BERKELEY HOIST & DRY STORAGE ANALYSIS

 

PURPOSE

The Hoist Committee was formed to study the feasibility of: (A) installing a hoist facility in the Berkeley Marina, and (B) whether a private entity should endeavor to build and/or operate the facility. 

 

EXAMPLE FACILITY

The pictures below show the Richmond Yacht Club facility, which has two 2-ton hoists and a large storage area.  This is almost an ideal template for a facility in the Berkeley harbor.

 

FINANCIAL & BREAK EVEN ANALYSIS

The analysis below attempts to project operational costs at various levels of use for boat storage, while holding constant the paid non-tenant hoist usage.  This model assumes that one entity would build the facility and lease it to another, on a "net lease" basis.  The developer and the City (land owner) would receive rent equal to the debt service on an estimated $100,000 initial investment, plus 10% of the gross operating revenue.  On a net lease (aka: triple net or NNN), all operating and maintenance costs and escalations in these costs are either directly paid by or passed through to the tenant.

Tenant would be responsible for maintenance and replacement of the equipment and improvements with an expected 30 year service life and $25,000 cost per hoist.  Tenant would pay for the labor and other costs to operate the facility.  Storage tenants would pay $125 per month including storage and hoist use.  Non-tenants would pay $5.00 per use of the hoist.  A break-even is projected at 17 stored boats and 50 non-tenant hoist fees.  

By adding a second hoist the building costs increase by about 33%,  asset replacement would be less than double by two machines sharing the load-- say 66%, and the service contract would increase.    Would this increase demand for storage?  Probably not.  Would it increase the demand for paid launches?  Potentially it could by offering the ability to host larger events and guarantee that at least one hoist would be working at all times, which important for the credibility of the facility.

         
Monthly Operating Statement - Net Lease Scenario      
         
   Full  80% Break Even  
   Occupancy   Occupancy  17 Rentals  
 
        
Boat Storage Rent              3,125              2,500              2,125 $125 per stall to 25 maximum
Hoist Fees                250                250                250 $5 per use x 50 per month
Late Fees                  23                  19                  14 5% x 15% of tenants
         
Gross Revenue              3,398              2,769              2,389  
         
Lease Payment - Developer                750                750                750 30 year payback of $100k investment
10% of Gross to City                340                277                239  
Casualty Insurance                  20                  20                  20 $20 per month
Liability Insurance                208                208                208 $2,500 per year - $2 million coverage
Property Taxes                   -                     -                     -   City exempt
Administrative Cost Accrual                150                150                150 Billing, accounting, oversight
Direct Labor Cost                400                400                400 20 hours per month @ $20 per
Professional & Legal                  42                  42                  42 $500 per year
Operating Maintenance                  50                  50                  50 Gates, plumbing, elect. Damage
Service Contract - Hoist                150                150                150 Estimated
Supplies                    5                    5                    5  
Security Service                    -                     -                     -   Police or Private
Electricity                175                150                125 Hoist, lights, & for tenants' use
Water                150                125                100 Boat washing, routine cleaning
Garbage                  35                  30                  25 ?
Capital Asset Replacement                175                150                125 AVG 30 YR SERVICE LIFE
       
Operating Expense              2,650              2,507              2,389  
 
        
Net Profit                749                262                    0  

 

CONCLUSION

Berkeley based sailors and clubs will probably benefit in membership and prestige by having a first class hoist facility located within the Berkeley Marina in close proximity to the club house.  However, income from operations may not be the motivating factor for a private group to operate the facility.  Intangible considerations such as quality control and member perquisites are benefits of private management.

 

Offering a second hoist although more costly, may be a better solution since this type of equipment is prone to unexpected breakdown.  Typically failures would come at peak usage on weekends or evenings when repair service might not be available.  A breakdown could scuttle a racing event to the harbor's embarrassment.

 

Our Berkeley location offers benefits and detriments as compared with Richmond.  We offer better winds, lower crime (city), and a centralized location (driving and boating).  Richmond offers a highly secure compound, semi-private harbor, a balmy climate.  Parking may also be a consideration.