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Boaters threaten to jump ship if boat tax re-instated

Last week the Town Council held a special meeting before its regular meeting to hear arguments from Marina owners and boat owners, opposing a tax hike on personal property tax for boats. At present the personal property tax in Colonial Beach for boats is 1 cent, allowing the tax to remain on the books but keeping the town from collecting. Council members are wrestling with the idea of re-instating the boat tax at a rate of $2.99 per every hundred dollars of value.

Carey Geddes president of the Colonial Beach Chamber of Commerce spoke first, saying, “Several events in the recent past have presented a challenge to Marina owners; the Marina fire, Hurricane Isabel and Ernesto.  Boat owners have concerns with rising fuel costs, maintenance and other expenses concerning boat ownership. They have their eyes and ears pointed towards their overall cost of operating their boats.


“The hottest topic among Marina owners and operators, and businesses alike is personal property tax in the locality where their boat is berthed and operated.”

Geddes read a statement saying, “The CB chamber of Commerce, 130 members strong including Marina owners and other businesses, is strongly against implementing an increase in the personal property rate above the current level of 1 cent per 100 dollars of value. We believe any increase will result in boats leaving the Town of Colonial Beach for other marinas that are more tax friendly.  The loss of these boats will have a devastating effect on Marinas, the restaurants, and other businesses within the Town of Colonial Beach.”

Gary Ralston, operator of Monroe Bay Townhome Community Marina, read on “Open letter to the Town Council.”

In the letter it states that the number of boats in Colonial beach has increased by 95 since 2004 and that records show that the modest increase in the quantity of boats registered in the Town has brought about a tremendous increase in the quality of boats that have chosen this town as their home.  He refers to a model study that was later presented in more detail by Kyle Schick saying that figures will show a severe negative economic impact on the Town if the boat tax is revitalized.

The letter signed by all Marina Owners in Colonial Beach accuses the Town of having a reputation of not being business friendly due to its support of high tax and licensing policies and constantly changing climate concerning planning and zoning.

In conclusion, the letter states that bringing back the boat tax would stifle the growth and success of marinas by causing boat owners to move their boats to more boat friendly marinas and towns.

The group presented letters throughout the various packets of information from boat owners threatening to move their boats if the boat tax is revitalized.
Kyle Schick, Owner Operator of Colonial Beach Yacht Center, and one of the only two Marinas listed with the town as offering boat repair and maintenance, turned the discussion from opinions to statistics.

Schick began his argument by being understanding of the town’s financial dilemma but quickly turned on the very powers that will decide the fate of Marina owners ability to attract boats by means of eliminating personal property tax on boats.

Schick began by saying, “I understand the town is experiencing a shortfall in its budget, I do not know if the shortfall is due to decrease in funds from the State, or decreased revenue from local sources, [this is where he turns on town officials] or poor financial management by certain government groups in town, but I know the shortfall is not directly or indirectly related to the Council elimination of personal property tax on water craft. In fact the town has experienced increased revenues.

“We’ve had a 24% increase in the number of boats and 175% increase in the value of boats.” Schick continued.

Schick argued that the Town Councils motivation for raising the personal property tax on boats is to recover lost revenue and balance the budget.  “The town needs to look within itself to solve its budget shortfalls and if the town cannot eliminate expenses, they should reduce services to citizens. If the public wants to keep the present level of services then the town's systems should pay the cost to operate it. Not the people that own boats, and certainly not the marine industry.”

Councilman Kennedy confronted Schick after his presentation, asking him, “What services should we cut?

 Schick responded by saying, “Raise taxes.”

Schick said that one group such as boat owners should not be taxed.  He referred to the fact that the public pays taxes at restaurants, at marina’s, etc. and argued that, “The additional tax that is put on boaters for personal property is not the same as paying your fair share.”

During his presentation Schick referred to a summary created from statistical data collected by the Recreational Marine Research Center at Michigan State University in 2005. A model was created by plugging in estimated data from the local area to generate a projected picture of what boaters spend. The data put into the On-line Boating Economic Model was derived from an informal survey of marinas (due to the short notice), according to the report Schick was referencing.

The summary is projected using the following data; 490 boats kept in the town limits of Colonial Beach in 2008, 264 of those kept at Marinas, 80 at private docks and 146 kept on trailers at private residences.

The Model projects that boaters spend an average of $2,857 per year on boating trips and $5,306 per year on craft-related expenses. The model projects that the total spending of boaters in Colonial Beach is over 4 million dollars at local businesses.

The model also projects that boaters on average spend 2.6 million dollars annually in upkeep and maintenance of their craft, not including fuel. The largest breakdown in this category is 20% on repairs.

If boaters are in fact spending that repair money “in Colonial Beach” then the two businesses that offer boat repair and supplies would have reported a combined revenue of at least $520,000 dollars on repairs alone, according to figures in the model.

According to the summary, 19% of that 2.6 million is spent on slip fee and storage. The Summary states that out of the 490 boats kept in Colonial Beach 264 are kept at marinas. With 7 marinas it is difficult to project with this model just how much revenue could be generated by slip fees since the survey covers 226 boats that are small enough to be stored on trailers or are kept at private docks.

Thomas Murray, of the Virginia Institute of Marine Science, introduced a study from Hampton Virginia to help shed light on the impact of property tax on boats.
In 2002, Hampton dropped its boat tax. Six years later Hampton revisited the no-tax situation which spurred an economic impact study in Hampton.

The study resulted in the following findings: Of the 55 million dollars in revenue from boating, 26 to 27 million dollars from non-residents was introduced into the city' revenue.
According to the Hampton study, 80% of economic impact comes from 20% of boaters who own larger boats, a group that would be hit hardest by a personal property tax on boats because their upkeep and maintenance is higher due to the larger size of the boat. Murray reports that these owners are more sensitive to boat tax policies and assessment methods.

According to Murray, the Hampton Study showed a marked increase in the number of boaters to the community after the boat tax was lifted in 2002 and showed increase revenue in boat related and other expenses. Mr. Murray reported that the study determined that no-tax on boating was fiscally responsible for the City of Hampton.
Although the Colonial Beach nodel projects powerful statistical data to support the fact that boaters spend a lot of money in the town, the numbers are not specific to this locality. Localities in which the data was collected could be quite different in the services available to boaters, quality of fishing, quality of water for swimming and skiing as well as availability of land-based dining and entertainment.

The Hampton study gives impressive figures as well but it must be noted that the study reported that Hampton is comprised of 72 square miles, of that 55 square miles are land and 17 square miles are water. The town of Colonial Beach is comprised of 2.6 square miles of land and 2 tenths of a mile of water.

There is no doubt that continuing the elimination, the tax on boats would be an incentive for boat owners to keep their boats here. The questions remain however: is the town of Colonial Beach big enough and well equipped to support a large boating community? Will the environmental impact on the town of Colonial beach be offset by the spending of boaters without a boat tax to absorb the cost of water pollution, road wear and tear from boat trailers and vehicles, and any cost of clean up by visitors?

One fact is certain, the boat tax issue is far from being decided. The town council listened to the arguments and facts presented by marina owners, boat owners and citizens. They no doubt have a long road ahead of them before decisions are made. The Town of Colonial Beach is faced with more than just whether or not to reinstate the boat tax, but how much is the town, marinas and other businesses willing to invest to keep boaters here? This issue should not end with the boat tax.

If you build a stadium and let the public come for free, they will come, but if there is no team to play resulting in no entertainment, they will leave.

Linda Farneth

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