Potential Marina Investors Need to Navigate Hazards

Wetlands and Waterways Permitting Pose Challenges
By Christopher R. Vaccaro
Special to Banker & Tradesman

Massachusetts is blessed with abundant navi­gable harbors and inlets that can accommodate watercraft of all sizes. It is unsurprising that the commonwealth’s coast­line hosts numerous marinas. Marina properties are currently in high demand by investors, but they present special due diligence issues.

In many ways, marinas operate like ho­tels and other hospitality properties. Reve­nues are generated by selling slips and pro­viding maintenance, storage services and retail sales to boat owners. Potential inves­tors must familiarize themselves with the usual business issues related to hospitality properties, such as occupancy rates, labor, major contracts and the physical condition of the properties. But unlike most hotels, marinas present interesting challenges in­volving wetlands and waterways permitting.

Two Massachusetts statutes are of partic­ular concern for marina operations, namely the Wetlands Protection Act and the Water­ways Act (also known as Chapter 91). The first of these statutes is an environmental law that protects wetlands, and the plants and animals that inhabit them, from devel­opment. The second ensures that properties now or formerly in tidal zones are devel­oped for water-dependent uses, while pre­serving public rights to tidelands. Both stat­utes are administered by the Massachusetts Department of Environmental Protection (DEP), which has adopted extensive wet­lands and waterways regulations.

SJC Clarifies Enforcement Timeline

One cannot assume that DEP or local conservation commissions will ignore latent or longstanding violations of wetlands or waterways statutes when brought to their attention. The Supreme Judicial Court’s 2021 decision in Conservation Commission of Norton v. Pesa exemplifies the risk of ig­noring unresolved wetlands violations. Al­though that case did not involve a marina, it is nevertheless instructive.

In 1979, a developer obtained a wetlands order of conditions from the Norton Con­servation Commission to build a store. The order limited fill near adjacent wetlands. The Conservation Commission later ex­pressed concerns that the project exceeded permitted fill limits, but otherwise refrained from acting.

The developer’s widow sold the property in 2014. Before closing, the buyers asked the conservation commission to issue a cer­tificate of compliance for the 1979 order of conditions. The commission refused, claim­ing that the land had 11,000 more square feet of fill than permitted. The buyers pro­ceeded with the closing anyway, whereupon the commission demanded that they restore the affected areas to their original condi­tion, and sued them in Superior Court for the violation, seeking injunctive relief and civil penalties.

The buyers hoped that a three-year statute of repose under the statute would exonerate them. However, the Supreme Judicial Court ruled against them, holding that the statute of repose allows enforcement actions against buyers who acquire land that violates the Wetlands Protection Act within three years after the buyers acquire the land. According to the SJC, the statute does not bar enforce­ment actions against subsequent buyers of the land, even if no enforcement action was brought against any prior owners within the three-year period. Instead, the three-year pe­riod starts to run anew upon each sale.

A Missing License in the North End

The Massachusetts Appeals Court’s 2021 decision in Commercial Wharf East Condo­minium Association v. DEP shows the perils of noncompliance with Chapter 91.

Boston’s Commercial Wharf was built 150 years ago on filled tidelands under an 1832 statute. After the wharf fell into disrepair, the city and the state legislature produced an urban renewal plan and legislation to re­habilitate the wharf. A developer signed a rehabilitation agreement with the Boston Redevelopment Authority (BRA) in 1974 to renovate the wharf for residential, marina and other uses.

The rehabilitation agreement included plans for parking near the main building. The resulting condominium project in­cluded 12,000 square feet of filled tidelands designated for private parking and vehicular access. However, the developer neglected to obtain a license under Chapter 91 for those ancillary uses.

For nearly 40 years nobody seemed to mind the missing Chapter 91 license for pri­vate parking and vehicular access. This blissful ignorance ended in 2011, when the owner of an abutting marina and inn alerted DEP to the issue. The condominium associa­tion argued, unsuccessfully, that prior legis­lation and the BRA rehabilitation agreement authorized private parking and vehicular ac­cess, but DEP ruled that those uses were un­authorized without a Chapter 91 license.

Both the Superior Court and the appeals court upheld DEP’s decision, confirming that the rehabilitation agreement and re­lated legislation did not substitute for the required Chapter 91 license.

These court decisions show that inves­tors in projects that impact wetlands and waterways cannot afford to “play ostrich” when it comes to permitting. Vigilance is es­pecially important for marinas, which usu­ally require multiple wetlands orders of conditions and Chapter 91 licenses for their operations.

Download the article as seen in  Banker & Tradesman on April 29, 2024. Learn more about Christopher R. Vaccaro.