Watch the Marina Reserve Fund. It’s Your Money

By Harry Hutton
BOA Advisory Board

There ia surplus being generated in the Marina Fund, to the tune of about $6.5 million for this fiscal year. The existence of a surplus, its magnitude and its management deserve some discussion.

When the “square footage” method of apportioning slip fees was set in 2006, the plan was, and remains, to set aside about 10% of the slip fee revenue for future replacement construction. The rationale for this was that the amounts reserved for future building would eliminate or at least reduce the need for borrowing, as is necessary now, and we would be on a more pay-as-you-go basis rather than be constantly paying for “debt service”, which is, like a mortgage payment, part principal, and the rest being interest.

When the Marine Advisory Commission approved the new plan, the “Reserve Fund” was in a slightly negative balance condition, but with budgeted surpluses, the Fund will have recovered to about $8 million at the end of this fiscal year. This is a significant amount of money, it is in a reserve account, and it will grow each year.

The question arises: shall we spend the money now on the ABM rebuild (when it gets started), or continue to accumulate funds for future construction and spend it on rebuilding the new marina we will need in the year 2055 when our planned 2015 marina falls apart? Good arguments can be made for spending the reserve now for the rebuild of the Alamitos Bay Marina. By spending the money now, as a down payment, we reduce the amount of the necessary bond issue, and this will lower future interest and principal payments. In addition, the reserve fund spending power will be subject to the same inflation that plagues all economies, so it is worth much more now than it will be 40 years from now. Finally, by spending the fund money now, we avoid the possibility that in future years, it will be spent on something else.

BOA will be monitoring the progress of the Reserve Fund, since it is being created by slip fees that could be lower without surpluses, and to some extent by departmental savings pledged in upcoming budgets. It is important that we continue to do so. It is also important for you, as an individual boater and slip holder, to know that this Fund exists, and how it is being used. It’s your money.