Berth Rates Explained

By Paul Kamen, April 4 2001

For distribution to Waterfront Commission

This proposal retains the same berth rate structure now in place, with a few changes aimed at simplifying administration of the Marina and facilitating future adjustments to the various parameters that determine the berth rates.

The overal size of the increase is driven by the need to balance the Marina Fund budget. Several other plans to increase revenue have been proposed, but the most promising strategies, which involve increasing commercial activity in the Marina, have been rejected by the City Council.

It should be noted that even after these increases, revenue from berthing alone will be insufficient to cover marina operation and maintenance. Although a significant part of the Marina budget is used for expenses not directly related to boat berthing, revenue from hotel and restaurant activity coming into the Marina Fund is considerably greater than these non-berthing related costs. So in terms of the boat berthing functions alone, the berthers are still not quite paying their way under this plan.

The proposed revenue increase is distributed among various sizes and types of berths with close attention to current market characterstics and the practices of nearby marinas, and to the goal of maintaining a diverse community of berthers.


Upwind/downwind berth: In an upwind berth, a boat enters by turning into the prevailing wind, bow to the west. In a downwind berth, a boat enters by turning downwind, to the east. Upwind berths are more desirable than downwind berths. End ties are considered upwind berths, crosswind berths are considered downwind berths.

Single/double finger berth: A single-finger berth has a float on only one side, a double-finger berth has floats on both sides. Double-finger berths are more desirable than single- finger berths.

Berth size: this is the nominal length of the berth, or the "extreme length" as defined in the Marina Ordinance, whichever is longer.

Size category: In order to more closely match berth rates to both the market demand and to the real cost of providing berthing, the berth rate is variable for berths of different sizes. Berth lengths are divided into categories are as follows: 20-21 22-24 25-29 30-39 40-49 and at ten ft intervals thereafter.

Initial base rate: This is the rate per foot per month charged for the smallest size category (20-21 ft), downwind single finger (smallest size, least desirable).

Base rate: The base rate for a specific berth size category, downwind single-finger.

Progressive rate increment: The amount that the base rate increases for each upward increment in size category. For example, if the progressive rate increment is 5%, then the base rate for 22-24 ft berths is the starting base rate times 1.05, and is multiplied by an additional 1.05 for each subsequent increase in size category.

Progressive rate increment for unmetered power: This is the percentage of base rate charged for unmetered power for the 22-24 ft size category, and the amount by which the rate increses for each upward increment in size category. (There is no unmetered power charge for the 20-21 ft size category.) For example, if the progressive rate increment for unmetered power is 5%, then the unmetered power charge is the base rate for 22-24 ft berths times 0.05. For each subsequent increase in size category, the unmetered power charge is determined by multipying the base rate for that size by 0.05 one additional time. So for a 45 ft berth, the unmetered power charge is the base rate for the 40-49 ft size category times 0.05 times four.

Adjustment for double finger: This is a percentage of the base rate. For example, if the adjustment for double-finger is 5%, then the rate is adjusted upward by 5% of the base rate for that size.

Adjustment for upwind berth: This is a percentage of the base rate. For example, if the adjustment for an upwind berth is 5%, then the rate is adjusted upward by 5% of the base rate for that size.

Credit for no dock box: A flat reduction in monthly fee for berths that are not supplied with a dock box. If the dock box credit is $5.00, these accounts are credited $5 every month.

Adjustment for extra-wide: A percentage adjustment over base rate for end tie berths if the berth is used by a boat that's too wide for a regular berth.


Progressive Rate Structure: This berth structure may seem complicated, but it's the simplest way to match prices to market forces. The mathematical complexity is all "under the hood" and neither the berther nor Marina Staff needs to deal with anything more complicated than a simple table of rates for each size and type of berth.

Note that the cost of a boat varies by approximately size to the fourth power. For a small boat, annual berth fees might be as much as half the market value of the boat. For a large boat, they are typically only a few percent. And for the largest boats that can berth in Berkeley, the berth fees are insignificant compared to other operational considerations.

Berths take up area inside the marina, not length. Smaller berths can be built closer together and allow more linear feet to be constructed in the same limited space. On this basis, berth fees should more closely follow the square of berth size, rather than per linear foot.

Finally, the need for major dredging projects is driven by the requirements of the largest boats in the marina.

There is more than ample justification for a steeply progressive rate structure. The surrounding market conditions - i.e., rates at other nearby marinas - is the only factor that keeps the recommended progressive rate from being considerably steeper.

There are several organizations operating in the Marina that should and do receive support from the City, either in the form of below-market leases and berth fees or as direct subsidies. Private boat owners are generally not considered to be among this group, and there is no justification to charge significantly below-market rates at the expense of other City services and deserving non-profits. However, economic diversity is considered a valuable goal for the community of Marina berthers, and this is accomplished by retaining a reasonable number of smaller berths in the marina design. With vessel cost so strongly dependent on size, accessibility by non-wealthy boat-owners is assured by continuing to provide ample berthing in the smallest size categories.

Fee Differentials: After a year of experience with differential fees for upwind/downwind and single- finger/double-finger, it appears that the price differences should be considerably larger than they are now set. That is, berthers still prefer upwind double-finger berths, despite the high fees. This new proposal increases them slightly, but larger differentials may be appropriate in the future. The proposed fee structure allows easy adjustment of this parameter.

The Dock Box Fee: This has been extremely unpopular among the berthers, and is seen as a kind of "nickel-and dime" approach to revenue generation, along with being an unnecessary billing complication. Since all berths will have dock boxes after the anticipated rebuilds are complete, there is no reason to retain this complexity. Structuring the dock box fee as a credit for no box rather than a fee for having a box (as is currently the case) will allow this complication to disappear when the dock rebuilds are complete.

Unmetered Power: The marina currently spends about $80,000/year on power to the unmetered docks. Slightly less than that is recovered in unmetered power charges. The City now participates in a group contract through ABAG at a very favorable rate. Although there's a lot of uncertainty here, it's reasonable to assume that the cost of supplying power to the docks will double at the end of the calendar year when this contract runs out.

The mathematical form of the unmetered power charge is relatively complicated, but it results in the correct exponential form that best matches consumption patterns. The complexity is handled instantly by a spreadsheet, and there's no need for either staff or berthers to deal with anything but the results of this formula as applicable to their berth size.

Large boats have at times cost the Marina almost as much in electricity as they pay in berth fees. Therefore a steeply progressive charge for unmetered power is justified. The long- term solution will be to install meters on all docks and only charge for power actually used, but meanwhile the Marina is not in a position to absorb a large loss in order to continue providing free electricity

Several strategies present themselves for dealing with berthers who are unhappy with sharply rising unmetered power charges. For example, they can be offered to switch to a berth on a metered dock. It might also be possible for some boats to go "off the grid," if it can be verified that they never plug into the marina power outlets.

Results of the Changes: The changes proposed here result in a net annual increase of just over $100,000 in revenue. This assumes 90% occupancy and an additional $80,000 cost for electricity.

The last column of the spreadsheet shows the percentage increase for various size categories, depending on amenities. Note that the high percentages are driven mostly by the sharp increase in the unmetered electricity charge applied to the large berths. For the majority of Marina berthers, the increase will be well under ten percent.

Option B: the Low Impact Alternative:

This alternative plan uses exactly the same rate structure for the berting fee, but uses a much lower rate for unmetered electricty so that there is essentially no change in this component of the fee. This option results in about $60,000/year revenue increase at 90% occupancy, assuming electicity costs are unchanged.

A reasonable strategy might be to reserve implementation of the electricity charge until the City begins to pay a higher rate (probably in January 2002) and introduce the new rates for unmetered power at that time.

Option C is similar, except that it involves a slightly higher berth rate, so that the annual revenue increase is approximately $100,000 as requested by the Waterfront Commission.