As noted above, if FWS approves the project, DNR and the facility owner will enter a Memorandum of Understanding (MOU). Included in the MOU is a land control agreement (LCA) that passes all federal and state grant requirements to the sub-grantee for the project’s useful life as determined by the design engineer (typically 20-40 years). If, during the project’s useful life, the sub-grantee fails to comply with any of these terms and conditions, then the sub-grantee will be required to reimburse DNR for 100% of the grant funds (with no proration).
Immediately below are some (but not all) of the terms and conditions contained in LCAs including requirements that apply to all marinas/facilities as well as requirements that apply only to privately owned marinas/facilities:
Long Term Requirements that Apply to BIG-funded Projects at All Marinas/Facilities
- The use integrity of the marina/facility, as approved in the grant, must not change. For example, if BIG funding is used to support the creation of five slips dedicated for large, recreational, transient, vessels, then the sub-grantee cannot, at any time during the project’s useful life, use any of those slips for long-term or commercial rental.
- The sub-grantee will be required, at its own expense, to maintain a minimum depth of 6’ mean low water (mlw) throughout the useful life of the project, unless a different water depth is pre-approved by FWS.
- All dockage fees, including any change in fee structure, must be approved by DNR and all income generated by the BIG-funded improvements must be kept in a separate account to be used only for the operation and maintenance of the BIG-funded facility. Fees must be based on prevailing rates at other facilities similarly situated and offering a similar service or amenity. User fees cannot discriminate against anyone such as by charging user fees that vary based upon boater residence or vessel homeport.
- If overnight dockage is allowed, the marina/facility must provide pump-out service or there needs to be an operable and available pump-out within two miles.
- The sub-grantee must allow DNR to do periodic inspections of the BIG-funded facility and, every five years, the sub-grantee must submit a status report to DNR (in a format approved by DNR) certifying that the project remains in compliance with all BIG grant requirements.
- A Notice of Grant Agreement (NOGA) must be recorded in the property deed.
Select Requirements that Apply only to Privately Owned Marinas/FacilitiesIn addition to the requirements noted above, privately owned marinas/facilities have the following long term requirements (other requirements may be imposed at the DNR’s discretion):
- In addition to a NOGA, a Record Covenant Agreement (if required) detailing the grant conditions must be included in the property records for the marina/facility.
- Performance bonds and/or personal guarantees may also be required.
- The marina/facility must not be sold and there must be no change in the corporate structure/status of the business without DNR and USFWS approval. Permission will only be granted if: 1) the new potential owner/partner signs a legally binding agreement, suitable to DNR, indicating that they will continue to comply with all terms and conditions contained in the LCA and 2) the new potential owner/partner provides DNR with any requested information (including an auditing report) in order to help DNR assess any risk of future non-compliance to the federal grant. 3) A BIG Grant Assignment/Transfer Form must be completed by transferor/transferee and approved by DNR.
- Each status report (to be submitted by the sub-grantee every five years during the project’s useful life) must include a report completed by an independent auditor, at the sub-grantee’s expense, certifying that the BIG-funded project continues to be used for its intended purpose, that BIG project income is being kept in a separate account, and that BIG project income is being used only for the operation and maintenance of the BIG funded facility.
Why are the Grant Requirements for Privately Owned Marinas/Facilities so Much More Comprehensive than for Publicly Owned Facilities?
As noted in the above section on “BIG Program Funding,” under the BIG Program, FWS is the “grantor,” Maryland DNR is the “grantee,” and the marina/facility owner is the “sub-grantee.” In other words, federal funds are passed through DNR to the marina/facility.
Prior to allowing DNR to use BIG funds, FWS requires DNR to conduct risk assessments of all sub-grantees. This is a reasonable requirement and, if you were considering investing a significant amount of money into a business venture, you would certainly do your due diligence.
DNR is also required by FWS to monitor all BIG-funded projects during their useful life (typically 20-40 years) and to provide written reports to FWS every five years certifying that the projects continue to comply with all terms and conditions of the grant. This is also a reasonable requirement because USFWS wants “bang for their buck.” FWS does not want to invest federal funds into a project that ten or fifteen years later is no longer meeting all grant requirements and does not serve its original intended purpose.
If, at any time during the useful life of the project, the sub-grantee fails to comply with the terms and conditions of the grant, FWS does not “go after” the sub-grantee, they will, instead, impose sanctions on DNR. In other words, the way the BIG program is set up, your project becomes DNR’s risk.
DNR attempts to protect itself from federal sanctions through the MOU/LCAs. To put it another way, along with the money, DNR passes through the risk so that sub-grantees assume the risk for their own projects.
When entering into a MOU/LCA with a government entity, DNR has a certain comfort level that the government entity will not go bankrupt, will not sell the facility, and will not change the use integrity of the facility. Individuals come and go but, if something were to go wrong, the government entity is always going to be there and is always accountable.
It is entirely different when dealing with privately owned facilities. Whatever corporate entity that signs a MOU/LCA today may not be around in ten or fifteen years for any number of reasons. Because of this, if something were to go wrong, it is much more difficult for DNR to hold any individual or any business entity accountable. That is why the MOU/LCA with private entities is much more stringent.
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