Mayor's Message - IOP Marina Update

June 30, 2022

There have been a number of on-line discussions, meetings and conversations about what’s happening with the existing marina operator’s request for assignment of the leases to Morgan Creek Marina, LLC. I thought it might be helpful to provide some information to help explain the latest. I understand the frustration of not having all available information and feeling like you are in the dark. However, there have been two discussions/presentations by the new potential operator made to Council outlining his plans for our marina that you can find at iop.net under recent City Council meetings.

The first thing to understand with the marina lease transfer is that while the City owns the marina, it DOES NOT control this property.  The marina operations and the store are controlled by the existing contractual arrangements with the current leaseholder until 2045, unless they defaulted and failed to cure any default under the terms of the lease.  What this means is that the City cannot re-write or change what is already in place unless the City and the leaseholder mutually agree to a change. Unilaterally writing a new lease or demanding material changes is simply not possible.  

Accordingly, we cannot demand that any changes to the lease be made to grant the transfer.  The only option we have is to get consent from the new tenant to change the lease.  

So, if the new tenant transfer does not damage the city’s existing position, we must grant the transfer.    

The good news is that the new potential tenant has agreed to, as part of the lease assignment, release current and existing lease control over the “shared parking” which is the middle lot on the waterway side of the boat ramp.  This would be a tremendous win for all residents because the city would control that lot, make it available for free for residents and better enforce the current regulations.

 Also, the new tenant has asked that the existing lease language on alcohol consumption be clarified and for on premise alcohol consumption to be allowed.  The lease as written states that the marina can sell beer and wine.  The current lease does not expressly allow the consumption, as required by City Code, and it is silent as to whether the sale of beer and wine are package only or whether the marina can sell single servings. The current tenant does not have an on-premises consumption license from the state.  As a practical matter, incidental on site consumption has always happened on the back deck and the new tenant simply wants to continue on-site consumption and be in compliance with the law.  Any material changes to the building, kitchen, service area or deck requires the approval of Council.  This is a good thing, because the city is currently on notice that on site consumption is happening and for 30 plus years has never tried to stop it.  This “pattern and practice” potentially creates liability for the city that will be mitigated once the new tenant assumes the lease.

Some of the other changes to the lease are minor, just clarifying language from a poorly drafted document.  If the lease is transferred, the new tenant has expressed a committed interest in entering a new lease negotiation with the City at which time the City and residents can work collaboratively with the new operator to explore mutually beneficial long-term changes to the marina. These changes could include transferring the City’s future obligations for maintenance of the docks to the marina operator and wholesale changes to the existing parking lot scheme and design.

Where does this leave us?  In my opinion, the city is getting a big win by getting control of the middle parking lot and will be able to properly police it, enforce parking regulations, provide free parking, as well as garner free launching and dedicated dry storage for residents.  In return, we are legally clarifying the on-site consumption of beer and wine, which has been happening since the marina was first established, which has the effect of transferring the city’s liability for that consumption to the new tenant.

Below is a summary of the current draft of the amendments compared to the original lease.  I hope this is helpful.

1. The current lease requires the tenant to provide IOP resident launch rates of $5. The proposed amendment would change that to free launching for residents. The current lease requires the tenant to provide dry boat storage. The proposed amendment would maintain this requirement but additionally require that no less than 12 dry boat storage spaces be reserved for IOP residents. The current lease does not include requirements for a specific amount of trailer parking spaces to be provided and the proposed amendment does not change this.
2. The upland area where the 16 exclusive resident parking spaces are currently located is under the City’s exclusive control and not encumbered by any leases. As part of the assignment, the potential new operator has offered to release the control over the shared parking lot to give full control to the City to manage and enforce. This area would be available to the City to offer free vehicular and trailer parking for residents, in addition to the existing 16 spaces.
3. The proposed amendment establishes that “Tenant shall use commercially reasonable efforts to provide IOP residents with priority opportunity to rent publicly available boat slips at standard rates to be determined by Tenant in its sole and absolute discretion on an as-available basis (must present valid evidence of IOP residence).” The current lease includes requirement of boat slip rental fee of $2 per linear foot. The proposed amendment would remove this requirement and leave the boat slip rental fee structure to the tenant.
4. The IOP Public Dock and upland area where the 16 resident only parking spaces are located are not included in any marina leased premises and the proposed amendment would not change that. These amenities would remain under City control.
5. The current lease has an assignment/subleasing clause that allows a transfer of the lease with City consent. These sections are maintained but enhanced in the proposed amendments, which establishes that any transfer of 50% of more of the partnership requires City approval.
6. The proposed amendment would expressly authorize the operation of a boat club and other commercial operations that if exceed thresholds would require Council approval. These thresholds safeguard the marina to ensure a mixed-use aspect to the marina. The current lease does not set any limits on the relative size of commercial operations, it merely requires approval of them. Current marina store lease requires the premises to be used for a convenience food store, deli food, beachwear, souvenirs, fishing supplies, and frozen bait.
7. The current marina store lease allows the sale of beer and wine in the marina market store. It also allows indoor seating for 12 people for eating.  The potential new tenant is asking for express approval of on-site consumption of beer and wine in the leased premises and the outdoor deck until sunset. No bar, bartenders, bar tabs, or sale of liquor would be authorized.

We are looking to schedule an open forum meeting with the new potential marina operator on July 11^th at 5:30 p.m. at the Rec Center. At this session we will allow the new potential marina operator to present his vision for our marina, answer questions that residents will submit prior to the meeting and allow a time for additional resident questions/comments.

Phillip Pounds, 

Mayor