more and more from the General Fund – so that we did not have to maintain the fiscal discipline of the Enterprise Fund.
We run another Enterprise Fund – the storm water utility. That does work like an Enterprise Fund. You pay storm water rates and in exchange the business covers all the costs, not only to run the thing today, but also to replace pipes and equipment off into the future. To set the proper rates and policies, we hire an expert every few years to do an analysis. We last did that in 2020 and by all reports it works well. We do not have to borrow money to cover costs or do other budget tricks to keep it running.
Twenty five years ago, the Council started hearing that the Marina was not paying for itself. The City needed to set aside reserves for dock replacement. At the time, they could have decided to install Dry Stack (on land boat storage) which was (and remains) the only way to expand Marina revenue. If done then, it would have provided the annual revenue necessary to fund the Marina’s replacement costs and much of the other Marina floor redevelopment without borrowing. In other words, that would have made the Marina actually work like an Enterprise Fund.
Instead, we kept kicking the can down the road.
When we build Project VE, the only other possible revenue source the Marina Floor will ever have (the center area known as Parcel A) goes away. That is the ‘switchbacks’.
But, just between you and me, I was never against a Marina Steps. I never cared if Parcel A was set aside for retail. I just didn’t want a less than spectacular Marina Steps. I felt then (and now) that if we were gonna do a ‘steps’, it should be amazing. I do not think Project VE will be amazing. It may be good. But by definition – by scaling it back – it was never going to be the best we could do. And if we’re going to go to these extremes to do a literally once-in-a-lifetime project? It damned well should be the best we could ever do.
But aside from that, the reason I never cared about the financial loss of that area is because of three cents.
1Three Cents
The City only retains three cents of every sales tax dollar. Read that again: when you spend $100 at a local restaurant, you may be charge $10 in sales tax, but the City only gets (at best) $3.
It would take over $8,000,000 in new retail every year to equal the same revenue as a dry stack. $8,000,000 is about half the entire retail sales of the entire City of Des Moines. Even if a ginormous electric ferry pulls up to our dock four times a day. Even if, someday, we build a hotel. We will struggle to generate the kind of reliable revenue a dry stack could have been providing for decades.
A dry stack (boat storage) could generate as much as $250,000 a year in pure profit. NET revenue. Bottom line revenue. After every cost is accounted for. Don’t start. That’s what it is.
Project VE, on the other hand, is a park. It has no more predictable economic value than any other park. And neither does the Redondo Fishing Pier. They’re not meant to. You wouldn’t want that kind of activity. They’re parks; not Cancun.
What I found absolutely astonishing at this meeting – and over the past nine years of this debate has been the cognitive dissonance. Everyone is concerned about now. There is literally no one speaking for the future.
We’ve lived paycheck to paycheck for so long, we can’t imagine what it might be like to actually generate money. We honestly do not believe in the concept.
1Miss Information returns! I’ve been saying ‘three cents’ for a while now, but that was wrong. The reality is that the City keeps far less because the ‘local’ portion of the sales tax (the three cents) is actually shared with other special districts. In fact, we keep about a penny. I’ve avoided going further in the past because, frankly, this is already more ‘into the weeds’ than most people ever want to dive. But to her credit, our new City Manager has begun speaking openly about it.
2Update: Now put off until mid-August, I hear.