The St. Ignace Public Marina, which has struggled financially since a major expansion in 2003, has begun to dig itself out of its deficit, posting its first positive year-end profit in six years, despite a suffering economy and increasing competition from Mackinac Island and a new state marina in Mackinaw City. Decisions made about a decade ago to boost the number of marina slips in the Great Lakes are coming to fruition now, but even as they do, harbor masters are reporting the number of boaters using these facilities has gone down because boating trends have changed.

Revenue for slip rentals at St. Ignace bears this out, even though St. Ignace doesn't keep track of the number of boats using its facility. And, while the St. Ignace marina was only full for three weekends last summer, and revenue was at its lowest point since the facility opened, the St. Ignace Harbor Authority is pinning its future profits on getting more slips designated for seasonal rental, where boat owners rent a slip for the entire season, rather than for several days. In the meantime, city officials say strict spending controls, more advertising, and diligent oversight can help the marina become a successful enterprise for the city.

Marina Director Gene Elmer demonstrates how he shuts off individual bubblers at the St. Ignace Public Marina Thursday, February 18. Mr. Elmer has shut off 10 of the marina's 21 bubblers, which use three-horsepower electric motors and air compressors to release air bubbles underwater, preventing ice formation around the floating docks. Six of the bubblers he shut off will remain off for the entire winter and four more, turned off Thursday, will stay off as long as the weather stays warm enough to allow it. By reducing the number of bubblers running in the $100,000 system, Mr. Elmer said he can save on the marina's winter electrical costs. The facility has been in debt from its first day of operation, Marina Director Gene Elmer acknowledges, and he credits recent cost cutting measures with digging the marina out of its deficit. Subsidy from the Downtown Development Authority, which he chairs, also helps keep the marina afloat.

“We Went in the Hole

Immediately”

– and Then High Gas Prices Hit

When the old marina was removed to make way for the current facility, which opened in 2003, Mr. Elmer said a year without any marina, followed by half a season in 2003, hurt marina revenues.

“It didn't open until the middle of the summer,” he said, “and we still had a payment to make. We went in the hole immediately.”

The expanded St. Ignace marina, which added 114 slips for $8.2 million, opened June 27, 2003. The marina showed a net profit in 2005 and 2007, but reported net losses in 2004, 2006, and 2008.

The summer of 2008 was particularly difficult for the marina because of high gas prices and declining boat traffic. When gas prices rose to nearly $4 a gallon, Mr. Elmer said, boat traffic in the area dropped dramatically, pushing the marina further into debt. Lower gas prices in 2009 stimulated business, he said, but weather and the sour economy continued to deter boaters.

To cut expenses, the city has reduced its workforce, which peaked at 12 workers, to eight last summer. One full-time summer employee was eliminated for 2009, saving $4,118.87, and Mr. Elmer said he plans to cut a half-time post this summer.

At the end of 2009, the marina's construction debt was $795,000, Mr. Elmer said, and 12 annual payments are left before the obligation will be paid in 2019. In 2009, the marina paid $71,122 on its debt, $46,122 of this for interest charges.

The required debt payment will increase in 2010, when an additional $25,000 must be paid toward the loan principal. The lower initial payments were meant to allow the marina to become financially stable and begin making a profit after it was built, but the city has never been able to do that.

Since the interest payment will be reduced slightly by these larger payments, Mr. Elmer said he expects the increase in debt payments to be about $24,000, for a total due in 2010 of about $95,000.

St. Ignace Requests More

Seasonal Slips

The Michigan Waterways Commission restricts slips set aside

for seasonal boaters to no more than 30% of the marina's total slips. Mr. Elmer said increasing this to 50% could help the marina make money by drawing more seasonal boaters to St. Ignace.

He has asked the Waterways Commission to allow more seasonal slips, from 42 of the 136 slips in the marina to 70 slips. If approved, this change would allow, although not require, half of the marina's slips to be filled or reserved by seasonal boaters.

Since federal funds were used to build the St. Ignace marina, the Waterways Commission needs to first get federal approval before any changes are made. Funding for building the marina was secured through the Waterways Commission. The request for more seasonal slips is pending, and state officials said they do not know when they might get an answer from the U.S. Department of the Interior.

If permission is granted, it would be the first such request to find approval.

Similar requests have been made by other Michigan marinas and granted by the state, said Jason Fleming, a Department of Natural Resources and Environment operation unit manager, but an appeal for federal approval for more seasonal slips has never before been approved.

“We get requests for more seasonals from marinas a couple times a year,” Mr. Fleming said. The department will review those requests and approve them if they will not have a negative impact on the availability of slips for transient boaters or on nearby private marinas, he said. St. Ignace's marina is different because of the requirement for federal approval of such a change.

The state and federal dollars that helped build the marina, he said, were provided to create a “harbor of refuge” in the area.

“As long as it is open for safe harborage, that is the main priority,” Mr. Fleming said. “We have grant ties with the federal government for that particular facility. It's for transient, not seasonal, use.”

The desire for more seasonal slip availability, he said, is understandable since it can help guarantee revenue for the year, and because a marina with more boats in it is more aesthetically pleasing to passing boaters.

Mr. Elmer said St. Ignace has about 40 boaters on a waiting list for a seasonal slip, although the list isn't kept up to date, so he doesn't know if or how the recession may have reduced that number.

Mr. Fleming said another option would be to offer monthly slip rentals, a compromise between transient and seasonal slips, to draw in more boaters.

“If it can be done without impacting transient boaters and the private marinas, and is within variances granted by the federal government, then we would support that,” he said. “That could be an opportunity for boaters, instead of having to pay for a full seasonal slip.”

The St. Ignace marina was only completely full on three weekends in 2009, Mr. Elmer said, during the St. Ignace Auto Show the end of June, Fish Feast the end of July, and Arts Dockside and the Mackinac Bridge Walk over the Labor Day weekend. These would be the only times that transients would have had difficulty getting a slip. In such cases, he added, it is possible to raft one boat to another, so long as the boat owners agree to it.

Local Leaders Weigh In

on Marina Finances Early in the 2009 boating season, both the Harbor Authority and St. Ignace City Council asked Mr. Elmer to provide them with monthly financial reports so they could more closely monitor the progress in eliminating the deficit and paying off debt. Mr. Elmer gave City Council his first informal report June 1, and submitted a balance sheet showing revenues and expenses at each of the Council's second monthly meetings in June, July, August, September, and October. He also provided an informal report without financial data in November. The marina is now closed for the winter.

Harbor Authority Chairman George Yshinski said recent restrictions on spending at the marina and the introduction of an official marina Web site as a revenue generation tool will help the marina become profitable.

“I feel that right now we are not in great shape, financially, but we are paying our bills and we have some cash on hand,” Mr. Yshinski said. “If we are not hurt too much by the Mackinaw City marina opening next year, we may be able to keep on track.”

The revamped state marina in Mackinaw City, Straits State Harbor, opened officially in July 2009 and caters exclusively to transient boaters. This summer will be its first full season in operation.

“That is our bread and butter, transient boaters,” Mr. Yshinksi said.

Summer events in and around the St. Ignace marina, a proposed downtown grocery store, and spilloff from the big Mackinac Island races from Chicago and Port Huron should help increase revenues at the marina in the future, he said, even though weather, gas prices, and the national economy are the biggest factors influencing its success.

“You are pretty much regulated on how much money you are going to make by the weather and the economic condition,” he said. “I really do feel that the marina is a good, viable operation. I think it's going to continue to do well.”

Other marinas have been renovated, too.

Mackinac Island State Harbor, which is operated by the Michigan Waterways Commission, was renovated in 2008 at a cost of $5.6 million. The Les Cheneaux Islands Waterways Restoration Group has proposed building a marina in Cedarville, which hinges on gaining approval for the use of state bottomlands and finding funding for the proposed 20-slip marina and boat launch expansion at on Meridian Road.

Other marinas competing with St. Ignace for boaters in the Straits area include the Mackinaw City Municipal Marina, the Cheboygan Municipal Marina, the Cheboygan County Marina, the Bois Blanc Island Marina, and the Hessel Marina.

Bob Brown of St. Ignace, who sits on the Waterways Commission, said the marina in St. Ignace is faced with fewer boat stays, a poor economy, high gas prices, and low water levels, the same problems that marinas across Michigan are dealing with. It also needs to compete with Mackinac Island's marina and the new Straits State Harbor in Mackinaw City, he pointed out.

“All the marinas around the Great Lakes are hurting,” Mr. Brown said. “The numbers of stays at marinas have been quite down across the board. The other problem Gene has is the new marina in Mackinaw City that pulls more people.”

The problem goes back to decisions made about a decade ago, he said, when a shortage of slips everywhere in the Great Lakes led many government agencies to pursue state and federal funding for new marinas and upgrades to existing marinas.

“It takes so long from when the marinas are proposed,” he said. “By the time it's time to start building them, the boating trends change.”

Now that many of the projects have been completed, there is less interest in boating and less demand for harbor slips, Mr. Brown said.

City Council member Tom Della-Moretta, who was recently appointed to the Harbor Authority, said he believes some organizational changes to the marina's administration, coupled with aggressive marketing and business strategies, could propel the marina toward becoming a profitable operation.

“It is not as financially stable as we would like it to be,” Mr. Della- Moretta said. “I just want to see us operate it professionally and successfully.”

One flaw in marina administration that he believes creates unnecessary expense is that two people perform the jobs of marina director and dockmaster. Mr. Elmer holds the marina director position, overseeing all aspects of operation, while Jeff Davenport is dockmaster, overseeing day-to-day operations on the docks.

“I'm not sure that those two positions couldn't be held by one person,” Mr. Della-Moretta said. “The initial way the positions were set up is not necessarily the most efficient.”

The marina needs to have a long-term goal of increasing revenue, he said, something that is admittedly more difficult to accomplish than finding ways to cut costs. Something Mr. Elmer is already doing that can help reach this goal, Mr. Della-Moretta said, is contacting boating clubs and events to entice them to St. Ignace.

An area that may need improvement, he said, would be communicating to boaters and other visitors what is available in the community in terms of events, recreation, and activities.

“It is more than getting them to come and park here,” Mr. Della- Moretta said, “it is getting them to come and stay here. Then everybody wins.”

The St. Ignace Chamber of Commerce provides bags to all marina guests with general information about the area, the annual vacation guide, dining information, a map of downtown, coupons, and other “goodies,” said Eileen Evers of the Chamber.

“We give out a couple hundred at a time, and sometimes they go through all those within a week. It depends on how busy they are,” Mrs. Evers said. “They give out a lot of them.”

The marina's Web site, www.stignacemarina. org, lists its amenities, including staff-provided transportation to grocery and golfing facilities and a planned delivery service, a link to the state's public marina reservation system, and a calendar of events, although nothing is yet entered on it for 2010.

In addition to the annual Antique Auto Show which is headquartered at the marina, the community schedules weekly public entertainment there, including Bayside Live and Locals on the Bay, a farmers market, a fireworks program, the popular Fish Feast and Arts Dockside, and new events, like last summer's Bayside Music Festival.

The marina has always been a debt problem for the city, council member Paul Fullerton said, and, in the past, it has had problems with overstaffing and poor use of the staff with specific skills.

“The Harbor Authority seems to be addressing that,” Mr. Fullerton said. “They plan to get the deficit down; it looks like they are moving in the right direction. With the added oversight, I think it's doing much better. It will be a really good asset for the community.”

Ken Hardy of St. Ignace, who sits on the Harbor Authority, said limits on spending have helped the marina stay within its budget this year, and said Mr. Elmer's request for more seasonal slips could help the marina increase revenues in the future.

“More seasonals means we can get as many slips as we can rent,” Mr. Hardy said. “That way we are sure there is more money coming in, guaranteed money.”