Model Case: Puget Sound Private Marina on a DNR Aquatic Lands Lease With Fuel Dock, 300 Slips, Sinclair Inlet, Kitsap County, Washington, SBA 7(a) Under Appendix 15 With 504 on the Upland and Leasehold Improvements

A model feasibility and valuation-support case built only from public data. The marina, seller and buyer are hypothetical; no client file or engagement data is used. The case follows the house format with the changes an acquisition on state aquatic lands requires: at a glance, determination, the eligibility and Appendix 15 test table with the lease read against the loan, the lease and the permits, market analysis, historical cash flow and the lender's DSCR, the post-close projection, sources and uses, the price the structure supports, sensitivities, the conventional fallback, collateral and conditions. Figures are as of October 9, 2026. Part of the marina feasibility study cluster; format detail on the coastal marina feasibility study and marina acquisition feasibility study pages, program detail on the SBA 7(a) feasibility study and SBA 504 feasibility study pages and the SBA underwriting and regulatory spine, and the state frame on the Washington feasibility study page.

The acquisition is not feasible as proposed, and it is not eligible. The DNR aquatic lands lease has 7 years to run against a 10-year 7(a), and SOP 50 10 8 requires a lease term, including borrower-only options, at least equal to the loan term, with an assignment and a landlord's waiver; the recent DNR private marina authorizations in the public record are posted at 12-year terms, so even a fresh lease on DNR's standard term would not carry a 25-year debenture. Under Appendix 15 the test is historical, and the marina's returns show $2,430,000 and $2,520,000 of revenue and, after a $95,000 replacement manager wage, $560,000 and $585,000 of EBITDA; the proposed $4,877,717 loan at the 10.00 percent cap on ten years costs $773,513 a year, so historical coverage is 0.74x on the average and 0.76x on the last year, and the seller's pro forma, $13.00 per foot at 95 percent against a Kitsap port band of $10.20 to $13.17 before leasehold excise tax, lifts it to 1.27x only on a forecast Appendix 15 bars. The budget carries no money for two underground tanks that must meet Chapter 173-360A WAC or close, and none for the floats and piles a marine engineer has not yet surveyed. And ahead of all of it sits the eligibility rule: a marina is eligible only if more than 50 percent of its prior-year revenue comes from transients staying 30 days or less, and this marina's guest moorage is 2.8 percent of revenue, 7.5 percent with the fuel sold to visiting boats, and 40.1 percent on the most generous reading that counts every fuel, store and fee dollar as transient. The Port of Edmonds, the best public Puget Sound operating statement, runs at 2.8 percent; no reading reaches the threshold.

The acquisition is financeable as restructured, and the restructure is a lease, a budget and a price. The lease: a new 30-year DNR lease, the maximum under WAC 332-30-122, with rent on the formula in WAC 332-30-123, DNR's written consent to the assignment and a leasehold mortgage, and an estoppel confirming rent, term and the treatment of improvements at expiration, all before commitment. The budget: $2,000,000 for two new 30,000-gallon double-wall tanks, piping to the float, dispensers and containment, which is what the Port of Everett paid in 2022 for the same scope as Phase 1 of an $8.1 million fuel dock program, and $500,000 of pile, float and electrical repairs per the engineer's survey, scheduled into the WDFW work window. The price: $2,670,000, $8,900 per slip, the price at which the two-year average historical EBITDA covers 1.25x on a structure that puts the upland, the leasehold improvements, the tanks and the repairs on a 25-year 504 at 15 percent contribution and the business on a 10-year 7(a); total cost $5,503,226, debt $4,718,147, debt service $457,950, historical coverage 1.25x on the average and 1.28x on FY2025, projected 1.15x in year 1 with the dock reserve the seller never funded and 1.50x by year 10. Every alternative SBA structure is worse: a single 7(a) at the same price and capital would need a $5,006,989 loan, above the program's $5 million maximum, and would cover 0.72x.

The SBA structure is modeled because the sponsor asked for it and because the transient reading is SBA's to make, but the determination does not wait for the ruling: on the public record this marina is not eligible, and the conventional structure on the same lease, budget and conditions is the one that works. At 75 percent of cost on a 25-year amortization at 7.50 percent the conventional loan is $4,127,420, debt service $366,015 and historical coverage 1.56x at the $2,670,000 price; at 1.25x the same structure supports a price up to $4,131,265, $13,771 per slip, with $1,721,566 of equity. The ask of $5,100,000 covers 1.63x on the conventional structure without the tanks and the repairs, which is the number the seller will quote, and 1.10x with them, which is the number the Ecology register will answer. The marina's value to a buyer is in its slips and its upland on Sinclair Inlet across from the Port of Bremerton's waitlisted marina; its value to a lender is $2.7 million of SBA debt it cannot get or $4.1 million of conventional debt it can, and the $2.5 million of capital in between is the fuel dock's bill coming due.

DNR manages the aquatic lands under the floats, and the lease is the credit. Washington's Shoreline District, which covers Kitsap south of Keyport outside Bainbridge Island, lists recent commercial marina authorizations in Sinclair Inlet itself: Sinclair Inlet Marina's lease 22-A02730 approved November 1, 2023, a right of entry the next day, and Kitsap Marine Properties' marina lease 20-A12499; the private marina authorizations DNR has posted elsewhere carry twelve-year terms, and the statutory maximum is 30 years. Rent is a formula, not a negotiation: under RCW 79.105.240 and WAC 332-30-123 the annual rent is the assessed value of the upland parcel per square foot, times the lease area, times 30 percent, times a 3 percent real rate of return, redetermined every four years, with no rent on improvements installed before June 1, 1971 while the lease is continuous; the model carries $20 per square foot of upland value on 6 acres of lease, $47,045, plus the 12.84 percent leasehold excise tax, $53,000 in all, and the Kitsap assessor's value and the surveyed area replace both. The State Auditor's 2024 performance audit found aquatic leases produced about $13.6 million in 2022, that marinas, docks and piers are about 80 percent of DNR's leases, and that DNR lacked documentation to show it chose upland parcels consistently, which is the flag on the rent line. What DNR negotiates is rent, survey, insurance and performance security, with attorney review before an offer, in 6 to 12 months from a complete application; what the public record does not show is DNR's standard clauses on leasehold mortgages, estoppels and improvements at expiration, which the buyer obtains by public records request for the two Sinclair Inlet leases before the loan is sized. Ports pass the leasehold excise tax to their tenants on the moorage invoice; a private marina on a DNR lease carries it in rent and prices against the port's gross rate, which is a built-in advantage of up to 12.84 percent at the same headline rate.

Repair and replacement go through four layers. The Salish Sea Nearshore Programmatic consultation, finalized June 29, 2022, covers repair and replacement of overwater structures and maintenance dredging on a voluntary basis, requires NMFS notification and verification under its repair-or-replace design criteria, keeps relocated structures inside the existing marina footprint and out of higher eelgrass cover, and offsets habitat effects through the Puget Sound Nearshore Habitat Conservation Calculator, with replaced structures assumed to start a new 40-year useful life. The WDFW hydraulic project approval limits in-water work in central and south Puget Sound tidal reference areas to roughly July 15 or August 1 through February 15 under WAC 220-660-330, with sand lance and rockfish closures layered on, so a float program that misses a window slips a year; the Ecology 401 certification and the Corps permit follow the same window. The 2026 nationwide permit regional conditions and the local shoreline master program were not retrieved and are flagged. The fuel dock answers to Chapter 173-360A WAC: registered tanks with secondary containment, interstitial monitoring at least every 30 days, an automatic line leak detector on pressurized piping, compliance tags, annual tank fees, financial responsibility certification, an ICC-certified tester and 24-hour reporting of a failed test; the Port of Edmonds budgets $3,000 of compliance testing, $3,000 of calibration, $6,000 of equipment repair and $2,500 of hose reels a year on its own fuel dock. Everett's $2,000,000 contract for two 30,000-gallon tanks is the benchmark for the replacement, and the Port of Bremerton's Port Orchard breakwater, estimated at $17 million to $20 million with every 2026 bid rejected, is the benchmark for what the marine structures cost when they go.

The submarket. Kitsap gives the deepest public record for a private DNR-lease marina: three port tariffs in one water body, posted 2026 waitlists, liveaboard rules and a live capital datapoint. The Port of Bremerton's Bremerton Marina has 221 permanent slips and 80 to 100 guest slips, moorage at $10.76 per foot under 36 feet to $13.02 at 60 feet and $13.17 over, before the 12.84 percent leasehold excise tax, $40 to $50 a night transient plus $1.00 to $1.25 per foot over 40 feet, electricity at $0.14 per kWh, a $5 environmental fee, liveaboards at $200 a month plus a $150 setup fee capped at 20 and none available, and active moorage and liveaboard waitlists confirmed July 22, 2026; its Port Orchard Marina across the inlet posts $12.07 over 60 feet, $1.00 per foot on the breakwater, and waitlists confirmed September 11, 2026. The Port of Poulsbo has 254 permanent and 130 guest slips at $10.20 for 25 feet and under to $11.58 at 56 feet and over, boathouses at $0.85 per square foot, a $5.75 technology fee, guest moorage at $1.75 to $2.25 per foot, and a guest marina it describes as rarely full. The Port of Kingston posts $19.06 per foot gross for a 50-foot slip and a $200 waitlist fee. Farther afield, Port of Edmonds charges $11.93 per foot for a 26-foot slip with $15 environmental and $6 meter fees and budgets 3 percent vacancy; Cap Sante in Anacortes has a waitlist and a 5 percent discount for 12 months; Shilshole Bay runs $16.33 to $27.85. Private comparables: Anacortes Marina, a 466-slip condominium, charges $485 for a 32-foot open slip and $745 covered, a 54 percent premium, with its 44-foot to 60-foot waitlist closed; Stimson Marina in Seattle posts covered slips at $20 to $26 per foot; Harbor Place in Gig Harbor charges $465, $745 and $860 a month for 30-, 44- and 50-foot slips with all taxes included, about $15.50 to $17.20 per foot, with no liveaboards and a waitlist; Peninsula Yacht Basin keeps a covered waitlist and no liveaboards; and in Kitsap itself, Port Orchard Railway Marina and Bridgeview offer the first month free with no deposits, which is the private discounting the model's 90 percent occupancy reflects.

What the record says. Large slips are short across Puget Sound and small private slips are being discounted to fill; a Sinclair Inlet private marina competing against the Port of Bremerton prices at or just below the port's gross rate, $11.50 to $14.85, not at Seattle's. Washington has about 233,000 registered boats, 2 percent of the national fleet, and the Department of Licensing publishes rules rather than county tables, so the county trend is flagged. The transactions say less than the tariffs: Bridgeview Marina in Bremerton, 76 slips on 4.74 acres with two apartments, asks $2,000,000, about $26,300 a slip; Kitsap Marina in Port Orchard, about 25 slips, is listed near $1,950,000, unverified; Westlake Marina in Seattle, 90 tenants on 63,325 square feet of fee land and 31,500 square feet of DNR lease, asks $11,300,000; Summertide Resort on Hood Canal, 26 slips on 22.3 acres, asks $2,700,000 at a 5.90 percent cap rate; and the Harbour Index aggregator's own figures conflict with its own listings. No public SBA 504 or 7(a) marina financing in Washington or Oregon, and no lender policy on DNR leaseholds, was located.

The seller's pro forma runs $13.00 per foot at 95 percent, $90,000 of guest moorage, fuel at $1,000,000 and the store at $100,000, $3,052,610 in all, 21 percent above FY2025.

The seller's $585,000 is before a dock and fuel system reserve, the fuel dock compliance file and the Washington business and occupation tax at the service rate on moorage, which together are about $100,000 in the study's statement; the restructured projection's year 1 is $525,419 for that reason, and the Appendix 15 test is on the historical figure. The add-backs the lender accepts are the categories SOP 50 10 8.1 names, documented and tied to the transcripts; the moorage deposits for the coming year and the leasehold excise tax collected from tenants are not income.

The projection is not the Appendix 15 test, which is historical; it is the lender's view under new ownership and the basis for the sensitivities. It carries FY2025 revenue flat in year 1 with 3 percent growth after, fuel at a 20 percent margin on Edmonds' 80 percent cost of fuel, payroll of $650,000 including the replacement manager (Edmonds runs 29.6 percent of revenue as a public employer), insurance at 3.8 percent of revenue, utilities at 2.9 percent and repairs at 6 percent on Edmonds' ratios, DNR rent on the formula, property tax of $40,000 on the fee upland and improvements, the business and occupation tax at a blended 1.35 percent, a 3 percent dock and fuel system reserve the seller did not fund, and 3 percent cost escalation.

Debt service is $203,621 on the bank loan, $138,997 on the debenture and $115,333 on the 7(a); the 7(a) is paid off after year 10 and debt service falls to $342,618. The year-1 revenue of $2,520,082 reconciles to FY2025's $2,520,000, and the year-1 EBITDA of $525,419 sits $59,581 below FY2025's $585,000 because the projection funds the reserve and the compliance file the seller did not, which is the check that the projection carries the business as it is.

Stated the way Appendix 15 reads it: at the 1.25x floor on $572,500 of average historical EBITDA, debt service may not exceed $458,000, and $458,000 buys $4,718,147 of debt on the restructured mix of 25-year real estate money and 10-year business money, which with $785,079 of equity funds $5,503,226 of project, of which $2,755,000 is tanks, repairs, closing, diligence and working capital, $78,226 is financed fees and $2,670,000 is price. On the post-close statement with every stream scaled and the fixed lines held, the restructured marina covers debt service at $2,381,376 of revenue (5.5 percent below FY2025), 1.15x at $2,477,168 (1.7 percent below) and 1.25x at $2,541,029 (0.8 percent above). The cushion is thin because the price was solved to the floor and the projection carries the reserve; the sensitivity rows are where the cushion is read. As proposed, break-even is $2,680,527, 1.15x needs $2,841,860 and 1.25x needs $2,949,416, 3 to 12 percent below the seller's pro forma and 6 to 17 percent above FY2025.

All rows start from the restructured base unless labeled otherwise.

Moorage decides the case and the structure rows help at the margin: a 75-cent move in the slip rate or a five-point move in occupancy takes the restructured marina to the floor or below it, a 15 percent move in the fixed lines takes it to 0.81x, and the season the fuel dock closes for the tank replacement, which the WDFW window and the Ecology timeline make likely, takes it to 1.06x. The moorage rows are the diligence: the rent roll shows whether the seller's $11.50 is a durable rate or a discounted one, and the port's $10.76 is the floor a private marina across the inlet can be pushed to. The 20 percent contribution tier is the one structure row that helps, because it moves $239,000 of debt to equity; the 20-year debenture is the one that hurts, because it is what the lender gets if DNR offers 25 years.

A conventional lender on this file lends against the fee upland and a leasehold mortgage on the floats on a 25-year amortization without the transient rule, the Appendix 15 floor on a ten-year business term or the standby limits, underwrites a 1.25x covenant on historical cash flow at 75 percent of cost, and asks the same questions about the lease, the tanks and the floats. At the $2,670,000 price the loan is $4,127,420, debt service $366,015 and historical coverage 1.56x, against $1,375,807 of equity. At 1.25x the same structure supports a price up to $4,131,265, $13,771 per slip, with a $5,164,699 loan and $1,721,566 of equity. At the $5,100,000 ask it covers 1.63x without the $2,755,000 of tanks, repairs, closing, diligence and working capital and 1.10x with them. The conventional route carries $1,461,265 more price than the SBA route, needs $936,487 more equity, needs no ruling from SBA and needs the same 30-year lease, and the workbook's Conventional sheet carries it beside the SBA case.

Puget Sound asking prices run from about $26,300 a slip at Bridgeview to $125,556 a tenant at Westlake with its fee land, and none is a closed sale with a disclosed cap rate; the SBA price is a 21.4 percent capitalization of $572,500, the conventional maximum 13.9 percent and the ask 11.2 percent, and the going-concern appraisal will land between the first and the last because the $2.5 million of capital the buyer must spend is the difference between a marina and a marina with a fuel dock that can stay open. Collateral as restructured: the bank's first lien of $2,347,568 and the debenture's second lien of $1,643,297 sit on 2.1 acres of fee upland worth about $667,500 and on $4,000,000 of leasehold improvements, tanks and repairs that are worth what a 30-year DNR lease with a leasehold mortgage consent makes them worth, which is the question the estoppel and the appraisal answer and the public record does not; the 7(a) holds the business assets and the guaranties. The floats are not insurable under NFIP and the Coastal Barrier Resources System does not reach the Pacific, so the marine structures carry private cover and the reserve. Edmonds' original 1960s covered docks were sunk by a snowstorm and rebuilt, Edmonds is spending $29.1 million on a seawall framed as flood protection, and the Port Orchard breakwater could not be bought for $20 million in 2026; the insurance line and the reserve are sized to that record, not to the seller's premium.

Prepared by Michal Mohelsky, J.D., FMVA, Practicing Affiliate of the Appraisal Institute. Model case aligned with SBA SOP 50 10 8.1 Appendix 15, under USPAP discipline. MMCG Invest, LLC, 27 Maiden Lane, Suite 625, San Francisco, CA 94108.