The End of Berth Leases on the French Riviera

The End of Berth-Leases on the French Riviera



The End of Berth-Leases on the French Riviera

Private marinas in the Var and the Alpes Maritimes (or more generally on the French Riviera) are all subject to a lease. The durations of these leases are due to expire from 2016 to 2027, depending on the ports.



 
Why leases ?
 
Under French law, the coast is the property of the state. This is not unusual. Most countries with access to the sea appreciate the importance of a coastline. The Riviera is certainly an asset for tourism in France, but it is more broadly a geopolitical asset which is used to define territorial waters, areas of influence, etc.
During the construction of the many of the marinas on the Côte d' Azur in 1960s and 1970s, the government sought to develop tourism and yachting in France rapidly and not at the taxpayer’s expense. Therefore, in order to finance these major projects, France sold sections of its coastline to private companies for 50-year leases. This approach is comparable to how the construction of the French motorway network was developed. Private companies were therefore granted areas of the coast to build ports and manage them over 50 years, under the conditions France chose at the time. In return, the region would inherit at the end of these leases, marinas in “turnkey" condition, which the local authorities could then exploit directly without having to invest a Franc or a Euro for their constructions. It is to be noted that as soon as these ports became operational, the France has benefited indirectly from their contribution to the local economy and tourism. Ports represent opportunities for consumption and for employment, and these effects have already been felt in the local French economy.
France always remains the sole owner of its coast-line, its marinas and its berths. The private companies that run these ports are only the lease holders, corporations that have Rights to Use but have no ownership rights over the ports’ infrastructures. Since then, this model has inspired the development of other coastlines.




Why is it possible to acquire long term Rights to Use moorings in these private marinas ?
 
These lease-holding companies had the right to raise finance by issuing and selling shares.
Under the approval of conceding authorities (i.e. France) they could therefore allow individuals (moral or physical entities) to buy into the companies’ capital and have Rights to Use a portion of the marinas, or more precisely, boat berths.
 
When you "acquire" rights on a mooring, in fact you buy in most cases groups of numbered shares. These shares give you the status of shareholder and thereafter, with the approval of the conceding authority, you are also granted the status of lessee or sub- lessee of a berth (“amodiataire” in French). This status can only be granted to the shareholder by the conceding authority which is the French local authority empowered to oversee the ports management. It is often the responsibility of the local mayor.

 




Note : In these transactions, the right to use a marina berth (the purpose of the transaction) is not granted to the Buyer by the Vendor (i.e. the person selling his or her shares). This right is granted by the state, which does not receive anything in return, except the Registration Tax ( 5.09% of the selling price) paid by the buyer to French Treasury . This has legal implications in contracts related to these transactions. The Vendor of a group of shares may not be held responsible for the Buyer obtaining the status of lessee (amodiataire). Although in practice, the approval by the state is often regarded as a formality, it is important to stress that notion. In France, the Right to Use a mooring is a matter between an individual, the state and a port authority.
 
The first investors in these marinas were therefore able to keep their Rights to Use berths or sell their shares to other individuals seeking to invest and receive rental income on several years, or as it is always the case nowadays, to have the guaranty of having a home berth over a number of years for their boat or their yacht.


 

What will happen at the end of the lease ?
 
Although several scenarios and hypotheses have spread along the quays, in reality no one today can clearly say what will happen at the end of the leases. All we can do at this stage is review the consistency of certain assumptions.
There is no real precedent indicating what will happen at when the leases expire on the French Riviera. There is certainly the case of Port Pierre Canto in Cannes, where the lease was shortened because the lease-holding company was unable to meet its obligations and the maintenance of the marina. But it does not present the case of a lease which reached its term as the other private ports along the coast should do in the years to come.
 
Moreover, even with reference cases, it would be difficult to give a general answer as each marina is different:

  • By its geographical location
  • By the type of boat that hosts ( different sizes )
  • By its size (some have a hundred posts Leased , others more than a thousand )
  • By its interaction with the local economy and the city or town where it is located
  • By the goals set by its conceding authority.

 
 
Could mooring leases be renewed ?
 
No, this is a certainty. The private berth-lease system of “amodiations”, which is still in place in most of the private ports on the French Riviera, is destined to disappear with the expiry of the current port-concessions. On 19th March 1981, the Ministry of Transportation issued a circular (No. 81-22/2/5) reforming Circular No. 69 of 29 December 1965, the same circular that had laid down the principles of the port-leases. In the new directives of 1981, the ministry clearly pointed out that the berth-lease system "proved to be an exorbitant and dangerous experience: it confers a right of exclusive use of the maritime public domain to a few individuals, leading to speculation, high selling price on boat berths located on the inalienable national domain". It is highly unlikely that French authorities would change views on this matter.
If the French authorities wanted to build new marinas or refurbish existing marinas using private funds, they could replace the system of berth-leases by a newer system, the Guaranteed Use system ("Garanties d'Usage" in French). The Guaranteed use does not grant as exclusive rights to a mooring location as the berth-lease does. It grants the beneficiary the right to moor in the harbour, in an area but on no specific location. Moreover, with this system, the port’s administrator (regarded as a public entity) has a right of first refusal on the sale of Rights to Use berths. The purpose of this reform is to allow the state to keep better control over its maritime domain and the management of marinas on its territory. This system is already in place in the port of Frejus for instance, which was built post-1981, as well as in the Old Port of Saint Raphael, further to its recent modernisation.
 
 
What will happen to the berth-lessees ?
 
Again, we cannot base any answer on experience or precedents. The first lease expiries on the French Riviera will only start occurring in 2016 and 2017.
 
At the end of the lease, private marinas will become fully owned and managed by the public authorities, such as the local councils or local authorities. Most port authorities nowadays indicate that when the marinas return to full state control, people who were previously berth lessees would be given priority in obtaining rental contracts. Instead of paying the annual service charges, former lessees would pay rent to their local council. But the people currently administrating these marinas are also not certain to be left in charge of operations after leases expire. And no one knows who the local mayors will be then. These statements are hypotheses.
 
From the public authorities’ point of view, what gain would there be in expelling boat-owners who have been courteously using the ports’ facilities for years? Why reject people who will have contributed to the maintenance of marinas’ infrastructure for decades?
Logistically, it would be a demanding task to empty a harbour of all its users to replace them with new tenants as soon as the leases end.
Therefore, it is likely that the former lessees or guaranteed use beneficiaries will be allowed to continue occupying berths by renting them, provided that at the end of the lease, these people use their moorings to moor their own boats, and continue to require a spot for an equivalent size of boat.
It is most probable that the authorities will gradually impose more conditions in order to benefit from long term rental contracts. It is considered essential for the success of a marina, economically and socially, to be "alive", that is to say that its boat owners regularly use their boats and ensure their maintenance. In a context where there are few berths available to new-comers, it is often sad to see boats continuously moored on the same location, looking neglected and clearly rarely used by their owners. It is expected that in future port authorities will give preference in obtaining long term contracts, to tenants who use their boats more actively than others.

 

MooringSpot.com, October 2013


References:

  • Ministry of Transports: Circular #81-22/2/5 of 19th March 1981
  • Ministry of Transports: Circular #69 of 29th December 1965
  • Terms of Concessions of various ports and marinas in the Alpes-Maritimes and the Var

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