Board of Directors Regular Meeting Agenda


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Meeting Date: 08/22/2018  

SUBJECT MATTER:
Receive, consider and act upon a Waterway Cruiser update (as requested by Director Bruce Rieser);
FISCAL IMPACT:
BACKGROUND:
The Water Taxi operations first began as a private operation in The Woodlands, Texas by The Woodlands Development Company (TWDC) in 2004. Six (6) boats were launched and each could carry upwards of 35 passengers. TWDC contracted operations to Water Taxi, Inc. of Fort Lauderdale, Florida which ran the service for many years, ultimately giving way to Brazos Transit District for operations.
 
In 2011, TWDC gifted all six (6) of the Water Taxis, free of charge, to The Woodlands Convention & Visitors Bureau (CVB), a 501 (c) (6) organization responsible to position The Woodlands as a regionally, nationally and internationally recognized destination for leisure, convention and business travel. The CVB Board at such time allotted $500,000 and five years for the funding of the operation and a major renovation in 2011 and 2012. Renovation required the boats to be lifted from The Waterway and taken to a shipyard in Kemah. After the renovation, the boats were returned to The Woodlands Waterway for service with a new name, Waterway Cruisers.
 
In 2015, Brazos Transit District notified the CVB that it would be discontinuing its operations with the Waterway Cruisers at the end of the year. The CVB went to market with a Request for Interest for new operators / owners. Two proposals were received, and Waterway Events LLC was selected. Waterway Events began service in April of 2016. The company operated the boats for approximately 18 months up to August 2017 when Hurricane Harvey hit the Greater Houston region. Suffering damage from the hurricane and lack of attention to the boats by Waterway Events thereafter forced the CVB shut down operations at the end of 2017.
 
Brazos Transit District performed a fleet inspection and found the boats in a state of disrepair and the maintenance facility overflowing with parts at the expense of four (4) boats. None of the boats were operational at the time. Based on their discovery, the boats could not be economically refitted for continued service without significant investment.
 
Further, the Brazos personnel determined the boats had reached the end of their useful life. To renovate the entire fleet of six and ensure the safety to carry passengers, costs could reach hundreds of thousands of dollars.
 
The Waterway Cruisers have logged over 500,000 passengers in 14 years of service.
 
Over the past several months, the CVB has issued three different Request for Interest (RFI’s):
 
1.   RFI for Waterway Cruiser Assessment and Survey:
At its February 28, 2018 meeting, the CVB Board authorized President Nick Wolda to seek a third party contractor to assess, investigate and/or provide recommendation regarding the current value of the assets for the purpose of the possible liquidation or disposal.
 
The CVB inquired of experienced firms/professionals in the marine vessel ownership/operation business for initial qualifying proposals for interest in contracting to perform an assessment and suggestions for maximizing value of the watercraft through repurposing/final disposition of the vessels (including processes and cost for removal from The Woodlands Waterway).
 
The CVB advertised, heavily promoted and contacted approximately 20 boat companies and surveyors. Lone Star Marine Surveyors, located in Kemah area, visited the Waterway Cruiser marina in early April and submitted a bid to assist the CVB.
 
At its April 18, 2018 meeting, the CVB Board of Directors authorized, President Nick Wolda to contract with a third party contractor to assess, investigate and/or provide recommendation regarding the current value of the assets for the purpose of the possible liquidation or disposal of six Waterway Cruisers.
 
Lone Star Marine Surveyors, located in Kemah area was chosen from two submitted proposals. Lone Star Marine Surveyors conducted an inspection of the six (6) Waterway Cruisers on May 1, 2018 and presented results to the CVB Board of Directors on May 16, 2018.
 
Results of Lone Star Marine Survey:
 
Terminal Value: The value of an asset at the end of its economic or useful life.
 
With an income producing asset, it may be its market value at the end of its economic life. It may still be useable but not in its original use or original design
 
It may have salvage value. It may be a scrap value.
 
It may have a negative terminal value (fiberglass hull, black oil or asphalt barge, vessel with asbestos or red lead) this is where it will cost to remove and dispose of an asset at a greater value than the fair market value. The consultant, Captain David E. Ghidoni of Lone Star Marine Surveyors, said, “I believe this fleet has a negative terminal value.”
 
 
2.   RFI for Water Vessel Operation on The Woodlands Waterway:
 
The CVB issued an RFI on March 29. 2018 seeking an innovative approach to boat service on The Woodlands Waterway.  All interested submissions were due by July 31, 2018.
 
CVB staff heavily promoted the issuance of the available RFI to local, state and national boat service operators, manufacturers and vendors. A colorful and dynamic ad was designed and placed in boating/manufacturer industry newsletters and publications. The ad was also used in online promotion on boating industry websites. Hard copy RFIs were compiled and mailed to dozens of identified companies through web searches for companies offering similar services in other destinations. The CVB reached out through their travel and tourism network to find additional vendors that other CVBs have worked with.
 
A full accounting of all correspondence with anyone seeking additional information or asking questions was recorded and filed by the CVB staff.
 
President Wolda scheduled three days of site visits of the marina and area for vendors interested in seeing the facility in person. Vendors visited at their own expense.
 
This RFI concluded July 31, 2018.
 
3.   Request for Interest for the Sale, Removal, Transportation and Proper Use, Reuse, and/or Disposal of Water Vessels
 
On June 21, 2018, the CVB issued an RFI to seek experienced firm/professionals who wanted six (6) Water Vessels currently located in The Woodlands, Texas.
 
The RFI specifically stated the CVB was looking for experienced firms/professionals in boat sales and operations who are willing to purchase the Waterway Cruisers, bear the costs of removal and transportation, and might make use of the Waterway Cruisers in destinations like cities, amusement venues and other destinations. Alternatively, the CVB inquired of parties who specialized in purchasing and salvaging similar boats or who would be willing to safely remove, transport and dispose of the Waterway Cruisers at their cost.
 
The CVB received two proposals. At its August 15, 2018 meeting, the CVB Board of Directors considered the following:
 
  • Two proposals were received regarding the Request for Information (RFI) for a new water vessel operation on The Woodlands Waterway and sale, removal, transportation and proper use, reuse, and/or disposal of Waterway Cruisers.
  • No decision was made for RFI a new water vessel operation on The Woodlands Waterway.
  • Bruce Rieser, Chairman, mentioned that after learning from Lone Star Marine Surveyors that the Waterway Cruisers have a negative terminal value and would be costly to renovate each boat.
  • A motion was made and approved to authorize the President, in consultation with legal counsel, to draft, negotiate and execute a contract with MGSIII Maritime pursuant to their proposal for removal and disposal of six (6) Waterway Cruisers from The Woodlands Waterway at a cost not to exceed $60,000.
  
POSSIBLE GRANT FUNDING AVAILABLE
Recently it was brought to The Township and CVB’s attention the ferry grant funding that was awarded in May 2014 will lapse in September 2019.  The award included $253,844 in federal funds with a local commitment of $63,461, totaling $317,305.  As there was concern at the time as to the direction and the future of the water cruiser operation, Brazos Transit District was asked not to move forward until future plans were adopted.  These funds are still available but the time to submit a grant is slowly closing. 
 
The award stated, “The Brazos Transit District will receive funding for the Woodlands Waterway Cruisers Capital project, which will replace aging equipment on six passenger ferries to ensure reliable service for thousands of residents and visitors within The Woodlands community.” 
 
Brazos Transit District has presented three options:
 
1.   The funds could be deobligated.  This would require a letter stating that The Township/CVB agrees to deobligate the funds.
 
2.   Second, the funds could be used to rehabilitate the existing cruisers.  Due to the condition of the existing cruisers, there may not be enough funding to rehabilitate all six, which could create issues since the award cited six passenger ferries.  However, we are not opposed to asking to rehabilitate three of the six or however many could be rehabilitated with the available funding. This option would require a letter of commitment of the local share before we move forward with the grant application in TRAMS.  This project is already in the TIP/STIP.
 
3.   Third, Brazos Transit District could petition FTA to allow funding for acquisition of new cruisers.  This would be based upon the fact that the existing cruisers have exceeded their useful life and it would not be a prudent use of the funds to rehabilitate the existing cruisers.  There has been discussion between BTD and the CVB of purchasing new, smaller, open-air watercraft.  These would most likely be less costly than the existing units with a much lower maintenance cost.  Acquiring new cruisers would add a fresh commitment to general public transportation on The Woodlands Waterway.  This option also requires a letter of commitment of the local share before moving forward with any action.  As BTD submitted the grant and the award was made in its name, time is of the essence.
 
WATERWAY MAINTENANCE FACILITY
 
The Waterway Maintenance Facility, located on Lake Robbins at Interstate 45, was built with federal grant dollars and is owned by Brazos Transit District. This building has a limited use for transportation purposes.
 
RECOMMENDATION:
The Township will need to determine its role in the process.
 

    

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