Panama City commissioners weigh marina lease, uplands and phased approach to reopen downtown marina

Panama City commissioners spent a lengthy workshop discussing a draft downtown marina lease with Capital Marina Partners and a PFM financial review that found marina operations could produce returns “just under 9%” under current assumptions.

The discussion focused on whether to limit a partnership to rebuilding wet slips, a ship store and fuel terminal, or to include the uplands (the waterfront land between Government Street and the water) in a ground lease. Commissioner Jonathan Hughes, who led the presentation, said the choice will determine whether the city prioritizes immediate public access improvements or seeks larger long-term revenue from upland development.

The PFM consultant, Kevin Plensler, said PFM reviewed CMP’s marina financial model and built a sensitivity analysis. “From a net operating income standpoint, we bridled it out to approximately 12 to 13 years,” Plensler said, and estimated an internal rate of return “just under 9%,” moving up to about 12% under more favorable rental or occupancy assumptions. Plensler and other presenters said PFM did not analyze upland development economics; their review focused on marina (wet slips) operations.

Commissioners and staff described existing constraints and project pieces already in place: a permit for 50 slips in the West Basin; fully designed plans for an improved downtown boat ramp that staff said would cost about $2.2 million to construct; and a remaining promenade and railing scope estimated at roughly $2.8 million to $3.0 million (about 3,500 linear feet). City staff said the 50-slip permit is the only current wet-slip permit for downtown aside from Saint Andrews.

A key legal/contractual constraint raised repeatedly is Saint Joe’s existing “right of first use” on portions of the property. City attorney and staff described a draft lease mechanism, carried forward from the Saint Andrews agreement, that gives Saint Joe first right of use and gives CMP a conditional “right of second use” (a defined period to propose alternatives) before the city moves forward with third-party upland proposals. Staff characterized the July 2 draft as stronger on upland permissions than earlier drafts and said that the draft remains subject to Saint Joe’s rights and to zoning and the city’s development approval processes.

Commissioner Hughes argued the marina redevelopment is not a giveaway: “Anything that’s built there … Panama City will own forever and ever,” he said, adding that a ground lease could let the city retain ownership while a private party finances and constructs improvements. Several commissioners and staff warned that folding uplands into the initial lease increases complexity and could slow an otherwise quicker path to rebuilding the slips and reopening the marina.

The commission discussed financing. Staff and consultants noted private financing currently carries higher interest cost (quoted examples near 7.5%–12% depending on market), whereas tax-exempt or private-activity bond structures could reduce rates and improve the lessee’s margin; staff said the draft lease allows, at the city’s discretion, use of tax-exempt conduit financing though any such plan would require further credit analysis and financial-advisor work. City staff said the draft contemplates that lessee debt service payments would be the security for any conduit debt and that the city would not be pledging its full faith and credit by default.

Commissioners described several objectives they want protected in any agreement: guaranteed public access to the water, a functioning marina (slips, ship store, fuel, parking, promenade and railing), and a transparent revenue-sharing structure. Some commissioners favored separating the wet-slip redevelopment from upland planning so the marina can reopen sooner; others favored keeping CMP engaged on uplands (a longer ground-lease term was suggested by several speakers, with Commissioner Hughes proposing 55 years instead of 30) so the developer can recoup a larger investment.

Staff reported that a recent grant application for the boat ramp had low statewide funding this cycle and that the city would explore other funding sources; the city owns the completed design plans and said they are ready to hand the plans to a lessee or contractor. Commissioner discussion included ideas to hold one or more public workshops/charrettes to develop a tentative master plan or parameters for upland use (height limits, permitted uses, areas reserved as public open space) before any upland lease is finalized.

No formal vote or contract approval occurred at the workshop. Commissioners asked staff to continue negotiations with CMP, return with revisions that reflect the commission’s guidance, and schedule additional public engagement; staff said downtown marina follow-up would be placed on the next commission workshop agenda for further deliberation.

Residents and stakeholders expecting a definitive decision were told the commission’s next steps will include public workshops and additional review of financing options and lease language.