Beaufort tries to correct botched lease with Safe Harbor. ‘There is no excuse for this’
Five years ago, the city of Beaufort ran afoul of South Carolina state law when it authorized a 40-year lease with Safe Harbor Marinas to run its downtown marina, the city manager acknowledged on Tuesday.
The news comes as Safe Harbor is preparing a controversial expansion of the marina it manages for the city, raising questions about the lease going forward and future management of the picturesque docks in Waterfront Park on the Beaufort River.
On May 7, 2019, the city, worried about the rising expense of managing the marina, approved a lease agreement with Safe Harbor, which operates marinas up and down the East Coast.
Under the agreement, Safe Harbor was required to invest at least $1 million in the docks during the first 10 years of the lease. Another $100,000 would be required during each 10-year term the lease is renewed, up to 40 years.
The arrangement helps to fund city projects and other expenses. Safe Harbor pays the city 15 percent of its gross revenue from dock fees, 7.5% of money made from retail sales and 20 cents of each gallon of fuel sold.
But City Manager Scott Marshall told City Council Members Tuesday that the agreement was passed five years ago without any public input and with a single vote. Both moves, he said, were “deeply troubling.”
State law, Marshall noted, requires municipal governments to convey property only through the approval of an ordinance. And ordinances require two public readings to be approved.
In this instance, however, the lease was approved with one vote and the document itself wasn’t even included in the City Council’s packet of information so the public had no chance to look at it.
“There is no excuse for this in my opinion,” Marshall said.
Paul Trask, a Beaufort developer, submitted a freedom of information request about the lease, and that led to the city discovering the error once it checked its records, said Marshall, adding that the city owed Trask a debt of gratitude.
Bill Prokop was city manager when the lease was approved. Marshall, who replaced Prokop in early 2023, said he would never present a contract to a City Council without first giving the public the chance to see it first.
City tries to correct mistake
Fast-forward five years and the city is trying to correct the mistake using an action called nunc pro tunc. That’s a Latin term that usually refers to a court retroactively taking action to correct an earlier ruling.
On Tuesday’s City Council agenda was the first reading of a “nunc pro tunc” ordinance ratifying the leasing of the city property to Safe Harbor. The terms of the lease would remain the same.
Residents raise concerns
But City Council members decided to postpone a decision on the first reading of the lease after encountering criticism from several residents, including two City Council candidates in the Nov. 5 election. They criticized not only the improper way in which the lease was handled, but also the details of the lease itself.
“This is a terrible lease ladies in gentlemen,” Paul Trask said. “It’s bad.”
Trask also noted that the city never received the required permission from the federal government before it leased the marina to a private entity. That approval was among the stipulations the city had to meet when it accepted federal funds for the construction of Waterfront Park, which opened in 1979, Trask said.
The net result of the faulty approval of the lease by the City Council, and the failure to get approval from the federal agencies, Trask contends, is the city illegally converted a public park into a private commercial property under lock and key that keeps the public out for 40 years for the exclusive use for Safe Harbor members.
As for the need to consult with the federal government, City Manager Marshall says the city is now working to determine whether the marina property is considered part of Waterfront Park and therefore subject the consultation requirement.
Will lease be renegotiated?
In light of the marina expansion, some residents are arguing that now is the time to negotiate a lease with better terms or seek out a new manager of the marina.
“We’re a small town and all we really need is a small marina,” said Wallace Scarborough, a Bay Street resident.
Scarborough also criticized the city for trying to pass the contract using the “nunc pro tunc,” which he called an “obscure procedure” and “an extreme stretch.” The city should start over with meetings and input from residents, Scarborough said.
“You have a very unique opportunity to get it right and hope you do,” Scarborough said.
Two current members of the 2024 city council — Phil Cromer and Mike McFee — were on the 2019 council when the original lease was passed.
Prokop, the city manager at the time, retired in late 2022. Bill Harvey, who was city attorney in 2019, resigned in May 2023, seven months before his term was set to expire.
McFee was not at Tuesday’s meeting.
‘It was a mistake’
Mayor Cromer said he wanted the proposed re-approval of the lease postponed to give the city more time to consider the path forward.
“I was on the council at the time,” Cromer said. “It was a mistake. I own up to it. But we can fix it and we’re going to fix it.”
Councilman Josh Scallate, who is running against Cromer for mayor, said he went back and watched the meeting when the council approved the original lease. A resident who stood up and asked when the public would see the lease was told, “after it was signed.”
Although some members of the community are not in favor of the original marina expansion plans that Safe Harbor submitted, Scallate said, “My interpretation of Safe Harbor’s response to that is that they were absolutely willing to work with the community.”
The issue going forward, Scallate said, is not the administrative error but forming a lease negotiating committee and getting feedback on what the city wants to see in a marina. The relationship, he says, can be salvaged, “but it has to start right” with transparency.
Councilman Neil Lipsitz originally said “hell no” to the marina plans but now finds Safe Harbor to be “an honorable partner” after meeting with them and looking at the latest plans, which he said address his concerns.
Councilman Mitch Mitchell said he wanted to hear from Councilman McFee, who was not at the meeting, before moving forward. One question Mitchell has is what will happen to the marina “if we do nothing.”
“What happens if there is no contract and Safe Harbor decides to walk away?” Mitchell said. “What does that mean to the city in terms of expense, to maintain it and keep it viable? I don’t know.”
He said the city also needed to gather more information on the pros and cons of the current lease.
Marshall, the city manager, said allegations City Council members have been having secret meetings with Safe Harbor about the lease are not true.
However, council members did meet individually and in pairs with Safe Harbor officials about a potential redesign of the marina on June 3-4. He said Safe Harbor was hoping to learn from its previous design proposals, which were widely criticized.
Safe Harbor and the city are hosting a meeting on Safe Harbor’s revised layout on Thursday, Sept. 5, at Waterfront Park.
Following a June 25 executive session, City Council members advised city staff to meet with Safe Harbor officials to discuss how the lease was incorrectly approved and also to inquire whether they would be open to negotiating new lease terms, Marshall said. That meeting was conducted July 23. Marshall said Safe Harbor officials agreed at that meeting that they would be willing to renegotiate as long as the current lease remains in effect if those negotiations fail.
This story was originally published August 28, 2024 at 1:05 PM.
