Bethany discusses taking over beach concessions

Article by Mary Counts of the Coastal Point, published November 14, 2014
There was a collective grumble in Bethany Beach Town Hall earlier this week, as many property owners came out to support Steen’s Beach Service, which has been operating in the town since 1957, following the announcement that the Town would be looking into providing beach concessions itself.
The topic was discussed in a crowded town hall, with many attendees wearing Steen’s T-shirts. Former Sussex County Council District 5 candidates Bob Wheatley and Brad Connor were also in attendance.
“This is an idea that I had,” emphasized Town Manager Cliff Graviet. “There’s no one’s name attached to this idea but mine.”
Graviet said the idea to have the Town take over providing beach equipment rental concessions came when brainstorming ways to come up with funding for a Storm Emergency Relief Fund.
He stated that it has been estimated to cost between $6 million and $9 million to replace the Town’s boardwalk, and $20 million to $30 million to replace the Town’s dunes. In order for the Federal Emergency Management Agency (FEMA) to provide funding following a disaster, Graviet said the Town would have to make a 25 percent match.
“What I’ve been looking for is a source of revenue that the Town might be able to rely on and take and build a fund… that would queue up the necessary resources to be able to make that match or deal with any storm-related issues after the fact.”
In 1986, the Town passed legislation regulating the letting of beach concessions, awarding bids for a five-year term. In 1998, the council agreed to add an addendum to Steen’s contract, stating that, if both parties were satisfied with the mutually beneficial agreement, there would be no need to advertise and bid new contracts.
Graviet stated that, in a 26-year time period, where there should’ve been a bidding process five times, according to the legislation, it had only occurred three times.
Steen’s current contract expires this year, and the Town began advertising for bids on Nov. 7. At the Nov. 10 meeting, Graviet said the Town had only received one bid — from Steen’s Beach Service.
Graviet said that, if the Town were to move to provide the rental concession itself, it would operate daily from 9 a.m. to 5 p.m. from May 22 through Sept. 27, weather permitting.  It would employ 22 seasonal employees to operate nine rental stations during the peak season and scale the number of employees and stations to meet demand in the shoulder seasons, he said.
Parking Supervisor Steve Grames said that, at Graviet’s behest, he had consulted with Sea Colony and the City of North Myrtle Beach about their beach concessions.  He added that Town staff had also used a Google Earth aerial photo taken on July 4, 2010, of Bethany Beach, in which there were approximately 1,750 umbrellas, of which about 51 percent appeared to be rentals. Based on the crowd, they estimated a peak demand of 900 to 1,000 umbrellas.
Grames said the Town would plan to purchase 1,000 umbrellas and 1,200 chairs if it were to provide the concessions.  The equipment would be stored in locked boxes on the beach, which the Town estimated would require 37 boxes. Other expenses would include cell phones and credit card equipment to process credit card payments. The estimated cost to set up beach concessions provided by the Town is $314,200. 
Graviet said that, in crunching the numbers, Town staff made conservative estimates of revenue, taking into account weather, the shoulder season and more. Through those estimates, Graviet said, the Town estimates, for the summer of 2015, it would have a gross revenue of $432,120, with a net revenue of approximately $200,000.
“I’m asking the council to consider making a change,” he said. “I’m asking the council to think about if it’s in the Town’s best interest to take these resources that the Town could generate by providing this service and use it to build this fund.”
Council skeptical of need for change
All seven council members agreed that the Town needs to look at a way to bring in money for an emergency relief fund; however, they were hesitant as to whether having the Town take over beach concessions would be the way to go.
“We really have to start thinking about and start doing something for a fund… There is no question about that,” saidCouncilman Jerry Dorfman. “We are looking outside the box, obviously, but we don’t have to rush to do this.”
“Does the town really want to get into that kind of business?” asked Vice-Mayor Lew Killmer. “I’m not totally convinced.”
Councilman Joe Healy said that such an enterprise would be a nonessential part of government service and that he would be “very reluctant” to have the Town provide beach concessions.  “The service we’ve not heard complaints about, can be and has been provided by private sector,” he said.
Killmer and Mayor Jack Gordon said they were concerned that the Town had only received one bid for beach concessions.
“I, myself, don’t like the idea of going out for a competitive bid and only getting one bid. That tells me we’re doing something wrong,” said Gordon.
“Just because the Town has only gotten one bid does not make that a non-responsive proposal,” said resident Vernon Diebler.
Ellen Johnston, a former Steen’s employee and Bethany resident, told the council there is a legitimate reason for the Town only receiving one bid — from Steen’s.
“It’s because we already have such a good service offered here,” she said. “People aren’t bidding here in Bethany Beach because they know Ron Steen already offers such a high quality level of service.”
Ron Steen, owner of Steen’s Beach Service and a Bethany Beach resident, said it was being portrayed as if there was a cloud over the bidding process, when really there wasn’t — as it was properly advertised in two states.
“I thought my proposal was pretty objective,” he said. “I feel like I’m being penalized for being a good operator out there.”
Steen also said that hearing about the workshop topic of taking over beach concession following his bid submission felt like a “dagger in the heart.”
Resident Bill Ziegler told council that Steen’s has been doing an exemplary job of providing beach concessions to visitors and residents for decades.
“I personally don’t think the Town of Bethany Beach should be in the rental business… That’s a slippery slope,” he said. Ziegler’s comments were received with applause from the audience.
He added he was concerned that the Town didn’t approach other beach concessions in Delaware for research but rather approached a town in South Carolina.
“We have towns within Delaware that we can ask and learn some more about why private enterprise does this instead of the government.”
Ziegler asked, if the Town starts offering beach concessions, what’s to stop them from taking over the boardwalk fries business, as well.
“There are different things the Town does excellently,” he said. “I believe we have a place, but they all involve public health and safety… There’s another place to find the money.”
Resident Len Kidwell added that one benefit to having a private enterprise offer beach concessions to residents and businesses is that they absorb any risk.
“He’s taking that risk,” he said. “Do we need to do this to one of our local small businesses? Think about it hard. It’s risky and may not be the right way to raise revenue. You guys are very creative. I’m sure you can come up with some other ideas.”
Resident Cathy Certner said that her family has been vacationing in Bethany Beach for 30 years, and it was the town’s charm that drew her family to purchase a home there.
“We come to Bethany because there’s something intangible here. It’s a family-oriented place. It’s different than a lot of other places we’ve vacationed. We have cherished the time with our children here. Steen’s has been a part of that,” she said. “It keeps families like mine coming back.”
Certner said that, as homeowners, her family does not own beach chairs or umbrellas because renting from Steen’s is a tradition.
“The kids they hire, for my kids, I use as role models. They’re hardworking, polite, considerate,” she said, agreeing that the Town needs to seek ways to fund an emergency relief fund. “I hope it’s not by putting this business out of service, because I think it is a part of the fabric of Bethany, and I hope you will consider that going forward.”
Johnston asked the council to consider why the Town is able to make such profit projections.“People come to Bethany Beach and can expect this service because Steen’s has been providing this service for so long,” she said. “We’re essentially taking the clientele that Steen’s has built up through years of marketing and client relations.”  Johnston also said it was important to note how honorable Steen is, and how he has given back to the community over the
“Bethany Beach is an idyllic reminder of the American dream. Ron Steen to me is the American dream. He built this business from the ground up. He established his clients; he’s been an honorable and good member of the Bethany Beach community,” she said. “I think we need to reward him for all he’s given back to this community.”
On Friday, Nov. 14, the council will hold its regularly scheduled council meeting at 2 p.m. at which it is scheduled to discuss and possibly vote on the issue.
“Nothing has been decided. This is an idea; something I bring forward… something that in the long run I think will be in the best interest of the Town,” said Graviet.
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