A Marina Leasing Proposal for the State of Rhode Island

This thesis examines whether Rhode Island has the authority to lease marinas their submerged lands, and if so, is the fee structure of the CRMC's proposed plan equitable to marinas in the State? The thesis determined that under the powers of the Public Trust Doctrine, Rhode Island has the right to implement a marina leasing program, but implementation of a program may prove to be problematic for the State. The thesis identified that the CRMC's proposed lease rate would be inequitable to marinas in Rhode Island. Marinas SUbject to the CRMC program would pay the same lease fee per slip, although marinas generate significantly different incomes from their slips, depending on factors like size and location. This stUdy recommends that CRMC adopt the fee system used by Maine and Michigan, which charges marinas a lease fee based on a percentage of their slip's revenues. Under this fee system all marinas will pay the same percentage of their slip incomes to Rhode Island as a lease fee. As a policy question, this thesis advocates that the CRMC move forward with a marina leasing program in the future. A marina leasing program if implemented properly would benefit both the pUblic and marinas in Rhode Island. ii

with the marina industry as one of the most directly affected user groups, a State marina leasing program for submerged lands may be in order.
The implementation of a marina leasing program will be problematic for the State. To enact a program, Rhode Island must challenge the fundamental right of private property ownership. A leasing program for submerged lands would charge fees for lands presently considered as private property by marinas. With much of Rhode Island's shoreline held in private ownership, the public could significantly benefit from a leasing program.

RESEARCH OBJECTIVES AND RELATED HYPOTHESES
A primary objective of this thesis is to examine and resolve those legal problems associated with establishing a 1 marina leasing program. A legal challenge questioning Rhode Island's authority to use the Public Trust Doctrine to implement a lease program is expected. To substantiate that Rhode Island possesses the authority to lease its submerged lands, a review of the Public Trust Doctrine will be necessary. To fully understand the scope of the Doctrine, a review of the Doctrine's evolution in the United States in general, and in Rhode Island in particular, will also be required along with a review of legislation and judicial decisions. Other problems associated with marina leasing, such as insurance liability and bank loans on submerged lands, will also be addressed.
Another goal of this thesis is to provide management information that may be useful to the State of Rhode Island.
To accomplish this, a review of other coastal state leasing programs will be conducted. This will identify program elements which could be useful in Rhode Island's management program.
When Rhode Island asserts its ownership over submerged lands by leasing them to marinas, there is a possibility that local tax assessments may be altered. If marinas are expected to pay lease fees, marina owners may request a reduction in their property taxes. This request will come on the basis that the marinas do not own the submerged lands, so they should not be figured in their tax 2 evaluations. At this time marinas in Rhode Island are not directly taxed on their submerged lands, but the value of their submerged lands does impact their tax appraisals. If tax assessments are modified a reduction in local property taxes could occur affecting local budgets. This position has already been voiced at public hearings, and legal action on this point is expected. If reductions occur, it is anticipated that Rhode Island's current proposed leasing plan would not compensate towns for reduced tax revenues.
To account for tax losses, Rhode Island may have to revise its plan to address this issue.

LITERATURE REQUIREMENTS
The literature needs are a critical part of this thesis. First, the evolution of the Public Trust Doctrine must be examined. "Putting the Public Trust Doctrine to Work", provides background along with U.S. case history involving the Doctrine (Slade 1990). Literature on the Doctrine's development in Rhode Island is also important.
"The Evolution of Public Trust Rights in Rhode Island's Shore", helps one to understand the history of the Doctrine (Nixon 1990). Further information on the history of the Doctrine and its development in the United States judicial system, was attained through various law reviews. The Rhode 3 rs land Supreme Court decision in Hall v. Nasciemento, 594 A.2d 874 (R.I. 1991), along with the other cases that were reviewed provided insight that was crucial in developing this thesis.
Coastal and landlocked state's leasing programs in the united States were arbitrarily collected and reviewed. From these reviews three lease fee formulas will be selected for further analysis in chapter 4. 4 CHAPTER 1 THE PUBLIC TRUST DOCTRINE AND RHODE ISLAND'S PROPOSED MARINA LEASING PLAN

THE ORIGIN OF THE DOCTRINE
The Public Trust Doctrine is a common law concept that originated during the Roman Empire (Slade 1990). Roman law was derived from the Greeks and developed in a society which relied heavily upon free trade and commerce (Tannenbaum 1985). To promote trade in a time where cargo was primarily transferred by shipping routes, the Romans recognized that certain areas must be kept open to the public. The Institute of Justinian, a principal source of Roman civil law stated: Things common to mankind by the law of nature, are the air, running water, the sea, and consequently the shores of the sea; no man therefore is prohibited from approaching any part of the seashore, whilst he abstains from damaging farms, monuments, edifices, etc., which are not in common as the sea is. (Tannenbaum 1985).
The public rights of access under Roman law existed in the waters and shores of all bodies of water, and shores that were in fact navigable (Slade 1990). These same principles of public rights in the shoreline remain the foundation for the modern day Public Trust Doctrine.

THE DOCTRINE'S EVOLUTION TO ENGLISH COMMON LAW
With the fall of the Roman Empire, the evolution of the Doctrine can next be traced to England during the 13th century. At the time of the Doctrine's reappearance, the 5 majority of England's coast was held in private ownership (Tannenbaum 1985). ~his  Although similar to the Roman civil law principles, fundamental changes were made to the Doctrine during its transition to England. Under English common law only tidal waters which were considered navigable contained public trust principles. This limited the public's rights in tidal waters and lands beneath them that were not considered navigable (Slade 1990). Another difference between the In England, the Magna Carta continued to be interpreted broadly to increase the scope of restrictions on the King, to finally become a major source of authority for public rights in England's navigable waters (Tannenbaum 1985).
This new interest in establishing public rights in coastal waters and navigable rivers was furthered by Sir Mathew Hale's Treatise, De Jur Maris written in 1670 (Kalo 1990).
It was through Hale's treatise that the basis for the English common law rule evolved. The rule changed, so that title to lands over which the tide ebb and flowed were now held by the King, in a sort of trust for the public. The importance of this, was that the burden shifted to the private landowner, to prove either that the sovereign had indeed meant to grant to him the tidelands adjacent to his upland property, or that he had acquired a prescriptive right in the land (Slade 1990). In the decision the Court stated: The common law of England at the time of the emigration of our ancestors, is the law of this country, except so far as it has been modified by the charters, constitutions, statutes or usages of the several Colonies and States, or by the Constitution and laws of the United States.  (Nixon 1990 Public Trust principles can also be found throughout the history of the Rhode Island's Constitution. In a provision adopted in 1842, public rights in the shore are plainly acknowledged (Rubin 1991). Article I, Section 17 of this provision stated that: The people shall continue to enjoy and freely exercise all the rights of fishing and privileges of the shore, to which they have been heretofore entitled under the charter and usages of the State.
A further amendment to this section in 1970 contained Public Is equivalent to the legislative declaration that navigation will not be straitened or obstructed by any such filling out . . we hold that establishment of a harborline operates as a license or invitation to the riparian proprietor to fill or wharf out to that line". General (Jackvony), to an ordinance adopted by the City Council of Newport. This regulation allowed the Newport aeach commission to erect a fence on Easton's Beach which interrupted lateral passage along the shore between meanhigh and mean-low tide lines (Johnson 1988 "that rights to the shore could not be destroyed even by the legislature".
Through this finding, the Court has fortified Rhode Island's position in claiming some control over its submerged lands.
The Court found the ordinance unconstitutional, and declared that the phrase "privileges of the shore" has never been clearly defined under Rhode Island precedent. allow his project to proceed (Nixon 1990 It is a title held in trust for the people of the State that they may enjoy the navigation of the waters, carry on commerce over them, and have liberty of fishing therein freed from the obstruction or interference of private parties. The Court went even further in establishing individual State rights by stating: a conveyance of public trust land into private ownership solely to further private interests violates the Public Trust Doctrine and a State can convey trust land only if the land can be disposed of without any substantial impairment of the public interest in the lands and waters remaining. This decision again established the individual States as a property owner in such lands, rather than assigning regulatory authority through their sovereign police powers (Slade 1990 which was filled pursuant to wharfing statutes in the 1800s (Rubin 1990). In its decision, the Massachusetts Supreme court found that the wharf statutes were valid legislative grants, by stating that: the land below low waterline can be granted by the state only to fulfill a public purpose, and the rights of the grantee to that land are ended when that purpose is extinguished.
The reason the Court defined the boundary as the low water mark, is that in Massachusetts and Maine the jurisdiction over submerged lands begins at the mean low water mark rather than mean high water mark (Slade 1990 (Gifis 1984).
The Doctrine also concedes that if the delay has led the adverse party to change his or her position as to the property or right in question, it is inequitable to allow the negligent delaying party to be pref erred in their legal right. Addressing the Doctrine of Laches the Court stated: we hold that the claims asserted here cannot be barred through either Laches or Estoppel. As the supreme Court of California has observed, the state acts as administrator of the public trust and has a continuing power that extends to the revocation of previously granted rights or to the enforcement of the trust against lands long thought free of the trust. In its decision the Court stated: We need not reach that question. The State's ownership of the submerged and submersible lands alone is sufficient to justify the rental which the Board proposes to charge for occupation of the surface of the water.
Although this statement reinforces State's rights to lease their submerged lands, the Court also addressed the question 33 of area in which Oregon has the right to lease when it found: we are aware of no general principle which requires a lessor, whether public or private, to calculate rentals on any particular basis such as the amount of surf ace area physically in contact with structures.
Although the question of area in which the State may lease has not been raised at public hearings in Rhode Island, it may be an issue that is brought up in the future. If this issue is brought before a Rhode Island Court, the outcome will most likely be similar to Brusco. an upland owner on tidal waters has no rights as against the state or its grantees to extend wharves in front of his land, or to any private or exclusive rights whatever in the tide lands, except as he has derived them from the statute.
The court went on to cite further cases supporting that riparian owners hold no property rights and stated: we find, then, no authority for plaintiffs' position that riparian owners on navigable waters have a right to build navigational structures on state-owned beds adjacent to their property which may not be revoked without compensation prior to its exercise. Mj.ssissippi, 484 U.S. 469 (1988), to get Mississippi to develop a submerged lands leasing plan (Jarman 1990  marinas have claimed that they are being subjected to an economic disadvantage (Oliveri 1992 (Flannery 1990).
Other aspects of interest in Florida's marina leasing program include its fee system and lease term. Florida has a two tier lease fee formula, in which there is a standard 52 fee and a base fee. gross profit to marinas, and usually make up 25% of their total revenue (Comerford 1986). Slip fees are important to marinas, and it is a general rule in the marina industry, that slip fees should cover the mortgage held on the marina (Bell 1985 To confirm the first hypothesis, the income differences generated from slips of various sizes must be examined.
First, the incomes generated from three slips of different sizes must be calculated. Next, the income totals on each slip will be compared to the flat $10.00 lease fee a marina would pay under Rhode Island's proposed plan. These comparisons should demonstrate that Rhode Island's lease fee is inequitable in that it charges the same fee to all  Where they are located.
Next, the function of a marinas location in relation to its slip price will be examined. This will be accomplished bY examining a few of the factors that help determine why location can influence a marinas wet slip price. These elements will then be applied to the three marinas    Marinas were randomly selected then contacted by phone 69 seek marinas near their homes, to minimize costs and travel time (Lyon 1967). As boat owners have a higher average household income than non-boat owners, it can be expected that marinas in towns where the per capita incomes are higher will command higher slip prices (Bell 1990). A comparison of the three selected marinas' (Table 4)   The neighborhood characteristics of a marina's location is another variable that affects wet slip pricing (Pompe !992). Even a marina with a prize winning design will fail if it is not located near shopping areas, restaurants, and other service areas its customers patronize (Rogers 1982).
Marinas found in areas that have waterfronts containing fine restaurants, live entertainment, and shopping districts charge higher slip fees (Pompe 1992 (Bell 1990 Access to open water and popular sailing and fishing sites, can also influence a marina's slip pricing (Rogers 1982

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The first formula to be computed will be Texas'    (Nixon 1990). The practice of filling tidelands became a popular method to create waterfront property in Rhode Island, and without State regulations, many harbors would have been filled in by riparian landowners. In 1815, Providence Rhode Island moved to establish some control over its submerged lands by passing the first harborline act (Ibid) . The harborlines primarily served to control the filling of tidelands in Narraganset Bay, and maintain the right to freely navigate protected by the navigational servitude. Navigational servitude is the paramount right of the Federal government or States, to compel the removal of any obstruction to navigation, without paying just compensation which the Fifth Amendment ordinarily requires (Kalo 1990 (Massachusetts Report 1987). Banks in New Jersey have also shown concern about the amount of lease fees levied on marinas. Banks were concerned that if the fee structure is of a certain magnitude, it could affect the marina's financial operations, thus impacting a loan.  in Florida, and as more towns undergo budget deficits it may become a common practice (Flannery 1993 (1988). How a Court decides such an issue will depend on the state in which the case is being held, because under the U.S.
constitution, the law of real property is left to the individual States to administer (Kalo 1990 (Flannery 1993 (Bell 1990 takes these steps, the chance that organized opposition from marine associations and the public will again halt a plan, will be reduced.

One of the most important features in any marina
leasing plan is the lease fee formula. Rhode Island's current proposed formula is not only inequitable to marinas, but also would not generate enough funds to justify the bureaucracy associated with setting up the program. Based on a 1988 survey done by the International Marina Institute, it was estimated that Rhode Island marinas contain somewhere around 10,000 slips (Ross 1988). At Rhode Island's current proposed rate of $10.00 per slip, the total amount of revenue generated from a marina leasing program would be on the order of $100,000. This figure can not be expected to cover the implementation and operation costs associated with establishing such a program. By adopting of one of the previously discussed leasing formulas, Rhode Island coulq generate enough income to warrant the creation of a marina leasing program.
In its current form, it seems probable that implementation of the plan will result in the creation of yet another State regulatory agency from which no operational budget is available. In a time of growing public awareness about government bureaucracy, implementation of such a plan would be a costly political and public policy mistake.
To provide marinas with the most equitable formula currently available, and generate enough income to justify a program, it is recommended that CRMC use Maine and Michigan's percentage of slip revenue lease formula. The adoption of this formula will reduce complaints among marinas in regarding inequitable rates. To reduce the initial financial burden on marinas, Rhode Island should opt for a lower rate, perhaps 2% or 1%. As Table 5 demonstrated, even at the lowest rate of 1%, the program would still bring in almost 300% more revenue than Rhode Island's proposed plan. The adoption of a rate lower than 4% may also make the initial implementation of marina leases more acceptable to the industry. In order to allow the State flexibility to adjust the rate, the lease should include appropriate language which considers a rate adjustment every 5 years based on the consumer price index. The leases should also include specific provisions to address both taxes and liability. To resolve tax problems the marina leases should include a provision finding the marinas as the responsible party for fees associated with the property, including both State and municipal taxes.
Most States have such language in their leases, and Rhode Island should simply adopt a provision from another State's plan. By including such language in the lease, Rhode Island will eliminate concerns from cities and towns on the potential implications to their tax bases. The State could also adopt a section of previously proposed legislation on filled tidal lands, which addressed taxes. The legislation was introduced to the Rhode Island General Assembly in 1992, 106 after the Hall decision, and it contained language directly addressing taxes. This legislation would grant municipalities the authority to tax filled lands· as agents of the state, and keep all revenues from such taxes (Boyle 1992). If such legislation was adopted then a tax policy which clearly stipulates who is responsible for the payment and collection of taxes on marinas' submerged lands would be established. In such a case, the slip fee is based on the greater of the two lengths.
In addition, many marinas reserve a certain number of slips as transit slips, which are rented to boats according to their length, on a daily basis. Fees collected from transit slips vary depending on the actual length of the boat docked that day. Therefore, a leasing system based on linear feet of actual dock footage would be less problematic to implement than one based on actual boat lengths.
In conclusion, this review shows that Rhode Island has the legal and political framework to implement a marina leasing program. However this analysis also reveals inconsistencies and weaknesses in the current proposed plan.
While it is advised that this plan not be implemented in its present form, it is recommended that the State amend the plan for future use. Through restructuring of the fee 111 system, and the addition of carefully worded specifications to address problems associated with leasing, Rhode Island could effectively have a plan ready for implementation by the end of 1994. With no doubt, both the citizens and the marinas of Rhode Island better served by the adoption of a fair and effective marina leasing program.