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Florida yacht industry watches Georgia refit tax cap

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By Dorie Cox

A bill to cap state sales taxes on yacht refits in Georgia has stalled in committee in the state senate, but its success in the state house has gotten the attention of Florida’s refit community.

The bill, which overwhelmingly passed the Georgia House in mid-February, would cap state sales tax on parts and equipment during a refit worth $500,000. Florida legislators passed a similar measure two years ago, but its bill caps state sales tax on repairs worth $1 million. If Georgia’s proposed law passes, it would mean that refits half as large as those in Florida would benefit from a tax cap.

For example, a $3 million refit in Florida would pay the state’s 6 percent sales tax only on the first $1 million, or $60,000. A $3 million refit in Savannah would pay, if this bill passes, 7 percent sales tax on the first $500,000, or $35,000.

Under Georgia’s House Bill 125, any parts, engines or equipment above $500,000 that a boat owner spends to repair, retrofit or maintain a boat, would be exempt from Georgia sales taxes. The current Georgia sales tax rate ranges from 7 to 8 percent, depending upon the county.

“Bringing more business into our state creates opportunities for everyone from florists to the local caulking business,” said Ernest Joseph D’Alto, president of Thunderbolt Marine in Savannah, Ga. “We would see growth from carpenters, electricians, mechanics and more. There’s a trickle down to restaurants, renters and drivers, and downtown Savannah will reap rewards with yacht crew here.

“We saw that it served Florida well,” he said. “Everybody’s goal here is to see the bill passed.”

The bill potentially “levels the playing field” for shipyard services between Georgia and Florida, said Ryan Chandler, vice president of business development at Colonial Group, the parent company of Savannah Yacht Center that is scheduled to open this summer. This legislation will encourage “significant private investment that is expected to lead to the creation of over 700 Georgia jobs,” he said by email.

“Vessels of this class have their choice of shipyards from anywhere on the U.S. Atlantic coast all the way to Europe,” Chandler said. “As it stands, Florida shipyards enjoy a tax exemption that makes Georgia uncompetitive. HB125 ensures that southeastern shipyards will be competing on the basis of quality facilities and services, not on tax treatment.”

Dania Cut Superyacht Repair in Dania Beach, Fla., benefits from the Florida refit tax cap. It has made the choice of location easier for many owners, said Deanna Tully, the company’s accountant.

“It has proven to be a financial benefit to get yachts to come to Florida when they have been looking at other options,” she said. “We specialize in superyachts, so it has definitely helped with bigger refit options.”

Florida may have a financial advantage now, but if Georgia passes the bill, that could change. James Brewer, head of business development at Derecktor of Florida in Dania Beach and a board member of the Marine Industries Association of South Florida, said industry leaders are paying attention.

“The fact that Georgia is trying to do this means they are following suit,” he said. “It’s all in the name of jobs and work for individual states. Ultimately, it’s the competitive advantage to the client and anything we can do to enhance client experience is positive.”

But he thinks yards like his and others in Florida may still have an advantage.

“We’re in a lucky sort of situation in Florida; it’s location, location, location,” Brewer said. “We’re still the preferred place to be for many yachts.”

Yards in South Florida are not so easy for Georgia to compete with, said David Morrison, one of the managing partners of Taylor Lane Yacht and Ship, also in Dania Beach. He said his yard is working on a yacht refit that could run to $4 million.

“Georgia has to primarily compete with Ft. Lauderdale and Palm Beach,” Morrison said. “Palm Beach has Rybovich, arguably the premier shipyard in South Florida in terms of crew amenities and big boat dockage.”

But the Ft. Lauderdale area, including Dania Beach, still rises to the top, he said.

“While the actual shipyards may lack in crew amenities, we have the one thing they don’t have, that’s Ft. Lauderdale,” Morrison said. “Georgia has to compete with the ease of doing work in Florida and the fact that all the vendors are here, they don’t have to fly in. And these are not just vendors, but great vendors.”

Aside from the South Florida’s yacht infrastructure of provisioning, crew houses, and other services, it is home to premier contractors.

“Everyone is here and they are all good, you have your choice,” Morrison said. “That’s why Georgia is not ready to take business from Florida. They have a lot to compete with.”

And industry leaders want to keep it that way.

“There is not a piece of legislation currently ready, but we have had conversations and are looking at that opportunity this year,” said Kelly Skidmore, public relations specialist with the Marine Industries Association of South Florida.

To organize new legislation requires working with members of the Florida legislature, the group’s lobbying firm and association members for public support, Skidmore said. Phil Purcell, CEO/president of MIASF, was at the Florida state capitol in mid-March for several issues impacting South Florida and was expected to talk about gaining support to lower Florida’s cap.

“It is a difficult year in the legislature, to say the least,” Skidmore said. “But we will work on this.”

 

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About Dorie Cox

Dorie Cox is editor of The Triton.

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4 thoughts on “Florida yacht industry watches Georgia refit tax cap

  1. Kevin

    They are nuts if they think 25k is going to determine the refit location. Some boats will have to spend over 10k in fuel just getting to Thunderbolt from south Florida. The issue here is there really aren’t any yards in south Florida that can handle dry docking of very large yachts. Only Tampa and Jacksonville can haul out vessels in the neighborhood of 2k GT+. The main deciding factors are yard capabilities, labor costs, and whether there are adequate vendors in the area. If an owner is really trying to save, they won’t even refit in the US anyways. Yet another pointless bill.

  2. Robert

    The iconic Merrill-Stevens yard now called RMK Merrill Stevens in Miami will open a new state of the art 2,700 GT shiplift in less than 12 months… restoring modern refit capability in south Florida!

  3. Chris Collins

    I think it would have an effect but a small one and it would largely depend on the owner. If it’s just a captain and manager picking likely has little effect, on the other hand I know many owners who hate taxes so much that saving a a couple thousand on taxes (even if they spent more in other ways) would be worth it in their eyes.

  4. Capt. Lloyd Bernard

    Just read the article about Georgia shipyards and the comment that they were not ready to compete with the Florida yards. Here are a few of my own comments in that regard. Reasons for returning to Thunderbolt:
    Shipyard
    – We have already completed one yard period with Thunderbolt so we know the upper management, project managers, yard workers and local technicians and have an excellent relationship with all of them.
    – Great yard management with a very efficient accounting and billing department that makes it easy to keep track of how much we are spending. Best of all, quotes and change orders are usually on my desk the same day as requested.
    – I have never seen yard workers put so many late nights in!
    – Great yard facilities and clean.
    – Covered storage for the tenders and wave runners.
    – Great shed facilities with the option to use the adjacent state of the art paint shed if required. Weather will not slow us down.
    – The Wilmington River is a nice big, deep and calm river for sea trials.
    – Beautiful yard location surrounded by healthy verdant wetlands bursting with water fowl and other wildlife. Always nice to look at when arriving at work in the morning as the sun rises.
    – Strictly enforced environmental policies. The local police marine department base is located just outside the yard.
    Expertise
    – Many of the yard workers are either ex-military technicians and mechanics from the local U.S. Marine Air Base in Beaufort, SC or used to work at Boeing in Charleston, SC or Gulfstream in Savannah. Suffice it to say that workmanship is of a very high quality and the work ethic is excellent.
    – All required expertise for things like AC, pumps, hydraulics (Axis One), machining, prop and shafts (Dominey), tank cleaning (Intra-coastal Environmental), fabrication, tender and wave runner service (Island Outboard), main engine and generator service (W.W.Williams), insulation, carpet cleaning, duct cleaning (Duct Doctor), navigation and satcom equipment (Mackay Marine), etc. are in the yard, located down the road or in nearby Savannah.
    – My engineer and I were very impressed with the state of the art industrial machine shop run by Continental Field Systems that we visited in Savannah when completing the alterations to our alignment.
    – We were also fortunate enough to find Sandy Noe at Savannah Apparatus Repair who repaired our spent generator end. They can work on any size and kind of motor.
    – A very good in-house naval architect.
    – Excellent in-house wood shop with very skilled carpenters.
    – Excellent in-house hydraulic and machine shop, but very good outside hydraulic services available as well.
    – Excellent in-house AC and refrigeration technician.
    – Excellent in-house upholster for exterior cushion and cover repairs.
    – Fleming Marine has moved up from Florida and set up shop in town. They do fantastic glass reinforced plastic work.
    – Not as busy as Ft. Lauderdale so we are not in competition with as many yachts when it comes to booking technicians and they are not as expensive as Ft. Lauderdale either.
    – Savannah is a busy commercial shipping port and accommodates all the expertise to support it.
    – Any techs we have to bring in from out of town will be working solely for us during the required days to get the job done, resulting in the work being completed quickly and efficiently without interruption. We will, for example, have to bring in ABT-TRAC to service and repair the stabilizers, but as they will be working only for us the job will be completed in two or three days at the most. It may cost a day or two travel time and accommodation for a couple of nights, but the job is done quickly as the technicians want to get back to Ft. Lauderdale. At the end of the day it probably turns out cheaper.
    – We have a great AV tech in Savannah, Alex Quinn from SVID who is smart as hell and half the price of his Ft.Lauderdale counterparts.
    – Life raft, fire equipment and safety equipment services available at River Services located just outside the yard.
    – Steyr technicians located in Charleston for servicing the Pascoe tender.
    – Wave runners and outboards can be serviced locally in Savannah.
    Logistics
    – Savannah is a 24 hour run up from Ft. Lauderdale.
    – English is the working language which facilitates efficient and effective communication.
    – Excellent and well stocked yacht chandler, River Supply, located just outside the yard that works closely with National Marine Suppliers.
    – Tubby’s Restaurant is also located just down the road, five minutes walk from the entrance to the yard and even has a yard worker fast-service menu. Good southern food and a great place to sit out on the deck and relax under the trees while watching the river during lunch or after work.
    – Home Depot, Publix, West Marine, Office Depot, Whole Foods, Macy’s and all other useful U.S. retailers and suppliers for interior, deck and engineering departments located close by.
    – Anything specific we need from Ft. Lauderdale is a day away with shipping.
    – Savannah/Hilton Head International Airport is close by and easy to get to from anywhere in the country.
    – Enterprise car rental location just down the road and they deliver.
    – Good quality climate controlled storage location just down the road.
    – Sea-Shield, who we use for professionally polishing our gelcoat and glass each year, has workers based in Savannah.
    Crew
    – Southern Hospitality!
    – Fantastic, very comfortable and affordable crew accommodation on the beach and close to the yard. Lovely 25 minute drive to work along the Savannah River each morning. Half the price of Ft. Lauderdale crew accommodation and so much nicer.
    – We stay in great three bedroom apartments just off the beach on Tybee Island that can comfortably sleep five or six crew depending on couples. Walk out the door and the beach is 200 feet down the road.
    – Beautiful location and a much healthier environment to be in for the crew. Everyone is kayaking, walking on the beach, surfing, running, cycling or using the local YMCA gym.
    – Culturally rich and beautiful, Savannah, Atlanta and Charleston are close by for weekend visits.
    Capt. Lloyd Bernard
    M/Y Chiqui

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