CITY OF VANCOUVER

ADMINISTRATIVE REPORT

 

Date:

October 20, 2003

 

Author:

Ken Bayne

 

Phone No.:

604-873-7223

 

RTS No.:

03090

 

CC File No.:

113/1757

 

Meeting Date:

December 4, 2003

TO:

Standing Committee on City Service and Budgets

FROM:

General Manager of Corporate Service / Director of Finance

SUBJECT:

2004 Business License Fees: Fees for Live-aboard Boats

RECOMMENDATION

Boat Length at Waterline

Proposed 2004 Live-Aboard Fee

<= 21 feet

$789

> 21 feet and < 26 feet

$954

> 26 feet and < 31 feet

$1,073

>31 feet and <37 feet

$1,225

> 37 feet

$1,351

COUNCIL POLICY

It is Council policy that fees and charges be established on the basis of the cost of providing the associated services or at market levels where the services are provided in a market environment.

PURPOSE

The primary purpose of this report is to seek Council approval for an increase in the fees charged under the License Bylaw to marina operators that host live-aboard boats at their marinas. However, the secondary purpose of the report is to report back to Council on the fees paid by users at Heather Marina. This follows from Council's request arising from the City Services and Budget Committee meeting on February 27, 2003.

BACKGROUND

The City of Vancouver owns two marinas, both situated in False Creek and managed by the Park Board. The Heather Civic Marina is an asset of the Property Endowment Fund (PEF) and has 252 berths, including 27 live-aboard berths. Burrard Civic Marina is a capital asset in the care of the Park Board and has moorage for 471 boats, with no live-aboard berths. Moorage and other fees and charges are set annually by Council and the Park Board, respectively. Because the marinas are generally considered to be "business" rather than "recreational" facilities, moorage and other fees are generally set at or near market levels such that operating expenses are covered and net income is earned.

Together, the City's two marinas account for something less than 50% of the moorage available in False Creek. Heather and Burrard are just two of nine licensed marinas in Vancouver, a much larger number in the region. Like those who moor boats at other marinas, customers at Heather and Burrard Marinas pay a variety of charges associated with their use of the facilities. Some of these fees, such as annual moorage fees, marina maintenance fees and utility fees are set by the marina owner. In addition, for those marinas in the City of Vancouver hosting boats whose owners' live-aboard their vessels, the marina operator also pays a Live-aboard License Fee under the License Bylaw. While this fee is charged to the marina operator, it is assumed this fee is passed on to individual boat owners.

The following describes the fees and charges that apply generally at marinas in the area and specifically at Heather Marina.

1. Moorage Fees

Moorage fees are the rent the boat owner pays for the space his boat occupies in the marina. These fees are generally set as a monthly fee per foot of space used. Industry practice is to base the fee on the longer of the boat length or berth length occupied. For example, at Heather Marina, the basic moorage fee is $8.02 plus GST per foot per month, based on the longer of boat or berth length. It is also typical at marinas in the area that the moorage fees are payable annually, in advance. At Heather, the moorage fee year runs from April 1 to March 31.

Moorage fees at marinas throughout the Lower Mainland vary based on a number of factors, including the condition of the marina, its location and the availability of parking and boat storage space. In addition to being sensitive to the market, marina operators also take demand for space in their marinas into consideration when setting fees. A summary of 2003 moorage rates at several area marinas is included in Appendix 1. Based on typical boat lengths, the following annual moorage fees would apply at selected marinas.

Marina

21 feet

26 feet

31 feet

37 feet

Heather Marina (False Creek)

$2,021

$2,502

$2,983

$3,560

Burrard Marina (False Creek)

$1,709

$2,406

$2,868

$3,423

False Creek Marina (False Creek)*

$2,016

$2,496

$2,976

$3,774

Thunderbird Marina (West Vancouver)

$1,711

$2,658

$3,617

$4,792

* Live-aboards at the False Creek Marina also pay a monthly charge of $100 and a one time membership fee of $3,000.

As noted, moorage rates at Heather Marina are currently $8.02 per foot per month. These fees, along with a number of other less significant fees and charges (electricity, elevator fees, etc.), generate net income for the PEF of approximately $300,000 annually. However, it should be noted that, unlike privately owned marinas, Heather Marina does not pay property taxes or specifically provide for depreciation in its operating costs.

It has been Council policy to maintain Heather Marina moorage rates near but not ahead of the market rate established by other marinas. As a result, it has been the practice to consider annual increases in the rate in February each year to coincide with increases at other area marinas. Rates for 2004 will be before Council for consideration in February 2004.

2. Moorage Fee Surcharge: Live-aboard Boats

Boat owners who moor and live aboard their boats at Heather Marina pay a surcharge on their moorage of approximately 5%. This surcharge reflects the fact that live-aboard owners pay their moorage fees monthly rather than on a prepaid annual basis, thereby depriving the marina of investment income that could otherwise be earned.

In 2003 this surcharge was $0.38 per foot, per month, increasing the basic moorage fee to $8.40 per foot per month for live-aboard moorage versus $8.02 per foot per month for general moorage.

The live-aboard boat owners do have the opportunity to avoid this surcharge by prepaying their moorage fees on an annual basis like other owners in the marina. However, despite this opportunity, at this time all live-aboard owners pay their moorage fees monthly.

3. Heather Marina Maintenance/Upgrade Fee

The 27 live-aboard berths at Heather Civic Marina pay a surcharge of $26.50 per month (exclusive of GST), generating approximately $8,850 annually. This fee was implemented at the time the marina accepted live-aboard boats and was intended to cover the costs of installing and maintaining facilities specifically provided for live-aboard owners, including telephone and electrical lines, sewage and water systems, and laundry room. In addition, the monthly fee provides an offset the user fees paid by the marina for sewer These costs are appropriately paid by live-aboard boat owners because these facilities were provided exclusively for them.

This maintenance fee has been in place, without adjustment, since live-aboard boats were permitted at the marina. Residents who live aboard their boats have argued that this was supposed to have been a time limited charge which was to have ended once the initial investment was repaid. However, while the original capital costs may have been recovered, ongoing maintenance of these facilities, annual costs specific to the live-aboard boats, such as user fees for sewer ($7,717 in 2003) and water ($14,296) consumption and the eventual costs of replacement argue against the fee being dropped.

4. Business License Fees: Live-aboard Fee

Since 1974, the City has levied a business license fee on marina operators for each live-aboard boat moored at their marina. The fee is levied under provisions in the License Bylaw. The license fee is charged to the marina operator rather than individual boat owners because it is the marina operator that is licensed to host live-aboard boats, not the individual boat owners. In fact, the City does not maintain a record of individual live-aboard owners. While the fee is directed at the marina operator, it is assumed that these fees are passed on to the individual boat owners.

Currently there are 113 live-aboard boats in four marinas in Vancouver that pay this fee, including the 27 live-aboard boats at Heather Marina. For 2003, the following fees were billed to marina operators for live-aboard boat they hosted at their marinas:

A more detailed review of the live-aboard fee is provided in the Discussion section below.

5. Summary

Based on these charges, live-aboard boat owners at Heather Marina pay the following fees and charges annually:

 

26 feet

31 feet

37 feet

Moorage ($8.02/ft./mo.)*

$2,502

$2,983

$3,560

Moorage Surcharge (5% of moorage)

$125

$149

$178

Marina Upgrade/Maintenance Fees ($26.50/month)

$318

$318

$318

Live-aboard License Fees (based on fees payable by the marina operator)

$878

$987

$1,127

Total Annual Charges

$3,823

$4,437

$5,183

As noted, the first two fees are paid to compensate the marina for the occupancy of space in the marina, the third fee relates to the live-aboard specific costs at the marina and the fourth fee is payable by the marina operator as a business license fee to the City.

DISCUSSION

The Discussion section deals with the primary purpose of this report, the adjustment of the Live-aboard License fee for 2004.

2004 Live-aboard License Fees

The purpose of the Live-aboard License fee is to ensure that those marina operators who permit residents to live aboard their boats contribute to the provision of public services in a manner similar to those who occupy assessable real property and pay property taxes. These charges are not intended to cover any of the direct costs associated with operating a marina.

As there is no assessable value for live-aboard boats1, the basis for establishing the marina operator fees for live-aboard boats was the property tax bill paid by "comparable" condominium properties in the False Creek area, where most live-aboard boats are moored. While this is problematic in that there is no real comparison between either, the accommodation provided in a condominium and that provided on a boat or between the value of a condominium and a boat, there was recognition that no matter where the resident lived, they consumed public services and should share in the costs. The assumption in levying this license fee is that marina operators will pass the license fee through to the live-aboard owners.

In order to provide some proxy for assessed value, the Council of the day agreed that the fee should be calculated on the basis of the waterline length of the boat. Finally, because these fees are intended to be a proxy for property taxes, Council agreed that the most appropriate way to adjust the fee annually would be to base the increase on the change in the property levy paid by all residential properties. This methodology has been utilized since 1996 on an arrears basis, where the License fee increase in any year is equal to the nominal residential tax increase in the prior year.

Live-aboard fees were not increased in 2003. However, the expectation is that the foregone 2003 increase would be applied in 2004. This will result in an increase of 8.8% (4.0% for 2003 and 4.67% for 2004) over the 2003 fees.

For several years, a number of residents who live aboard their boats have argued that the fee charged to marina operators for live-aboard owners discriminates against them compared to residents who live in similar accommodation. The argument is that, on average, the fee is higher than the property taxes paid by comparable properties, primarily because Live-aboard fee does not make allowance for the Homeowners Grant that could reduce the comparable condominium property tax bill paid by up to $470 ($740 for owner-occupiers over age 65).

The basic premise in establishing the license fee for marina operators that host live-aboards is that those who live in the City and place demands on public services should contribute to the cost of those services, irrespective of whether they live on land or water. The live-aboard community does not argue with this premise and are prepared to pay their share of the cost of public services by reimbursing marina operators the cost of their license fees.

Moreover, the community agrees with the City's view of using comparable properties as the basis for the fee. As noted, "comparable" has been taken to mean the property taxes paid by condominium properties in the False Creek area. Between Cambie and Granville and from 6th Avenue south to Broadway there is a range of condominium properties and a wide range of values. As a result property taxes can vary significantly and there is no obvious translation of these charges into a fee applicable to live-aboards.

Staff have looked at a number of properties in the False Creek area in an attempt to identify an appropriate level of marina operator license fees that would be appropriate for live-aboard residents. Many of these properties were identified by live-aboard owners in response to a discussion with staff. There appears to be two general ranges of value for condominium properties in the area: those in the range of $100,000 to $125,000 of value (2002 values) and those in the range of $180,000 to $240,000 of value. It is assumed these reflect smaller one bedroom units on the low end and higher valued one or two bedroom units on the higher end. There are properties of higher value, however, the purpose is to identify typical properties, not properties at the extremes.

Using these value ranges, annual property taxes would range from approximately $700 to $1,500. This compares to current marina operator license fees based on live-aboards that range from $725 (for boats under 21 feet) to $1,234 (for boats over 37 feet).

The live-aboard residents believe that the fee should take the Homeowner Grant into consideration since it is available to condominium owner-occupiers. At the outset of the live-aboard program, the City took the position that the Homeowner Grant is a provincial program that has no impact on the overall revenue received by the City because the Province reimburses the City the amount of the credit provided to property owners on the property tax bill. If a benefit similar to the Homeowner Grant was extended to live-aboard boat owners, the City would not recover an equivalent amount from these "properties" as it does from real property, even though the contribution from the latter is paid, in part, by the property owner and, in part, by the Province. While the live-aboard owner would pay an amount comparable to the net taxes paid by property owners, Council would be funding a provincial program, the total amount received by the City would be less and the difference would be shifted to other taxpayers.

Implementing a grant program similar to the Homeowner Grant would be administratively and legislatively difficult because:

In establishing license fees for marina operators for 2004, Council has two options:

The fees arising from these options are shown in the following table:

   

Possible 2004 Live-aboard Fees

Boat Length at Waterline

Current
Live-aboard Fee

Option 1

Option 2

<= 21 feet

$726

$789

$319

> 21 feet and < 26 feet

$878

$954

$484

> 26 feet and < 31 feet

$987

$1,073

$603

> 31 feet and < 37 feet

$1,127

$1,225

$755

> 37 feet

$1,243

$1,351

$881

Staff recommend that Council adopt Option 1 above since it ensures a comparable level of support for public services from "properties" on land and water. Providing a benefit similar to the provincially funded Homeowner Grant to those who choose to live on their boats is not recommended because the cost would essentially be transferred to other taxpayers rather than the provincial government.

The marina operator license fee based on the number and length of occupied live-aboards currently generates revenues of approximately $120,000 based on the 113 live-aboard boats for which permits were issued in 2002. Adoption of Option 1 would result in increased revenues from an 8.8% increase. Adoption of Option 2 would result in a net reduction in revenue of approximately $50,000, a change that would be reflected in the 2004 Operating Budget.

Finally, as noted in this report, the live-aboard fee is payable by all marinas that host live-aboard boats in Vancouver, not just Heather Marina.

CONCLUSION

To ensure that owners who live on their boats at marinas in the City provide a comparable level of support to the provision of public services, it is recommended that the Live-aboard License fee payable by marina operators that host live-aboard boats be increased by 8.8% to reflect nominal increases in residential property taxes in 2002 and 2003.

* * * * *

MARINA MOORAGE RATE COMPARISON - AS AT January, 2003

LOCATION

2003 RATES

% Change from 2002

Heather Civic Marina
- Vancouver

$8.02/ft./mo. (Recreational)
$8.40/ft./mo. (Liveaboard)

2.4%
2.4%

Burrard Civic Marina
- Vancouver

$6.78 /ft/mo. (21 ft. and under)
$7.71/ft/mo. (22 ft. and over)

4.3%
3.0%

False Creek Marina
- Vancouver

Members only:
$8.00/ft/mo. (36 ft. and under)
$8.50/ft./mo. (over 36 ft.)

$0.80/ft/day + electricity (Transient)

Liveaboards: pay member moorage rates + 100.00/mo. + license fee + membership fee (presently $3,000)

No Change

Spruce Harbour Marina
- Vancouver

$8.00/ft/mo. (all sizes)

Liveaboard: $5.15/ft/mo. + license fee + Co-op (presently $41,783.00)

No Change

Pelican Bay Marina
- Vancouver

$12.00/ft/mo. (46 ft. and under)
$9,000.00/yr. (over 46 ft. to 65 ft.)

  

Mosquito Creek Marina
- North Vancouver

$7.43/ft/mo. (24 ft) (2002)
$7.76/ft/mo. (26 ft) (2002)
$8.32/ft/mo. (30 ft) (2002)

  

Thunderbird Marina
- West Vancouver

$6.79/ft/mo. (21 ft.)
$8.52/ft/mo. (26 ft.)
$9.54/ft/mo. (30 ft.)
5% discount allowed if paid in full before March 15

4%
3%
4%

Note: * all rates exclude GST

cs20031204.htm

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