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BEFORE THE NATURAL RESOURCES COMMISSION

OF THE STATE OF INDIANA

IN THE MATTER OF: ) ) PETITION FOR RATE INCREASE ) ADMINISTRATIVE CAUSE BY LAKE MONROE SAILING ) NUMBER: 19-158P ASSOCIATION )

REPORT OF HEARING OFFICER WITH PROPOSED FINDINGS AND RECOMMENDATIONS TO THE U.S. ARMY CORPS OF ENGINEERS BY THE

NATURAL RESOURCES COMMISSION 1. PETITION FOR FEE INCREASE BY LAKE MONROE SAILING ASSOCIATION

On December 16, 2019, Jeff Watson, Commodore, filed a “Request for Rate Establishment and Increase

Per Information Bulletin #20” (Petition) on behalf of the Lake Monroe Sailing Association (LMSA).

Exhibit A. The Petition was filed with both the Natural Resources Commission (Commission) and the

Department of Natural Resources (Department).

In the Petition, Mr. Watson, correctly observes that LMSA’s last rate increase was approved by the

Commission in 2012 to be phased in over the period from 2013 through 2016. He explains that

historically LMSA has maintained an annual net revenue of between $25,000 to $35,000, which allowed

for capital projects and contingencies. However, while the marina has continued to operate at a

“breakeven level” the current “profit model is longer sustainable, with [the] current pricing model.”

Petition, pg. 1.

LMSA is seeking to better align slip fees with increases in the Consumer Price Index noting that by its

calculation LMSA’s “current fees are approximately 20 percent below our 2006 prices when adjusted

for inflation.” LMSA is also seeking to restructure its summer trailer fees, board boat fees and winter

dry storage fees in a manner that will allow flexibility to charge increased fees to boaters who use these

services intermittently.

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LMSA’s Petition seeks an across the board ten percent (10%) fee increase for boaters who keep boats

with LMSA on a slip, on a mooring, or in dry storage. For services, including trailer/cradle parking,

board boat storage, and winter storage, provided to boaters who do not keep a boat with LMSA, the

proposed fee increases range from 111% to 194%.

Mr. Watson explained that LMSA maintains 100 slips, 50 moorings and 50 additional dry storage boats.

LMSA maintains a restroom/bathhouse, conveniently located paved parking and walkways, housing for

an on-site general manager who is available to provide convenient customer service and security.

LMSA staff are available to assist boaters with raising masts, launching boats, charging batteries and

providing on-the-water assistance and towing at no additional charge. LMSA also provides internet

service, gin pole usage and free firewood to patrons.

In 2018 the restroom/bath house was modernized, the parking area and walkways were also paved to

enhance appeal and comply with the Americans with Disabilities Act. These projects were completed at

a cost of $180,000. The general manager’s housing, which was an “aging prefabricated home”,

underwent significant improvements. LMSA has restructured its long-term service team to reduce costs

but foresees the need to increase wages in the future. Mr. Watson explained that LMSA is also

“working on a long-term plan to refurbish [LMSA’s] aging infrastructure with a focus on replacing

floats” on the docks. Further, LMSA incurs capital expenses associated with the provision of boats for

youth training as well as “supporting and hosting the Indiana University student sailing program.”

LMSA included a “Marina Comparison Chart” that compares LMSA’s proposed fees to the 2018 or

2019 fees being charged by Four Winds Resort and Marina (Bloomington), Geist Marina (Indianapolis),

Patoka Lake Marina (Birdseye), Hoosier Hills Marina (Celestine), Kent’s Harbor Marina (Liberty),

Hammond Marina (Hammond), Sandusky Harbor Marina (Sandusky, OH), Spitzer Riverside Marina

(Lorain, OH), Four Seasons Marina (Cincinnatti, OH), Grafton Harbor (Grafton, IL), Montrose Harbor

(Chicago, IL), Manitowoc Marina (Manitowoc, WI), The Harborage (Boyne City, MI)1, Elm Hill

Marina (Nashville, TN), and Lee’s Ford Marina (Nancy, KY).

1 Information Bulletin #20 defines a “comparable marina” as one “located within four hundred (400) miles of the lessee's marina that maintains facilities and provides amenities similar to the marina for which a rate establishment or increase request has been submitted.” It is noted that Boyne City, Michigan is located approximately 500 miles from LMSA. For this reason the The Harborage is not a “comparable marina” and the fees charged by this marina will not be considered.

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2. SCOPE OF REVIEW

On May 13, 2005, all statutory power previously granted to the Department to establish fees associated

with, among other things, facilities owned or operated by the Department, the Commission, or a lessee

of the Department or Commission, was transferred to the Commission. Ind. Code § 14-10-2-0.3. The

Commission adopted 312 IAC 8-1-3 to assist in the implementation of Ind. Code § 14-10-2-0.3. In

relevant part, 312 IAC 8-1-3 provides as follows:

Sec. 3. (a) The commission may, in a master plan or by resolution, establish any of the following: (1) Fees for: … (B) a particular use within a DNR property.

The property upon which LMSA is located is a “DNR property” operated by the Department under lease

with the U.S. Army Corps of Engineers. 312 IAC 8-1.5-6. In the context of marinas, the Commission’s

evaluation of petitions for fee establishments and increases is further guided by Information Bulletin #20

(Fifth Amendment), (“IB #20”), as posted in the Indiana Register at 20170524-IR-312170263NRA on

May 24, 2017.

The process developed and set forth in IB #20 allows the Commission to fulfill its statutory

responsibility in a manner that provides transparency, encourages public participation and ensures

thorough evaluation by both the Department and the Commission. The process established also

provides for oversight by the U.S. Army Corps of Engineers, consistent with the lease agreements

entered into by the Department.

3. HEARING OFFICER ASSIGNMENT AND NOTIFICATION TO RENTERS Section 3 of IB #20 provides for the assignment of a Hearing Officer and the dissemination of

information concerning a request for fee establishment or increase as follows:

A. The [Commission] will assign a cause number and hearing officer. By February 1, the

Department shall notify the lessee of the assigned administrative cause number, identity of the hearing officer, and hearing officer's electronic mail address.

B. By March 1, the lessee shall provide written notice, by personal delivery, U.S. first class

mail, or by electronic mail, to each slip renter or buoy renter that the lessee is requesting a

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rate establishment or increase associated with slips or other mooring facilities, including buoys and docking stations. The notice shall include the proposed rates and advise the renter that a rate hearing will be scheduled only upon submission of requests for rate hearing by ten percent (10%) of the renters within fifteen (15) days … The lessee shall also provide the renter with the hearing officer's electronic mail address. Not later than March 15, the lessee shall provide the Hearings Division with a copy of the notice and a listing that includes the names of persons notified and the method of service under this paragraph….

In the instant case, Sandra L. Jensen (Jensen), the Director of the Commission’s Division of Hearings,

was appointed as the Hearing Officer. On January 8, 2020, Jensen advised Mr. Watson of her

assignment as the Hearing Officer and provided him with her contact information as well as the assigned

administrative cause number.

On March 10, 2020, Walter Johnson, General Manager of LMSA, filed an affidavit on behalf of LMSA

as required by IB #20, confirming that slip renters were notified of LMSA’s proposed fee increase. The

notification identified the deadline for submitting a comment or request for public hearing and also

provided the mailing address and the email address to which such comments or requests could be sent.

The Commission received one comment and one request for public hearing. The comment, made by

Linda Redding, received by email on March 12, 2020, states as follows:

I am a member and facility user of Lake Monroe Sailing Association. My husband and I have had a slip on B dock which we have rented since 1990. I request the state review LMSA’s request for a rate hike increase.

The request for public hearing, submitted by James Redding by email on March 3, 2020, reads as

follows:

This email is to affirm that as a voting member of Lake Monroe Sailing Marina and a renter of dock space (Slip B17), I request a rate hearing as described in Lake Monroe Sailing Marina’s Rate Increase and Increase proposal dated February 29, 2020. This letter is intended to comply with the NRC statement that 10% of renter’s make a written request for a rate increase.

In order for a public hearing to be conducted, IB #20, at Section 3(B), requires that requests be

submitted by at least 10% of the current marina slip renters. A sufficient number of public hearing

requests was not received and a public hearing was not conducted. Mr. Redding’s request for public

hearing is to be considered as a comment. IB #20, Sec. 3(F).

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It is also observed that LMSA operates as a club as opposed to a fee for service business. As a result,

notice of the proposed rate increases were considered by the membership elected Board of Directors

before submission to the Commission. In addition to the notice required by IB #20, the Petition and the

proposal to increase fees were also addressed in LMSA’s newsletter, The Zephyr, and were discussed

during LMSA’s annual meeting. Mr. Watson reported in the Petition that no member had expressed

concerns to LMSA officials at the time the Petition was submitted to the Commission.

4. COMPARABLE ANALYSIS AND DEPARTMENT RECOMMENDATION Consistent with the requirements set forth in IB #20, LMSA submitted its Petition for fee increases

intended to be effective in 2021, to the Commission before January 1, 2020.

Upon receipt of a request for marina fee establishment or increase, the Department’s Division of State

Parks is tasked with analyzing the fees of comparable marinas. IB #20, Sec.3(E). In a letter dated May

14, 2020, Terry R. Coleman (Coleman), Deputy Director of the Department’s Division of State Parks,

offered support for LMSA’s Petition. Exhibit B. Coleman acknowledged that LMSA last sought a fee

increase effective in 2013 and observed that the fees proposed by LMSA “are still below” the fees

charged by similar locations.

5. HEARING OFFICER ANALYSIS

LMSA’s Petition included an “Itemized Rate Increase Proposal” that included the “current rate” as

compared to LMSA’s “proposed rate”. Review by the Hearing Officer revealed that the current rates

being charged by LMSA are not significantly different from the rates approved by the Commission, with

some rates being higher and some being lower. These minor discrepancies are noted in Table 1, below,

only to ensure clarity.

It is noted that in 2013, the Commission approved a fee for “north bay slips” that are not identified in

LMSA’s current Petition. Upon inquiry, Mr. Johnson reported that the Petition’s failure to refer to the

north bay slips was an oversight. He explained that there are three 22’ x 12’ slips on the north bay dock

that are priced the same as the 22’ x 12’ slips on the B, C, and D docks and that those slips should have

been included in the Petition. The Hearing Officer recognizes that neither the Petition, nor the notice to

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slip renters expressly identifies the slips on the north bay dock; however, in light of the fact that the

Petition and notice identified the proposed increase in fee for slips of the same size located on other

docks, the Hearing Officer reasonably believes it is appropriate to consider and act upon the increase in

fees for the three north bay slips through LMSA’s current Petition.

LMSA’s Petition seeks to establish two tiers of fees for winter storage, trailer/cradle parking, and board

boat storage. In the Petition, Mr. Watson explains that this restructuring is intended to increase the fee

for these services to market rate for boaters who do not keep boats at LMSA in a slip, on a mooring or in

dry storage to “prevent boaters who do not support LMSA year-round” from “cherry-picking” low

priced services and options. Under LMSA’s proposal the fees for these services will increase by only a

maximum of ten percent (10%) for boaters who keep boats with LMSA and who support LMSA

throughout the year.

Mr. Johnson notified the Hearing Officer on July 2, 2020 that an error had been made in LMSA’s

Petition with respect to the Winter Storage Fee for boats of 20’ or less. The Hearing Officer

acknowledges that the current approved fee for that item is $106, and the Petition reflected a decrease of

19% to reduce that rate to $85 for boaters keeping boats at LMSA. According to Mr. Johnson, LMSA’s

true intent was to seek an increase of 9.52% to increase that fee to $115. The Hearing Officer

recognizes that both the Petition and the notice provided to slip renters reflects a decrease in this fee.

However, under the circumstances, it would be inefficient to require LMSA to go through the fee

approval process in 2021 to address this error. For that reason the Hearing Officer supports LMSA’s

correction of this error.

Table 1, inserted below, identifies the current fees charged by LMSA along with the proposed 2021 fees

for slip renters. Table 2, also inserted below, identifies the current fees and the proposed 2021 fees for

winter storage, trailer/cradle parking, and board boat storage for non-slip renters.

TABLE 1 Slip Rental and Fees for Boaters with Boats on a Dock, Mooring or in Dry Storage

2013 Approved Fees

2020 (Current Fees)

Proposed 2021 Fees % Increased

A- Dock

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24 x 12 $1,415.00 $1,415.00 $1,555.00 9.89% 26 x 12 $1,526.00 $1,530.00 $1,685.00 10.13% 30 x 14 $1,632.00 $1,655.00 $1,800.00 8.76% 32 x 14 $1,744.00 $1,750.00 $1,925.00 10.00% 34 x 14 $1,855.00 $1,860.00 $2,050.00 10.22% B, C, and D Docks 22 x 12 $1,145.00 $1,145.00 $1,260.00 10.04% 24 x 12 $1,198.00 $1,200.00 $1,320.00 10.00% 26 x 12 $1,526.00 $1,530.00 $1,685.00 10.13% Buoy Standard (single anchor) $845.00 $845.00 $930.00 10.06% Heavy Duty (double anchor) $949.00 $945.00 $1,040.00 10.05% Facility Use $85.00 $90.00 $100.00 11.11% Board Boat Storage $85.00 $95.00 $200.00 110.53% Dry Storage 20' or less $345.00 $345.00 $380.00 10.14% Over 20' less than 26' $451.00 $455.00 $500.00 9.89% 26' or greater $530.00 $530.00 $585.00 10.38% Trailer/Cradle Parking $80.00 $85.00 $95.00 11.76% Winter Storage Fees Trailer/Cradle $74.00 $75.00 $85.00 13.33% 20' or less $106.00 $105.00 $115.00 9.52% over 20' less then 26' $148.00 $150.00 $165.00 10.00% over 26' less than 30' $180.00 $180.00 $200.00 11.11% over 30' less than 34' $191.00 $190.00 $210.00 10.53% over 34' $201.00 $200.00 $220.00 10.00%

TABLE 2 Fees for Boaters without Boat on a Dock, Mooring or in Dry Storage

2020 (Current Fees) Proposed 2021 Fees % Increased

Board Boat Storage $95.00 $200.00 110.53% Trailer/Cradle Parking $85.00 $250.00 194.12%

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Winter Storage Fees Trailer/Cradle $75.00 $200.00 166.67% 20' or less $105.00 $270.00 157.14% over 20' less than 26' $150.00 $350.00 133.33% over 26' less than 30' $180.00 $400.00 122.22% over 30' less than 34' $190.00 $425.00 123.68% over 34' $200.00 $445.00 122.50%

LMSA provided a “Marina Comparison Chart” that identifies the fees for similarly sized slips at 15

comparable marinas2. See Exhibit A. LMSA’s proposed 2021 fees are particularly consistent with the

fees charged by Patoka Lake Marina. LMSA’s proposed fees are consistently less than the fees charged

by each of the other 14 comparable marinas identified. The Hearing Officer observes that LMSA

included Four Winds, Hoosier Hills, Patoka Lake and Kent’s Harbor marinas on its “Marina

Comparison Chart” and notes that the fees charged by these marinas were also approved by the

Commission. The Hearing Officer further highlights that Four Winds, Kent’s Harbor, and Hoosier Hills

marinas each have Petitions pending at the present time seeking to further increase fees in 2021.

With respect to LMSA’s fee proposal for services such as trailer/cradle parking, board boat storage, and

winter storage, LMSA observes that the low rates previously established for these services were

intended for customers keeping boats at LMSA and “providing substantial summer revenue.”

Increasingly however, individuals who do not otherwise support LMSA are taking advantage of the low

fees. LMSA is seeking to maintain low fees for these services for customers who keep boats at LMSA;

increasing these fees by a maximum of ten percent (10%) for those customers. However, LMSA is

seeking to increase the fees for these services by one hundred eleven percent (111%) to one hundred

ninety four percent (194%) to establish a significantly higher fee for these services by individuals who

are seeking these services on a stand-alone basis. LMSA’s concept of restructuring these fees appears to

be reasonable.

Identifying comparable marinas for the purpose of considering LMSA’s fee proposal for services such

as trailer/cradle parking, board boat storage, and winter storage has proven to be a challenge. With

2 The document identifies a total of 16 marinas but, as noted previously, The Harborage, located in Boyne City, Michigan, is not an appropriate “comparable marina” due to the fact that it is located over 400 miles from LMSA. IB #20, Sec. 2(B).

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respect to winter dry storage, LMSA reports that storage of a 25’ sailboat at LMSA is currently $150 as

compared to Four Winds’ fee of $625. Similarly, LMSA reports that Fairfax Marina charges $350 for

outside winter storage of a boat that size. Under LMSA’s restructured fee schedule a person who rents a

slip at LMSA would pay a fee of $165 for winter storage of a 25’ boat, whereas a person who does not

rent a slip at LMSA would pay a fee of $350 for this service. The actual fee differentials for each of

these items is apparent through a comparison of Table 1 and Table 2, above.

The Hearing Officer recognizes that both Four Winds and Fairfax marinas’ fees are subject to

Commission approval. She has no reason to question LMSA’s report of the fees charged by Four Winds

and Fairfax marinas for winter storage; however, she observes that those marinas have not sought fee

approvals for winter storage. 3 Consequently, the Commission has no record these fees being charged.

Based upon available information, the fees that would be established under LMSA’s proposed two tiered

fee structure for trailer/cradle parking, board boat storage and winter storage, appears to be appropriate.

After the Hearing Officer presents findings and recommendations to the Commission, the Commission

may recommend approval or disapproval of the requested fees or recommend fees in an amount less

than the fees requested by the lessee. The Commission’s “recommendation for favorable consideration

of a fee establishment or increase shall not be withheld unless, in the opinion of the Commission, the

fees proposed exceed the fair market fees charged by operators of other similar privately-owned resort

developments comparable to the project in the area.” IB #20, Section 5.

With the foregoing analysis, the Hearing Officer recommends the approval of LMSA’s Petition and

presents Exhibit C as the proposed findings and recommendations of the Commission to the U.S. Army

Corps of Engineers.

Dated: July 1, 2020 ______________________________ Sandra L. Jensen

3 In 2019, the Commission’s Division of Hearings identified the need for enhanced compliance with Ind. Code § 14-10-2-0.3 and 312 IAC 8-1-3 and initiated a project that, with the current involvement of the Department’s Division of State Parks, is intended to identify all of the fees being charged by marinas operating under lease agreements with the Department. The intent is to allow the Commission, the Department, and the marina operators to more fully understand and comply with fee setting requirements. See Administrative Cause Number 19-109A. This project is ongoing.

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Hearing Officer

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EXHIBIT A

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EXHIBIT B

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EXHIBIT C BEFORE THE

NATURAL RESOURCES COMMISSION OF THE

STATE OF INDIANA

IN THE MATTER OF: ) ) PETITION FOR RATE INCREASE ) ADMINISTRATIVE CAUSE BY LAKE MONROE SAILING ) NUMBER: 19-158P ASSOCIATION )

PROPOSED

FINDINGS AND RECOMMENDATIONS TO THE U.S. ARMY CORPS OF ENGINEERS BY THE NATURAL RESOURCES COMMISSION

A. Findings

1. The scope of the informal review accorded by the Natural Resources Commission (the “Commission”) in Information Bulletin #20 (Fifth Amendment) (IB #20) is addressed to petitions for fee increase or feee establishment at marinas and related facilities on properties owned or leased by the Department of Natural Resources (the “Department”).

2. Although the Department may appropriately exercise whatever rights are provided in a ground

lease with respect to marina facilities, as well as any other rights provided by law or equity, the scope of review provided in IB #20 is limited to the subject of the petition for fee increase. The Commission ultimately recommends action on the petition to the U. S. Army Corps of Engineers (“Corps”), and the Corps may either accept or reject the recommendation.

3. For requests for fee increase, the Hearing Officer shall make a written report to the Commission.

The report shall include written findings with respect to the requested fee increase and a proposal to the Commission for recommendations to the Corps in determining Lake Monroe Sailing Association’s (LMSA) request.

4. LMSA, in its Petition, requests across-the-board increases of approximately 10% for customers who rent slips at LMSA. For customers who do not rent slips at LMSA, the Petition seeks to restructure the fees for trailer/cradle storage, board boat storage and for winter storage through an increase ranging from 111% to 194%.

5. In determining whether to recommend a fee increase be granted, the Department is to analyze similar facilities and compare fees with those sought by the Petitioner. The consideration of fees charged by comparable marinas is fundamental to determining the propriety of proposed fee increases. The preponderance of information in the record indicates that the increased fees proposed by LMSA will remain consistently below the fees charged by comparable marinas.

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6. A Hearing Officer’s or the Commission’s recommendation for fee increase shall not be withheld unless the fees proposed exceed the fair market rates charged by operators of other similar privately-owned resort developments comparable to the project in the area.

7. The Commission exercises it authority to recommend approval of the fee increases as requested

by LMSA.

8. The requested fee increases, are within the industry range and supportable. The rates approved by the Commission are set forth in the attached table, which includes all rates previously established as well as the rates recommended for approval through this action. Rates established through previous Commission recommendations are so noted.

B. Recommendation The Natural Resources Commission recommends to the U.S. Army Corps of Engineers the fees as set forth in the attached table be approved for existing facilities at LMSA. Dated: Bryan Poynter, Chair Natural Resources Commission

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Commission Slip Rate Recommendation

LAKE MONROE SAILING ASSOCIATION

Slip Rental and Fees for Boaters with Boat on a Dock, Mooring or in Dry Storage Proposed 2021 Fees

A- Dock 24 x 12 $1,555.00 26 x 12 $1,685.00 30 x 14 $1,800.00 32 x 14 $1,925.00 34 x 14 $2,050.00 B, C, and D Docks 22 x 12 $1,260.00 24 x 12 $1,320.00 26 x 12 $1,685.00 Buoy Standard (single anchor) $930.00 Heavy Duty (double anchor) $1,040.00 Facility Use $100.00 Board Boat Storage $200.00 Dry Storage 20' or less $380.00 Over 20' less than 26' $500.00 26' or greater $585.00 Trailer/Cradle Parking $95.00 Winter Storage Fees Trailer/Cradle $85.00 20' or less $115.00 over 20' less then 26' $165.00 over 26' less than 30' $200.00 over 30' less than 34' $210.00 over 34' $220.00

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LAKE MONROE SAILING ASSOCIATION Fees for Boaters without Boat on a Dock, Mooring or in Dry Storage

Proposed 2021 Fees Board Boat Storage $200.00 Trailer/Cradle Parking $250.00 Winter Storage Fees Trailer/Cradle $200.00 20' or less $270.00 over 20' less than 26' $350.00 over 26' less than 30' $400.00 over 30' less than 34' $425.00 over 34' $445.00