Marina Property Tax Appeals Are Not an Easy Process to Sail Through

Boat marinas are a specialized class of property and can be difficult to appraise for property tax purposes. A boat marina may have many sources of revenue from retail sales, boat rentals, and monthly slip fees. The “going concern” value of a marina may include some or all revenue streams; therefore, assessors attempting to value a marina based upon the sale price of the marina or the income stream of the marina, often face difficulties.

What is the value of a business that buys gas for $4.00 per gallon and sells it for $6.50 per gallon at the marina gas pump? How much do they buy minnows for, in comparison to what they sell them for? How much revenue is generated from hourly rentals of a jet ski that costs $10,000 and rents for $200 per half-day, over the course of three or four years?

The cost approach is the best method to value a marina, but there are many variables that play into the cost models. The land and water where the boats are docked are most often leased by government entities that own the water rights. These leases are expensive line items for the marina operators. Additional things to consider when using cost models include the types of materials used as well as the ongoing maintenance needed because of extreme conditions.

It is not a matter of if a marina will be hit by a natural disaster of some sort; it is simply a matter of when. Ryan has handled marinas hit by hurricanes, drought, ice storms, and excessive rain. If a marina is subjected to an income model, a very high cap rate should be used because of the extreme risk faced by marina operators. The experts at Ryan have assisted marina clients when the assessor decided to move away from a cost model and go to an income model approach.