Sean Scarborough would shake his head when he passed by the dilapidated marina on Bay Avenue and Second Street as he drove home in Ocean City.
“It just kind of bothered me to drive by and see this big mess,” said Scarborough, the principal at Scarborough Properties, which also built the Harbour Cove Marina in Somers Point.
He was even more frustrated when the city tried to stop him from building condos on the land and refurbish the docks behind them, which started a legal fight.
But now Scarborough is in control of the property after the city hired his company to completely rebuild the marina through a public-private partnership that is becoming a hallmark of the current administration and a new tool among New Jersey towns.
“The private sector can do it cheaper and get it done faster,” said Ocean City Mayor Jay Gillian, who also said the city has neither the money nor experience to handle such a project.
Gov. Chris Christie has been a major proponent of privatization. In 2010 he created the New Jersey Privatization Task Force, which went on to recommend a variety of ways to privatize state operations, from maintenance on NJ Transit buses to medical services at prisons.
“The Task Force has come to the conclusion that, through sensible planning and implementation, privatization offers a variety of benefits to governments and taxpayers, including lower costs, improvements in the quality of public services and access to private sector capital and professional expertise,” states the summary of the report.
Earlier this year the city similarly tried to find a private company to manage its municipally owned golf course. The 12-hole course on Bay Avenue currently makes a slight profit, but city officials think it could be better managed by a private firm with more expertise in the industry.
“In both examples, I think there’s a realization that as government we’re not experts with running a golf course or a marina,” said Ocean City Finance Director Frank Donato.
The city received no responses to its advertisement for proposals on the golf course, though, and Scarborough was the only company to bid on the marina project. The marina plan is designed to be “revenue neutral,” meaning the city plans to not make or lose money off the deal.
Scarborough stands to profit over the life of the 25-year deal, but he said he also plans to give the public access to the best marina on the island.
“What I want to do is give the general public the same opportunity as someone who was able to build a home on the water and put in their own private dock,” he said.
These type of plans are not unique to Ocean City, and there has been a push statewide to privatize more public services in recent years.
“I think that as part of the town’s due diligence in evaluating all the public services they’re exploring things like shared services, cooperative agreements and partnerships with the private sector,” said Bill Dressel, executive director of the New Jersey League of Municipalities.
The state’s privatization task force report does acknowledge that some such efforts have failed in the past because of poor planning and lax oversight, creating skeptics of such concepts.
For instance, opponents mocked a plan released last year to privatize concessions at state parks as a way to re-brand public facilities such as sports stadiums, with names like Fort Mott’s Applesauce State Park and Jeep Liberty State Park.
Ocean City’s marina redevelopment plan has also had its opponents, and the most vocal has been Michael Hinchman, the president of the local watchdog group Fairness in Taxes, who ran against Gillian for mayor in 2010.
“The idea of a public-private arrangement for municipal government is a good one, and I’m completely for it,” he said. “What I’m not for is that sometimes you get a private entity that can out-negotiate the city because they’re not experts in real estate, and that’s what happened here.”
Hinchman said the city’s managers and elected officials did not do enough fiscal analysis of the deal before proposing and approving it in a 6-1 vote at the end of June. He also said there was not enough transparency and public discourse before its approval.
He says that the city should have rejected this current deal and re-advertised for a better one that would possibly make the city money in the long-term.
Hinchman did support the city’s purchase of the marina property in 2009 in order to resolve its fight with Scarborough, who at that time owned the property. The county then purchased the property from the city in 2010, and leased it back to the city.
The stated goal was to provide more public access to the bayfront, and while the city has made some improvements to the property, a lot remains to be desired.
One of the three piers there is closed because it is unsafe, with deteriorated pilings and missing decking. It also lacks many of the other amenities found at most modern marinas.
“We’re in the heart of the summer,” said Scarborough, looking out at the boat slips on a late July morning, “and 14 out of a potential 63 slips are occupied. It’s not something that’s attractive.”
This past December the city first advertised to have a private developer sublease the property, redevelop it and the city would essentially rent its use. Scarborough was the only bidder at that time, but the city felt the annual rent payments he first proposed were too high.
So, the city scaled back its expectations, re-advertised the project, and Scarborough bid again.
He plans to make about $1.5 million in improvements, removing the current piers and putting in two fixed piers with 30 boat slips, 27 of which will have boat lifts, and one floating pier with 33 personal watercraft slips, as well as a kayak launch ramp and a fishing pier.
The plan still needs approval from the county, since it owns the land, and it will require state and Army Corps of Engineers permits. It likely will not be finished until the second quarter of next year, Scarborough said.
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