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Maysville looks to escrow in place of salvage insurance for Skipper's lease; commissioners set initial terms
Summary
After tenants said a $750,000 salvage-insurance requirement was not obtainable, the board discussed creating a city-held escrow to cover salvage or removal costs; commissioners agreed on a $1,000 initial deposit and a $300 monthly contribution as a working proposal and directed staff to draft lease amendments for February.
Commissioners questioned whether the salvage-insurance requirement in Skipper's lease was realistic after representatives said insurers would not write a $750,000 policy. City Attorney Kelly Cottle proposed an alternative: "in lieu of salvage insurance, an escrow account shall be created at the Bank of Maysville," held by the city and funded with an additional monthly payment from the vessel owner.
Commissioners explored mechanics: whether the escrow would be refundable if the tenant relocated, how long the city could take action to recover costs, whether the city should be named as an additional insured, and whether the lease should require annual proof of liability coverage. Cottle pointed to existing indemnification and lien language in the draft: "Vessel owners shall indemnify the city against all claims, actions, proceedings, damages, liability, arising or connected from the vessel owner's possession and use," and she noted the draft already includes a lien provision to secure rents and salvage expenses.
Commissioners and staff also discussed the practicality of requiring an annual marine-surveyor inspection; several participants said surveyors may be scarce, and Cottle said she would add alternative verification and notification language (including a requirement that the tenant notify the city of significant problems and repairs).
After back-and-forth on amounts, commissioners converged on a working floor: a $1,000 initial deposit and $300 monthly escrow as a starting point. As Main Street Director Matt Reese summarized, "So 1000 dollars deposit and then $300 a month." Staff directed Cottle to incorporate these changes into the lease language and return with an amended document for possible approval in February; Reese said that would allow the tenant to begin operations in April if arrangements are finalized.
Why it matters: The escrow approach is intended to protect taxpayers from salvage and removal costs if the tenant's vessel becomes a hazard, while recognizing that commercial insurers may not offer the previously required policy. The proposed deposit and monthly contribution are intended as a compromise to provide a ready fund for mitigation.
What's next: City Attorney Cottle will draft lease amendments reflecting escrow mechanics, notification and inspection requirements, and repayment/recovery provisions and will return the draft at the board's February meeting.
