I once owned a marina
on a large lake in down state IL that was known for
great winds, and therefore, had a great number of
sailboats. Being an avid sailor, I too had a boat
at the lake marina. Not the, "other marina,"
but "the" marina. You know, where the big
boys kept their boats. In the process of sailing over
a number of years, I got to know the owners, a number
of brothers and in-laws from the local town nearby.
They had several disputes amongst themselves, and
decided they'd sell the marina for the sake of family
unity. Of course their asking price was too high,
so they were not able to find a buyer with the money.
Along I came, not
with the money, but with a plan. The bottom line is,
they were desperate, and I had a very good plan that
allowed them to sell out and get their money in increments
over a four year period. I scoped out the docks, and
figured I could move the dock sections around and
gain over 90 new slips to rent. Brilliant! These 90
slips would bring in around $50k in rents. Almost
enough to make the payments. Of course, I didn't tell
them of my plan.
The deal went down,
and I owned a marina. I guess I sensed there might
be a problem at some time in the future, so I structured
the ownership of the stock in the Marina Corporation
to be owned by a separate holding corporation, not
by me directly. I did own all the stock in the holding
company. That way I could sell my stock in the holding
company, and get out of the deal without having to
sell the marina company that had the lease. . A very
good idea if you want to cash out without a lot of
involvement with a lease transfer.
The marina was on
a Corps lake, so I went to meet the 'Landlord'. They
welcomed me with open arms, and in fact, referred
to me as their, 'white knight'. I was all wet with
enthusiasm as I drove back to my marina that I had
just agreed to pay several hundred thousand dollars
It was exciting, it
was hard work, and it was wonderful. The Corps people
at the lake office were great. They were more than
happy to see me improving the facility and serving
the public who used the lake. The Colonel in the regional
office was laid back, and that attitude permeated
Life was good. In
fact, it was so good, I bought a home on the lake
and went to work each day by walking down to my private
dock, and skimmed over the mirrored water of the calm
lake in my brand new Boston Whaler. 'It can't get
any better than this,' I'd think, with the cool breeze
blowing in my face as I went to work each day.
I was the envy of
all my friends, living my dream. I loved my Customers,
and they loved me. Of course my plan worked, and over
a period of four years, I paid off the marina., just
as planned. To do so, I had to sell the meat business
I currently owned, but that was part of my master
Over the following
2 - 3 years I poured the profits from dock rents,
boat handling and repairs, and brokerage sales into
the infra structure. We built a large repair shop,
redecked the docks, and added more docks to the facility.
The business grew from 140 slips to over 350. Finally
I was able to reap my reward and take some money out
for my family and my future. After all, that's what
you do, right?
Along the way it wasn't
all joy and prosperity. There were floods, ice incidents
with the docks, and hours of hard bone grinding work
to get the job done. I wasn't one to just manage,
but instead, I worked the boats, and acted as the
salesman on weekends. I built a transport trailer
and hauled boats free from the surrounding lakes and
river to the marina.
But, it was part of
the deal when you are a marina owner. And after all,
you're building a business that someday will be worth
some real money. When you are the owner, you knock
your nuts off sometimes to make your business prosper.
The key word here
is, 'owner'. When you buy something, you own it, right'
Well , not exactly. You own the business, the docks,
and the buildings, but not the land or the harbor.
That's owned by the government, and managed by the
Corps. But you do have a 25 year lease! Yeah, right.
You think you have a 25 year lease. This realization
came to me with the first disagreement I had with
my landlord. It was over the installation of a flag
pole for the Yacht Club members.
Every change or addition
made to the facility had to have an approval from
the Corps. That's part of the deal, and ok with me.
I didn't have a problem with any of that over the
past 7 years with two Colonels who oversaw the regional
operations. But then, well, let's just say, 'I did
The Corps rejected
my application for permission to put in the flag pole
for the Yacht Club. The reason' I wasn't done with
my complete dock re-decking project, and didn't ask
permission to paint my building navy gray instead
of army green. ' navy gray's nice', I said with a
smile. 'But you didn't ask first', the Major (shooting
for Colonel} scowled. 'As soon as you're in compliance,
we will consider the flag pole request, but not until
you are fully in compliance with our requirements.'
Seems like a trivial
concern, right' Well, stupid is stupid! And the leader
of stupid at that time was me. I told him what I thought
of their reason for not allowing the flag pole installation.
Big mistake! To add fuel to the fire of discontent
with me, the Yacht Club Leaders were 'connected' in
Washington, and asked their Senator why the Corps
would not allow the American flag to be flown at the
Lake. Not a good thing to happen to me at that time.
Reluctantly, under pressure from above, the flag pole
request was granted and installed. Winning one for
the Gipper might be fine, but winning one from the
Corps ain't so fine for your future.
I wasn't being a team
player. I didn't realize they were the Army, and I
wasn't. My biggest mistake was telling them what I
thought of their system of total micro control. Another
big mistake. Now I was on their list. Starts with
's' and ends with 't'. But I had a 25 year lease and
have some rights under that lease to run my business
and earn a profit.
At the end of the
season I made an application to increase the rent
by 50 cents a foot to generate added revenue for the
following season. We had not requested a rate increase
in our 7 years, and it would cost each boat owner
only about $35-50 per season more for rent. I informed
the new Real Estate manager that I wanted to expand
the docks, and put in more boats. The request was
rejected. The reason' Excessive. Excessive' 'What
are you talking about' I can't build more docks without
more revenue to pay the bill,' I objected. Again,
they replied to my second request, 'Excessive'! I
made a third amended request for a rate increase,
49 cents a foot. 'Not smart, but it has to stop somewhere',
I had a meeting with
the new Real Estate Manager and candidly told him,
off the record, what I thought, and how thankful I
was that I had a lease that still had 18 years to
'You don't have anything!'
was his response. 'The Corps wrote the lease, and
we'll interpret it any way we want', Then he added,
' we can get rid of you anytime we want.' That sure
made me want to pour in more money after the $650k
I had in the deal!
There were other incidents
over the next year or two, including an attempt to
cancel my lease for being out of compliance when I
put in some railroad tie steps to one of the docks,
and then applying for permission to do so after the
My reasoning was;
it was an emergency safety hazard created when dirt
was piled by the Corps on a new berm above the ramp
to the dock. It was the Corps action that created
the hazard, and I assumed they'd welcome my covering
their tails with the steps... However, I knew they'd
do the flag pole routine with my application, and
time was of essence. My customers were sliding on
their butts down the hill on the steep slope.
I was ordered to first
remove the steps, before they would consider my application
for the steps installation. That made a lot of sense.
First re-create the hazard, and then after months
of waiting for the x's to be in the right boxes, and
jumping thru their bureaucratic hoops to get permission,
then undo the hazard and rebuild the steps' I requested
that they inspect the steps for safety, and if there
was a problem, I would correct the problem immediately.
The answer came back.
'You are ordered to remove the steps immediately,
you are not in compliance.' I purposely waited before
I made any response. A couple of weeks passed, and
nothing. Charlie, my carpenter, looked out the window
and saw the parade first. 'Hey, there's a pot full
of Corps cars driving down the field toward 'G' dock'.
I came to the window and sure enough, four or five
Corps cars were parked near the steps.
I could see the army
uniforms from a distance, I could also see them setting
up a video camera and start to take their video, sweeping
back and forth with the camera.
I took a long time
to let them do their thing before I appeared. I walked
down the path to the entourage, and respectfully approached
the Major and his cohorts, nodding my head when getting
near. 'Thanks for coming by to see that the safety
hazard created by the berm has been corrected', I
said with a smile. All I got in return was a scowl
from the Major. I then offered, ' I'm sure the steps
meet the safety requirements as outlined. But, if
there are any changes you want, I will make them this
afternoon'. I again smiled. 'And I want to thank you
for understanding the safety situation, and the apparent
need for fast action', I added. Not a word of greeting
or acknowledgment. Then, the Major stepped into my
face in his long practiced military posture. Chest
out, arms at attention, and teeth clenched. 'I order
you to take those steps out, and now!' he growled
in his best ever command voice.
There I was, nose
to nose with this fool, standing in the mud on top
the berm, and not wanting this to be happening to
him or me in front of his command. I was a few inches
taller than he was, so it was a little awkward with
him standing there with his chin out looking up at
me, his face a foot away from mine, his hat crisp
and spotless with a shinning rank symbol; and mine,
a faded red with finger grease stains on the bill
from taking the hat off and on for three years. The
tension spiked to unbearable. It couldn't stay at
this level without something exploding. I didn't know
whether to bend down and kiss him on the forehead,
or cough, or laugh!. Anything to break the tension!
What could I do to maintain my manhood and not embarrass
the Major, or myself?
I guess we stood there
for seconds, but it seemed like minutes. I could see
he was serious, with his face turning red, as his
people began to mill around a bit, and glance down
to the ground in nervous anticipation of the next
move. I know now, I should have been a tad more diplomatic,
and asked the Major if we could discuss the problem
in private, but I didn't. I too was a fool under the
tension. ' Major,' I said very slowly, measuring my
voice, and using an artificial country boy drawl,
' I'm not going to remove the steps unless they are
unsafe, but you' all can. You can order your people
up on the hill to bring your bulldozer down here,
and you' all can push the steps up over the hill,
and down in the valley. Then, I will take your picture
doing it, and if someone breaks their leg and wants
to sue, I'll give them the video!' Then, I think I
apologized, but probably not, but I wished I had.
The Major didn't say
a word He turned on his heel in perfect drill fashion,
and taking mother may I giant steps, briskly popped
into the back seat of his car, and away it sped, dust
flying as they zipped onto the road and out the gate.
The others looked up from their focus on the ground
to me like I was dead meat, and smiling nervously,
also left without a word. I knew without a doubt what
would happen. But, what could I do? I really felt
bad for the Major. But not too bad.
Their attempt to cancel
the lease was immediately challenged in the Federal
District Court, and we won. The Judge asked them,
'why the trivial minimus litigation with the marina''.
'That's two strikes, including the flag pole face
down' , was my conclusion. Why wait for three. Who
knows what will happen then. I decided I wanted out.
But, I was finally off their s-t list, and unfortunately,
now on their dead meat list.
Again I had a brilliant
idea. 'Build, Sell, and Lease back', it's called.
It's the way they made the Holiday Inn chain, and
Sears. The way it works is: you build a structure,
sell it to investors, and then lease it back from
those same investors for use in your business. You
can then use your money to do it again and again.
Brilliant! I could do the same with my assets. My
docks, buildings, and marina equipment. I owned all
these assets, right' They weren't part of the leasehold,
they were mine and I could do anything with them I
wanted, right' With my plan I could extract several
hundred thousand dollars just from the sale of the
docks, and still own the buildings and business. Lease
payments could be figured as a percentage of the rent
they generated. Happens all the time in the business
world. It's like the old hooker says, 'You got it,
you sell it, you still got it!' What a stroke of business
My rich customers
at the marina were enthusiastic about the investment
opportunity. It was the 80's and investments were
going great. I made deals to sell every dock I owned,
and then have the Marina Corporation lease them back
from the investor's Leasing Company. $700k for 350
docks. I could then sell the holding company stock
to another group of investors, and slip quietly out
of town. A new president of the Marina Corporation
could manage the marina and continue business as usual.
After all, there would be no change of ownership of
the Marina Corporation, which had the lease, and owned
the buildings and business. Nothing would change,
except I would be gone.
Then, the Corps got
wind of my deal. 'You can't do that. You're selling
the marina to Investors without approval from the
Corps', they informed me. 'We will cancel your lease
if you try to go through with such a scheme'.
My explanation was
futile. 'I'm selling some assets I own. There's nothing
in my lease that says I can't sell some assets'. I
asked them if it would be ok if I leased some new
docks from a leasing company, and then put those docks
in the marina. They responded that it would be ok,
'Happens all the time', they said. When I then inquired
if it would be ok if the Leasing Company had the new
docks fabricated by another party, they said that
would be ok too. 'But if it's ok for an outside company
to make the docks and sell them to the Leasing Company,
and then I lease the docks from that company, what's
difference' If I make the docks, sell them to a leasing
company, and then lease them from that company, isn't
it the same deal'' Linear thinking is not a good thing
to try when you are on that now, 'dead meat list'.
'It's a scheme to
sell the marina without our permission'. You are not
I cancelled the lease
deal with the investors and made more docks out of
operating income over the next boating season. Things
settled down for a time. The Corps was busy building
the new dam at Alton, IL, and it took their mind off
of war planning. Then, when it was time to change
Colonels, the Major made Colonel, and acted as interim
regional officer until a new permanent Colonel was
Strike three, July
7th 1989. I was pulling a customer's boat for bottom
paint, when up pulled the small white car with the
Corps logo on the door. Not the regional lake manager's
car, but the 'company' car from St. Louis. Out stepped
the big duo, the Real Estate Director, and the Corps
Attorney. 'We're here to deliver this lease cancellation
notice', they snickered. 'You are out of compliance
and have 60 days to get in compliance before your
lease is cancelled', they added. I was astonished.
What on earth could this be' The Major made Colonel.
The war was back on!
- 1] Re-deck all the docks. That's an easy one.
I had done that already.
- 2] Tear down the covered docks on dock 'D'. it
is not in compliance.
- 3] Tear down the main building that housed the
marina store, office, and showers and lounge for
the dock renters. The building is not in compliance.
- 4] Tear down the bait shop building and replace
it. The building is not in compliance.
- 5] Pay over $25,000. in additional rents that
were refigured using a different formula than the
one outlined in, and part of, the so called 25 year
lease that we both had signed.
I could see by the
list of compliance requirements that it was not achievable,
and they knew it when they made the list. To attempt
to do anything that would satisfy their demands would
be futile. It was just a formality they had to go
thru before canceling the lease and booting me out
of the business. It didn't even matter what I tried
to do, because they were on a road to ridiculous,
and I was on the back of the bus. Not even sitting
in the back seat, but strapped on the bumper like
a sack of disposable garbage, to be dumped at the
side of the road when the 60 day period expired.
Off to my Lawyer's
office again. I sure knew the way. Back to District
Court for an injunction. But this time they had done
their legal homework. This time the case could not
be settled in the District Court where we had previously
won, and surely would win again. . No indeed! This
time, they argued that because they had included a
money dispute ($25k rent refiguring}, the District
Court did not have jurisdiction, and the case would
have to be settled in the Court of Claims in Washington
DC because the amount was more than $10k. It was out
of our favorite judge's hands. They had me, and they
were glib and enthusiastic. They knew it would take
months, if not years, to get the case on the docket
in the Court of Claims, and even then, I couldn't
financially defend myself. Meanwhile, they would cancel
the lease, and boot me out the gate.
We wrote them a certified
letter that explained that the docks had been re-decked
and we included a survey done by a registered engineering
firm that certified that the docks were safe, and
had all new boards installed. The engineering report
gave the buildings a passing grade for structure and
safety. Their response was, 'the cracks are to wide
between the boards on the docks.' We responded that
the cracks were 3/4th of an inch, what is the requirement
for cracks' Is there a regulation for board cracks'
'Less than what you have', was their reply. We were
in it deep.
To counteract the
rent dispute, we paid the rent requested, but under
protest. . They responded that we were still out of
compliance with the other items and that the lease
would be cancelled. The hand writing was on the wall.
We were toast when the 60 day period was up. What
could we do' Were we finally screwed and tattooed'
I knew that immediately after the 60 day compliance
time was up, they'd lease the marina immediately to
another party, and we would be in a legal battle to
undo the undoable.
We put a group of marina
patrons together in a limited partnership, and tried
to sell the marina to the partnership and settle the
ongoing dispute. We made an appointment to meet with
the St. Louis cabal, and the partnership offered to
buy the marina from me for one million dollars, but
on a purchase contract with minimum cash down. The
group was rejected outright. 'not qualified' Another
group of local hotel investors met with the Corps
and offered to buy the marina from me for $500k cash
and put up a hotel as part of the deal. They were
told, every building, dock, sewer, electric line above
and below ground, would have to be razed and replaced
to the specs as outlined by the Corps. Two million
was the estimate to do all that. 'What did you do
to them to make them so mad at you', they asked. '
I should have kissed the son of a bitch on the lips',
I thought, but didn't say it.
In a word, they had
my butt in their pit bull jaws, and they weren't going
to let me get out of the deal with one red cent. It
was blatantly obvious, they were out to destroy me,
and the $650k I had in the investment. I asked my
congressman to intervene for me, but to no avail.
They insinuated to him that money spent by the Corps
in his district might be reconsidered . He jack rabbited
out of my problem with a, 'keep in touch'.
The time ground down,
and the 60 day grace notice period was fast approaching.
They sat patiently waiting for their final hammer
blow. I'm tired, and out of cash, with all the legal
bills piling up. That's the way they operate. Beat
you down legally with the tax payer's money until
you go broke. They had done it to others, and I wasn't
Then, another lawyer
marina customer came on the scene. He welcomed a battle
and came up with a, ' plan of attack', instead of
defense. File bankruptcy in the Federal Bankruptcy
Court and sue the Corps for the rents that were over
paid. Bankruptcies are heard at the District Court
level, no matter the amount. Ask as part of the Bankruptcy
Settlement, that the Corps be required to return the
rents paid under protest because they were not in
compliance with the terms of the lease. And therefore,
acting as a preferential creditor, illegally holding
the assets of the marina for their benefit, and denying
those assets from the other creditors; and also allow
me to sell the marina to fully pay off those other
The last day of the
60 day grace period we filed the Bankruptcy Petition
in the Federal Bankruptcy Court in East St. Louis,
and came under an automatic 120 stay period of protection
We sent the Corps a letter informing them of the protection
Again, three days
later, up pulled the little white car with the 666
door label. Out stepped the Deadly Duo. ' Here's your
lease cancellation, your lease has been canceled '
they smirked. 'You have 30 days to get your equipment,
buildings, and docks off the property, or it becomes
the property of the US government.' Under my voice
I whispered to myself, 'you forgot another 'S' and
the 'R'. It was all I could do to smile, but I did.
'Didn't you get the notice from the Bankruptcy Court
about the 120 day stay period'', I said. Their reply
was, '30 days!'. They got back into the 666 transporter,
and out the gate they went.
This time we had them!
It was a kinda nice feeling to have my jaws in their
butt too. Tasted real good in fact. They had made
a very serious mistake with the lease cancellation.
They were in contempt of court with the 120 day stay
period violation, and my devious new lawyer joyfully
filed contempt of court charges against the Deadly
They appeared in court
at the scheduled time with a gaggle of attorneys and
Corps puppets in tow. They told the Judge they didn't
understand that the stay included them, because they
were the Corps, and part of the executive branch of
They tried to argue
that we were not really bankrupt, and were only trying
to keep the suit in the Bankruptcy Court, instead
of the Court of Claim in DC. The Judge didn't buy
their lack of understanding, and you could tell by
his gaze over his glasses, he had done business with
these dudes before, and he wasn't a team player either.
He did drop the contempt charges, and asked them if
the dispute should not be settled instead of argued.
He pointedly responded to the accusation that we were
not bankrupt, that it could not be determined until
the case was heard, and he agreed to hear the case
if it was not settled first. Ball One!
We put our original
group of marina Limited Partner Investors back together
again and went political one more time.
They finally agreed
to settle the lawsuit in the Bankruptcy Court after
Senator Simon, our flag pole guy, contacted the Corps
head in DC again. It went down like dominos. All it
took was the creation of a tipping point, and it was
They agreed that the
Customer Limited Partnership could buy the marina
from me for $200k less than my build-sell-lease back
scheme. They had an immediate attitude adjustment,
and told their new White Knights that the current
assets and docks were ok, as is, and could be included
in the deal. I could get out with something if I sold
the marina to settle the Bankruptcy, and my new best
friend the Judge agreed. Part of the settlement was
I got my $25k rent paid under protest back, less $5k
for their expenses. But so what. My butt was spit
out of their jaws like I was a skunk, and I beat it
out of town with my wounded pride somewhat intact.
Some salve, and my many wounds would heal, I guess.
Now I'm searching
for, Sven. You too may some day have a need for Sven's
services. I hope not, but if you do, you should have
him on retainer just in case.
Sven, as I see him,
is a 240 lb Svedish Guy with a boot size of at least
14. I intend to make a standing contract with Sven
when I find him. Our deal will be, that in the future,
before I buy any business that involves any government
contract, that I take Sven with me when I consider
such a venture.
Sven's duties are
simple. When I get all excited about the income opportunity
offered by such a deal, Sven will immediately start
kicking me, time after time, until I yell, 'enough
Sven! I give up!' Then, I will pay Sven $1000 per
kick administered, and send him on his way until next
time. There are good investments, and there are great
investments. Sven is a great investment!
If you ever have a
need for Sven's services, I will get you in touch
with him. Assuming of course, that his leg is not
to tired from my adventures.