[CITE: Quaker Town Boaters v. DNR, Horns Marina, 5
CADDNAR 129 (1990)]
[VOLUME 5, PAGE 129]
Cause #: 89-249V
Caption: Quaker Town Boaters
v. DNR, Horns Marina
Administrative Law Judge: Teeguarden
Attorneys: Shoker; McCoy, DAG; Smith
Date: June 22, 1990
ORDER
The
increase in buoy fees for Horns Houseboats of Indiana, Inc., $410
per year to $450 per year approved September 29, 1989, with the conditions that
boat owners receive an annual pass and receive free sewage pump outs is
affirmed.
FINDINGS OF FACT
1. The
department of natural resources (DNR), through the division of reservoirs
(DOR), is responsible for managing and maintaining the Brookville Reservoir.
2.
The Quakertown Boaters Association (QBA) is a voluntary association of boat
owners who rent boat docking space on Brookville Reservoir.
3.
Horn's Houseboats of Indiana, Inc. (Horn) operates Horns Marina on Brookville
Reservoir under contract with the DNR.
4.
IC 4-21.5 and IC 14-3 apply to this hearing.
5.
The DNR is an agency within the meaning of IC 4-21.51-3 and the natural
resources commission (NRC) is the ultimate authority with regard to this
matter.
6.
On or about August 14, 1989, Horn wrote to the DNR requesting a buoy fee and
houseboat dock rental fee increase for the 1990 boating season.
7.
This request for an increase to $450 per year also included an annual gate pass
and unlimited holding tank pump outs as part of the fee.
8.
This request for an increase was ultimately approved on September 29, 1989.
9.
The contract being revised was a five-year contract which became effective in
1987. This 25 page contract, plus exhibits, was introduced into evidence as
exhibit #6 and its provisions relevant to this hearing are:
a.
Horn is to collect rent, assign buoys, provide shuttle service, and pay 35% of
the gross income from buoy rental to DNR.
b.
DNR is to maintain all buoys, cables, and anchors.
c.
The contract as written expires March 31, 1992, but Horn has an option to renew
for five more years.
d.
Horns must maintain the leased property in good repair and provide for trash
removal.
e.
Horn must have available sewage pump-out facility. f. Horn may adjust rates
annually but NRC approval is required for an adjustment.
10.
The original buoy fee in 1977 was $270. This fee was first increased for the
1981 season to $300.
11.
By the 1986 boating season, the fee was $390 per year. The next increase was in
1989 to $410 per year.
12.
The matter under appeal is the approval of an increase from boat season 1989 to
boat season 1990 of $40 thus increasing the annual rental to $450.
13.
The original contract does not require Horn to provide a DNR annual pass to the
reservoir property to buoy renters.
14.
The current version of the contract does require that an annual pass be
included in the fee. This amounts to $18 per year.
15.
The original contract required Horn to have sewage pumping available; a service
for which he charged $3 per pump out.
16.
The current contract requires Horn to provide pump out service for free.
17.
A typical boat owner will use the pump out service as many as eight times per
year.
18.
Figuring that the pump out service is worth $20 to $25 per year to the average
boat user, the adjusted 1990 rate becomes $450--$18 (annual pass)--$20 (pump
out) = $412. This represents a 52% increase since 1977, or approximately 3 1/4%
per year compounded annually.
19.
Further, the actual rate increase from 1989 to 1990 is approximately $20 since
pump out was not included in 1990.
20.
35% of the gross increase goes to the DNR and not Horn under the terms of the
contract. This amounts to $14. Horn thus realizes a net increase of $6 per buoy
rental after DNR rental and pump outs are removed.[FOOTNOTE 1]
21.
QBA's main argument deals with the fact that a DNR operated Marina on the same
reservoir (Fairfield Marina) charges only $285 per boating season.
22.
Fairfield is not
[VOLUME 5, PAGE 130]
operated to make a profit.
23.
Horn makes part or all of his living by operating the Marina and related
activities such as convenience store goods, gas, and boat sales.
24.
It is difficult to compare Horn to other privately owned facilities as the
others own their buoys. Also, other private marinas do not have to provide the
$18 annual pass.
25.
It is difficult to compare Horn to state owned facilities as the state does not
attempt to make a profit or provide as many services. For instance, Fairfield
has no sewage pump capability and has no parts or service capabilities whereas
Horn provides these.
26.
Four Winds Marina fees are $650 per year and Lake Fork (Patoka Lake) is $300
per year. Horn is halfway between these.
27.
While there were complaints about the length of waiting for shuttle boats to
take passengers to the boats, QBA members admitted that Horn Shuttles will
carry all persons, not just the driver and Horn shuttles will carry groceries,
coolers and pets to the boats. Fairfield shuttles take only the boat driver and
do not take packages and pets.
28.
Horn provides water for boats at no charge.
29.
Horn operates his facility over a longer boating season than does Fairfield.
30.
IC 14-3-8 deals with leased state property for recreational facilities.
31.
This section permits the DNR to contract for the operation of outdoor
recreation, water resources, or facilities as the DNR deems appropriate.
32.
IC 14-3-8-3(6) provides that any such lease or contract shall provide rates and
fees which are in accord with those charged at similar developments in the
area.
33.
Brookville Reservoir is a high use facility.
34.
Fairfield is not a similar development to Horn in that it is not privately run
and is not required to offer all the same services.
35.
Four Winds and Lake Fork are not similar to Horn in that they own their buoy
field. Four Winds is designed to be a higher priced facility, and Lake Fork is
on a low use lake away from population areas.
36.
Having concluded that there is no good comparison for Horn,...[it
is concluded] that the standard that must be used is a "reasonable and
rational" standard.
37.
Increases averaging a compounded 3 1/4% rate over 14 years are reasonable.
38.
Further, a rate increase which only provides the operator with an additional
net of $6 or so per boat is not unreasonable.
39.
Accordingly,...[it is concluded] that the buoy fee
increase approved by the NRC on September 29, 1989, should be affirmed.
FOOTNOTE
1.
Some arguments were made dealing with the 35% rental fee. The QBA raised an
interesting point when they criticize the DNR's having a 35% interest in every
rate increase. The DNR's rationale for this amount of rental deals with the
amortization of the buoy field and replacement thereof. This is one of the only
private marinas where the state paid for the buoy field and operated the marina
before entering into the lease. Clearly, the DNR may take this into account
when setting initial rates as they include the cost of maintaining the field.
The amortization rate should not increase over the years but the revenues from
rentals have. Because of the fact that the parties are clearly bound by this
contract until 1992,...[it is concluded] this is not the time, place, or forum
in which to challenge that portion of the contract which has existed for 14
years, however QBA has a valid interest in this information and resulting
negotiations when the 1992 option is exercised.