Frequently Asked Questions about the Chestertown Marina/Waterfront
The following information is based on conversations the Chestertown Waterfront Coalition has had with the leadership of Chestertown.
Q: Who owns the Chestertown Marina?
A: The Chestertown Marina is owned by the Town (and taxpayers) of Chestertown.
Q: How long has the Town of Chestertown owned the Marina?
A: The Marina was purchased in 2012.
Q: Why did the Town of Chestertown purchase the Marina?
A: The Town purchased the Marina out of concern that the facility could no longer operate profitably as a commercial enterprise, and that there was a risk that the property might be developed as private condominiums with deeded slips for condominium owners. By purchasing the property, the Town hopes to: 1) preserve public access to the Chester River for resident and transient boaters; 2) stimulate economic activity in the downtown commercial district; and 3) preserve an important component of the community’s history and culture.
Q: How did the Town of Chestertown pay for the Chestertown Marina?
A: The Town purchased the Chestertown Marina by issuing approximately $2 million in municipal bonds through the Maryland Department of Housing and Community Development.
Q: What are the terms of the Municipal Bonds issued to pay for the Marina?
A: The bonds have a 20-year maturity and the annual principal and interest payment on the bonds is approximately $143,000 (2017 figure).
Q: Do the bonds place any restrictions on the Marina property?
A: Yes. The terms of the bond issue prevent the town from selling the Chestertown Marina before 2022, and require that the facility be used solely for public purposes. While there are technical loopholes that might theoretically allow the town to circumvent these restrictions, the Coalition believes the conditions imposed by the bonds are sufficiently restrictive that a successful public /private partnership is virtually impossible.
Q: If the Town believes private interests can’t rehabilitate Chestertown Marina and continue to operate it as a profitable commercial enterprise, how does the Town plan to pay for the repairs?
A: One of the biggest challenges with the Chestertown Marina is the significant amount of deferred maintenance at the facility. Current estimates put the price of dredging, dock replacement, bulkhead replacement, and raising the property grade at more than $5 million. Unlike a private developer, the Town of Chestertown has access to State and Federal grants to help cover these costs. To date, the Town has successfully obtained over $1 million towards that end.
Q: If the Town is successfully able to repair and operate the Chestertown Marina will the facility generate a profit for the Town?
A: Considered in isolation the operations of a refurbished Marina would most likely break even or operate at a slight deficit for the Town. When the entire economic impact of the facility is considered, including the facility’s impact on the local economy, the Coalition is confident that the facility will be a significant net positive for the community and far superior to any other scenario.
Q: As it currently stands, what are the annual costs incurred by the Town while operating the Chestertown Marina?
A: On the operational side, the Marina has been operating at a break-even level or slightly in the black for the past four years. However, the annual bond payments for the Marina total approximately $143,000. For FY17, this figure is broken down as follows: $86,000 towards principal, and $57,000 towards interest. The bond has a twenty-year payment schedule and will be paid off in 2032.
Q: What happens if the Town is is unable to raise sufficient funds to rehabilitate the Chestertown Marina?
A: If the Town is unable to raise the funds to rehabilitee the Marina it is possible that the facility would need to close in the next three to five years as it could no longer operate safely.
Q: What are the ramifications for the Town’s finances if the Chestertown Marina closes?
A: If the Town is forced to close the Marina, the town’s annual loss on the property would increase significantly. The Town would still be obligated to make full payments on the bonds issued to purchase the property and to cover costs of some basic required expenses at the property. The Town would have to cover all of these expenses without any operational income from the Marina.
Q: Could the Town wait until 2022 and sell the property to a private developer?
A: In theory the Town could sell the property to a private developer beginning in 2022. In practice, there are significant problems with this scenario. If the Town is unable to address deferred maintenance at the facility, the value of the Marina in 2022 would be significantly less than the amount paid by the Town in 2012, resulting in a significant loss of capital. It could also take years to find a suitable buyer for Chestertown Marina.
Q: What sort of State Funding is available to help with the rehabilitation of the Chestertown Marina?
A: The most likely source of significant funding from the State of Maryland for the rehabilitation of the Chestertown Marina is an allocation in the Governor’s Capital Budget. The Town is currently seeking a $1.5 million allocation in the State’s 2017/18 budget.
Q: If awarded, would these funds be sufficient to complete the rehabilitation of the Chestertown Marina.
A: The Town has a significant grant outstanding to the U.S. Department of Agriculture (USDA) for the rehabilitation of the Chestertown Marina. The Town believes they have a good chance of receiving this grant in 2016-2017. If the USDA grant and State of Maryland Capital Budget allocation were awarded, these allocations would supplement existing grants that the Town has in hand from a variety of sources (Waterway Improvement Fund, Maryland Heritage Area Authority, Community Legacy Grant Program) and would provide almost all of the remaining funds required to complete the project.
Q: Does a Capital Budget allocation from the State of Maryland for the Chestertown Marina mean that taxes in Maryland will go up?
A: No. The State of Maryland allocates funds each year for capital projects in municipalities around the State. The Town of Chestertown must compete with other municipalities for these funds, but the funds themselves will be expended regardless of whether Chestertown makes an application or not.