Cerino Reports on State of Town and Marina

Mayor Chris Cerino delivered the 2018 Report of Municipal Affairs at the Jan. 22 meeting of the Chestertown Council. It was an animated performance, enlivened by a slide show of street scenes, new construction, and crowds at local festivals.

The full report is online at the town website.

Cerino said the town is in a “strong financial condition,” with $15,621,447 in total assets over liabilities. The increase in net assets comes from a major increase in capital grants, most of which were applied to upgrades at the marina. Grants almost tripled, going from $1,089,532 in 2017 to $2,981,663 in 2018.

This increase in total assets is despite, at the same time, the fact that the town’s revenues from property taxes, income taxes and shared revenue from the state of Maryland decreased. The major reason, Cerino said, was the continuing effects of the Great Recession, which depressed the local tax base beginning in 2008. In response, the town took “the difficult step or raising taxes for the first time since 1991.” He said the council hopes that the raise from $0.37 to $0.42 per $100 assessed value, along with improving property values, will provide sufficient revenues to cover expenses for “a meaningful period of time.”

The town will also continue to ask Kent County for a tax differential to recognize services, such as police protection, road maintenance, and planning, that town residents are charged for in county taxes even though the town provides them within its jurisdiction. “Our taxpayers pay taxes for these services twice,” Cerino said. The county formerly provided a lump sum payment in recognition of this discrepancy, but it stopped payment in 2014.

In addition, Cerino asked the county to apply its hotel tax to Air B-and-Bs and other informal room rentals that do not currently pay the tax. In addition to depriving the county and town of tax revenues, these businesses adversely affect the tax-paying hotels and B-and-Bs in the community.

Among achievements for the year, Cerino listed extensive improvements and repairs to the town-owned marina, including new bulkheads and piers, a new marina building, and raising the grade of the parking lot by up to two feet to combat periodic flooding. Along with Washington College’s capital improvements on its waterfront property, these efforts significantly upgrade the town’s riverside presence, which could lead to an increase in tourist revenue, an important ingredient in the town’s economy.

Cerino also noted new business investments in the town, including the Dixon Valve business campus north of town, expanded facilities at LaMotte and Shore Distributors, and the reopening of the local movie theater by Chesapeake Movies. In addition, he listed improvements to the Margo Bailey and Luisa Carpenter parks, and state approval of Phase IV of the Rail Trail, which would extend it to Foxley Manor.

The town negotiated a new set of rules for the farmers’ market, following the death of long-time market manager Owen McCoy. Cerino also noted the importance of the local hospital and the council’s concern over its status and continued service to the community.

Among goals for the coming year, Cerino listed keeping taxes at their current level; completing improvements at the marina and developing a management structure to operate it; protecting the town’s drinking wells “at all costs;” repairing and repaving streets; improving and expanding recreational programs; and working to retain services at the hospital.

Cerino also gave a detailed update on funding for the marina, particularly private donations to augment the state and federal grants that have provided most of the funding to date. “There’s been some really great news actually on the marina fundraising front,” he said. After a recent visit to the marina with him, representatives of the Chesapeake Bank and Trust donated $5,000 to the rebuilding project, with the possibility of another $5,000 in a year’s time to get the organization’s name on one of the nine pillars at the front of the marina building. Another $50,000 came from the Ingersoll-Stevens family, in exchange for naming the plaza next to Scott’s point for a loved one.

And “best of all,” Cerino said, an anonymous donor pledged $250,000 to name the marina building. “So this is to be,” Councilman Marty Stetson joked, “the Anonymous Building?”  “This a little bit embarrassing for me; this is really not my style,” Cerino said. He said the donor made it a condition of the pledge that the building be named for the Cerino family. “It’s going to be kind of weird to be alive and walking around with my name on somewhere…” he said.

As a result, all work to date – including another layer of paving to be installed in the spring – is paid for. While the work was ongoing, the town had dug into a line of credit to keep contractors paid, but the donations allowed the town to pay the credit “almost down to zero,” Cerino said. “I can’t thank those private donors enough,” he said. In addition to paying down the line of credit, they allowed the town to put up one-to-one matches for several state grants that required the matches to activate them. “Without those donors, we would have like one dock out there,” he said.

Remaining work includes repairing a contractor’s error on the boat ramp that leaves its lower end above the water at extreme low tide. As a result, launching boats in low tide is very difficult and can damage boat trailers. “It’s not cheap to fix,” Cerino said. He said a new contractor has been lined up to do the job, for about $120,000. The work is scheduled for March, and if it’s not completed at that point, it may have to wait until the end of the busy season. In that case, Cerino said the town might have to erect a sign advising boaters not to use the ramp at low tide.

Also, fuel lines need to be extended to the end of the fuel dock. Additional paving needs to be laid, and the large metal shed on the property needs to be removed. Cerino said a local farmer had agreed to take away the building at no cost to the town. “His machinery’s already down there,” he said. And setting up the office for the marina remains to be done. Total cost for all those projects is estimated at $200,000, Cerino said.

After some discussion of alternatives to finance the remaining work, including the possibility of adding onto the USDA loan and using the town’s line of credit, Cerino turned to the question of how the marina should be managed. He said that Matt Tobriner, who was a key figure in the waterfront study committee that led to the town’s purchase of the marina, had put together an informal group to study the marina and its management. Cerino said the group, which he described as having “some really good brainpower,” was willing to continue its work as long as the town felt its advice was beneficial.

Cerino said the group suggested looking into working with a management company that specializes in marinas. He said the town had talked to representatives of three marina management groups, two of which weren’t interested because the marina was too small for their business models. The third company charges $4,000 monthly, plus a percentage of the marina revenues, to bring in their own manager to run the facility. The advantage of employing that company is their ability to advertise widely and provide experienced salesmanship, potentially increasing the business at the marina. “I see how they make money. I don’t really see how we make any money, other than to get it off our hands,” Cerino said.

The other approach is to hire one year-round fulltime manager, who could bring on seasonal workers, possibly high school or college students, in the months of greatest demand. “That’s basically what the town has always done,” Cerino said. He said the study group agreed that was probably the path that made the most sense for the town. “I think we need to maximize our revenues. The key to me is finding that person to take pressure off (the town’s financial officer) when it comes to doing the books,” he added.

Cerino summarized the study group’s other recommendations, including a program to market the marina. He noted that several of the town’s regular festivals, including Tea Party, Downrigging and the Jazz Festival, already bring good business to the marina. “The challenge will be marketing the marina for, say, July 13, when there isn’t a big event.” The group also suggested naming the facility “The Port of Chestertown,” to distinguish it from other marinas offering repairs and other services the town doesn’t plan to provide. An active website was also suggested. Cerino said the town’s webmaster would be involved. A particular advantage would be the ability of boaters to reserve docking slips online – he mentioned an online company specializing in that service. Also, a closer relationship to Main Street Chestertown would be beneficial in marketing the marina. A christening event, possibly around Labor Day, to honor the donors and launch the facility was also suggested.

On a more practical level, prospective visitors need to be aware of the services available: electricity and water at the docks, refueling facilities and waste pump out, winter storage and launching facilities, security arrangements, and a travel lift. He said it’s especially important to make available basic information about the town in the marina office, with rack cards for all local businesses and a street map showing them. “We need to basically get all this out there,” he said. He said he’d be willing to work with the website manager to provide photographs and other information. “We can set something up in a week that gives the image that this is a place people want to come to.”

Ingersoll said he had put together a preliminary budget, and that the figures suggested that paying some $50,000 to an outside firm to manage the marina was not in the town’s best interests. He also noted that leasing the facility to an outside management firm might expose the town to taxes that it doesn’t currently pay. “It would be the straw that broke the camel’s back,” he said. He also noted that the town would not be able to give discounted slip rates to organizations like Shore Rivers and the Maryland Department of Natural Resources that use the facility to do important work on the upper river. He said the town should be able to find an experienced long-term manager if it advertises the position. “There’s a lot of talent around that could do a really good job for somebody.”

“We’re getting a lot of great free press,” Cerino said. He noted that Chestertown will have one of a handful of essentially new marinas nationwide. He also mentioned a possible festival on “one of those random weekends I was talking about” that he said would bring in “the kind of people you want to bring into your marina.”

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