Crains Chicago: Anchors away — far away! Lots of vacancies in Chicago harbors


From Crain's Blogs: Greg Hinz On Politics

Anchors away — far away! Lots of vacancies in Chicago harbors August 22, 2012





This is the time of year when Chicago's lakefront boat harbors ought to be packed, filled with those who enjoy getting out of the hot city and onto the cool water.

The boats are out there, all right. But not nearly in the numbers the Chicago Park District had hoped.

In a bit of bad timing that a lot of business owners can relate to, the park district opened a huge new, 1,015-slot harbor last spring, even as economic weakness continued.

The result is that harbors that once had a long waiting line have vacancies — lots of them. In fact, roughly a quarter of the 5,893 boat slips and other docking facilities the district offers are empty this summer.

At an average docking fee of $5,000 a year, the 1,450 empty slots are costing the district — and taxpayers — better than $7 million a year in revenue that it could use. Which raises an obvious question of how the district will pay fast-rising debt service on the $105 million it spent to build the new harbor at 31st Street.

"Where was their marketing strategy?" asked Erma Trantor, president of Friends of the Park, a watchdog group. "While it's not surprising that a new harbor should take a few years to fill up . . . this is not a good sign about the financial health of the park district."

The man in charge of figuring out what to do now is Michael Kelly, who took over as superintendent about a year ago.

Mr. Kelly concedes the numbers aren't very good. Not only did the district add 1,015 slots this year, but the number of returning boats is down about 50, with overall revenue from harbors off about $1 million, he told me.

Mr. Kelly notes that planning for the expansion began nearly a decade ago, with a decision to proceed in 2009.

"I think it was a wise investment," he said. "I still think that, in four or five years, we'll be at 80 percent capacity."

He points to one thing I wrote about last winter: the huge number of vacancies at the new winter dry-dock facility the district opened at Montrose Harbor. Those numbers will be much improved this winter, he predicts.

But to get to that 80 percent, Mr. Kelly hinted at changes that may draw some applause in the boating community, which has been quite critical of the district and the firm that operates its harbors, Encino, Calif.-based Westrec Marina Management Inc.

For one, he said, the district is "absolutely looking at" freezing mooring fees, which have rapidly climbed in recent years. It's also considering unspecified "incentives," he said — all designed to lure boaters back to the city from cheaper locations elsewhere along the lake.

In addition, the district is studying whether it can cut a deal for naming rights for its harbors, which now have only geographic titles.

Citibank Belmont Harbor? American Airlines Marina at Monroe Street? Why not?

One other biggie: Westrec, a frequent target of boaters' wrath, could be on the way out when its current management deal expires in two years.

"They're doing a good job, but they've been the only really serious bidder in recent years," Mr. Kelly said. "(Having) another serious bidder would really help the taxpayers."

I'll bet that gets some notice in Encino. " I need to do what I need to do to keep the market healthy," Mr. Kelly concluded.

It's hard to argue with that. But with debt service on the new harbor scheduled to kick in at $4.6 million next year and rise to $6.7 million in 2014, as my colleague Shia Kapos reported last year, he'd better do something.

Follow Greg on Twitter at @GregHinz.

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Read more: http://www.chicagobusiness.com/article/20120822/BLOGS02/120829921/anchors-away-far-away-lots-of-vacancies-in-chicago-harbors#ixzz24Iy4dHcv

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