Local Lake Business Owners Say They’re Drowning in State Regs

April 13, 2012

Investigative Reports

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SailboatsState regulations are designed to protect South Carolina’s parks and lakes while allowing visitors to enjoy the outdoors.

Several small business owners on Lake Murray, however, say state rules and rental rates are cutting into their livelihoods.

The rental rates that Dreher Island State Park offers for access to Lake Murray and park condos, for example, are so low that they are making private marinas uncompetitive, says SouthShore Marina owner Carl Sundius.

“They’re undercutting the prices of other marinas, and the taxpayer is paying for these people to keep their boats at the lake,” Sundius said in a recent interview with The Nerve.

“What we’re concerned with is boat storage,” Putnam’s Landing marina owner Bill Shipley told The Nerve, adding that the state park on Dreher Island’s rental rates are significantly lower than those at most private marinas.

An analysis of fees charged by Dreher Island and private marinas for boat storage for one month shows that Dreher Island’s $150 rate is $42 below the average rate among all Lake Murray marinas.

A more significant problem, says Sundius, is that Dreher Island charges for only one boat slip when two are needed for oversized boats, while private marina owners are forced to charge for both slips to remain profitable.

“For example, they’ll [Dreher Island will] have a 28-foot Bayliner in a slip designed for a 20-foot boat. The Bayliner takes up both slips in a bay, and you can’t rent out the other,” said Sundius. “And at Dreher Island, the Bayliner only pays for one slip.

“But private marinas, we can’t do that, the Bayliner would have to pay for both slips,” he said.

Marion Edmonds, spokesman for the S.C. Department of Parks, Recreation, and Tourism, said because many of Dreher Island’s facilities are more outdated than those at private marinas, the state park must charge lower prices.

“Dreher Island’s marina is aging and the slips weren’t built anticipating some of the boat lengths we see out there today,” Edmonds wrote in an email response to questions from The Nerve. “However, I’m not aware that private marina owners ‘have to charge a boat for two slips,’ but I really haven’t investigated whether there is such a requirement.”

The monthly rate to rent one boat slip at Dreher Island is $150; Sundius’ SouthShore Marina charges $165. But for boats that occupy two slips, SouthShore charges $330 to cover both slips.

That $180 in savings at Dreher Island is great for consumers, Sundius admits, but it’s unfair to private business.

“It’s a double-edged sword,” said Sundius. “The state parks are great for people who want to visit the lake, not to keep a boat there permanently. . . It’s awfully cheap, but it’s to help the people of South Carolina visit the lake at an affordable cost.

“But I am losing business to them. They’re undercutting me, and we are all paying for them to stay there,” he said.

Condo Rentals on the Cheap

Sundius and Shipley aren’t the only lake business owners claiming they’re victims of unfair competition by the state.

Dreher Island’s rates for condo and campground rentals also make private businesses uncompetitive, says Randy Walston, broker-in-charge at Lake Murray Vacation Rentals & Sales.

Walston said one of the three-bedroom lake cabins he manages on Lake Murray that has comparable amenities and furnishings to the ones offered at Dreher Island is the “Chapin Getaway” house. The cost of renting the Chapin Getaway for two nights during the peak summer season is $492, according to Lake Murray Vacation’s website.

In comparison, the two-night weekend rental cost for a three-bedroom condo during the peak season on Dreher Island is $378.

“It’s unfair competition,” Walston said. “That hundred dollars is the reason they sell out, and I don’t.”

Walston said Dreher Island is able to charge significantly lower rates than private businesses in part because the park does not need to pay for many of its overhead costs, such as landscaping or cleaning cabins.

But the biggest reason that state parks make private cabin rental businesses noncompetitive is because state parks do not pay county property taxes, he said.

For instance, Walston said, the average value of one of the rental lake homes he manages is about $300,000. For a Lexington County home that is not owner-occupied, that means the homeowner is paying approximately $7,000 every year in county property taxes, Walston said.

“That’s $7,000 every year that Dreher Island doesn’t need to worry about paying,” said Walston. “It doesn’t make sense to us that they compete with private business. They have no concern for overhead expenses.

“We’re not against them offering these things, if they make it fair,” he said.

Putnam’s Landing’s Shipley says the difference in county property tax payments is driving him out of business.

“The property taxes have increased for small business owners since 2003 approximately ten-fold,” Shipley said.

Shipley said in 2002, the property taxes for the 7 acres that Putnam’s Landing occupied totaled about $3,800. By 2010, Shipley said, the property taxes for those 7 acres had risen to about $30,000.

Shipley said he sees similar problems with Dreher Island’s rates for campground rentals. The state park charges between $24 and $28 per night for campground rentals during the peak spring and summer seasons, depending if the campground is on the waterfront and if the rental is for the weekend.

The lowest price Shipley can charge to remain profitable, though, is between $30 and $40 per night, he said.

Edmonds, of the state parks department, said his agency keeps private businesses in mind when setting rental rates at state parks.

“We try to look at the balance between our mandate to provide reasonable recreation to the public at an affordable price and making sure we don’t take advantage of the private sector,” said Edmonds. “We understand, they [private business owners] have a legitimate point in asking us to look at what we do.

“The important thing is, it is a fluid situation with the rates. It’s something always under consideration.”

Edmonds also said that Dreher Island has been operating with a budget surplus for the past five years, including a surplus of $123,000 in fiscal year 2010-11, which ended June 30.

“Our thinking is that if we’re breaking even and even making a profit, let’s make sure we don’t set the rates too high,” he said.

Shipley, though, said competition with the state and constantly increasing property taxes on his marina have nearly caused him to get out of the business.

“I honestly really would like to sell my marina,” said Shipley. “I love it here; I’m very blessed with what I have. But I’d like to get out, even though I’ve been here since I was 15 years old.”

Former Gov. Mark Sanford spoke of privatizing some of the parks and campgrounds run by the state. However, he was never able to get much buy-in from the Legislature for the idea.

State Regulations Hurting Business

In addition to having to compete with the state, some marina owners say a convoluted, bureaucratic permit process they have to go through to expand their businesses is causing them to lose customers.

One marina owner who has been operating on Lake Murray for decades but requested anonymity for this story says it took him much longer to get a permit to expand his dock than it did to actually construct the dock.

“You can have the dock plans in six weeks, built in two weeks, and you’re done,” the owner said. “But I had started the permit process one-and-a-half years before I could begin the construction.”

In South Carolina, a private marina owner who wants to modify or add docks to a marina must first obtain permits from a number of government agencies. Those agencies include the U.S. Army Corps of Engineers, the S.C. Department of Health and Environmental Control, SCE&G, the S.C. Department of Natural Resources, and the county government where the marina is located.

The problem, says the long-time marina owner, is that when each agency receives its permit application, it can take weeks for the agency to approve the application and pass it on to the next level of government.

“They’re all good people, don’t get me wrong,” said the marina owner. “But there’s no one person in charge. We’ve got too many layers in this thing, and nobody wants to do anything until the layer above gets done. You can’t get everything done all at once. They’re like dominoes.”

The marina owner said because it took him so long to get his dock permit approved, he was not able to do any construction on the land he had already acquired. With no new dock, the marina received fewer customers than if there had been a quicker permit process, he said.

Brice McKoy, branch regulatory chief for the U.S. Army Corps of Engineers branch in Columbia, toldThe Nerve that the commercial dock-permit process begins with a joint application to the Army Corps and DHEC.

McKoy said there is no single application for a commercial dock that applies to all agencies involved because each level of government must check for compliance with different regulations and laws.

For example, McKoy said, the Army Corps focuses on ensuring that a new dock does not decrease the navigability of a waterway. DHEC, in contrast, focuses on issues like water quality and boat activity on the lake, he said.

Lake Murray marina owners, though, say the permit process in recent years has become far too arduous.

“With commercial marinas, there’s so few of us,” said SouthShore Marina’s Sundius, “that if you don’t let them expand a bit – if you make it such a detrimental process for them to do that – then you’re going to have less access points for the public on the lake.”

Reach Kumar at 254-4411 or amit@thenerve.org.