Our Funds

The Harbor Commission (hereafter Harbor) manages the harbor fund. It is a committee of five that includes one member of the Common Council. It is charged with maintaining, improving, and managing the waterfront facilities of the city. These include City Dock (the main dock adjacent to the Pavilion), the Apostle Island Marina (the docks and individual boat slips across from City Hall), the boat launch ramp, and the slip adjacent to the Coast Guard station. Its revenues and expenses pass in and out of a city account called the Harbor Fund.

Harbor is organized as described in Wisconsin statute 30.37 and operates according to statute 30.38 and Bayfield ordinance 21-7.  Statute 30.38 gives it some special powers that most city committees do not have. Importantly, 30.38(9) allows it to set rates for use of the harbor above the actual costs, potentially generating revenue for the city. In contrast, without a Harbor Commission rates can only be high enough to cover costs (see statute 30.35(2a)).

Harbor negotiates agreements with Apostle Island Cruises and other charter boats based along City Dock, and others who wish to tie-up there either briefly or seasonally. A recent addition to Harbor’s responsibilities is working with the cruise ships that first visited in 2022, using City Dock to land passengers who wished to visit Bayfield and vicinity. Commission members invested lots of time in sorting-out this important new source of revenue.

Unique within city governance is the arrangement Harbor makes with a marina management company to operate the Apostle Islands Marina. The marina’s infrastructure (but not the mobile machinery) is owned and maintained by the city. The contracted operator leases it and puts it to use by selling services to boat owners, including launching, seasonal slip rental, boat retrieval and storage, sales of fuels and supplies, and some maintenance. The contract has been awarded for five-year periods for some time, and yields about $160,000 annually in revenue. The current contract ends at the end of 2023.

A perennial discussion with the end of each five-year contract with the marina operator is whether the city should take over this work, managing it directly. Revenues to the city would increase, but recruiting and retaining the specialized knowledge and skills required here would be a challenge. It brings to mind the awkward (to me, anyway) situation of the highest-paid state employee being the university football coach.

Harbor generates a good bit of revenue — projected to be nearly $400,000 in 2023 (the cruise ship agreement substantially increased this starting in 2022). But waterfront infrastructure is astonishingly costly to build and maintain. Large projects require borrowing, which is done by the city.

Rebuilding of the breakwall and one dock of the marina over winter 2021-2022 was a $4,560,000 project. The US Army Corps of Engineers paid for 75% of the project, and a state program and the city each contributed 12.5%. This made our piece $650,000 (how much of this must be borrowed has yet to be finalized, as far as I can ascertain). This was a big project that required a lot of attention from the city clerk and treasurer, as well as commission members.

The next big project Harbor is facing is repair of the “finger piers” that jut-out from City Dock. While they are sturdy and functional, deterioration of components below the water level, I'm told, creates safety issues. While City Dock was originally funded by Wisconsin and federal agencies, it looks like maintenance is on us. Cost are very uncertain at this point, but could be on the order of $500,000.

Our waterfront is a huge part of what makes Bayfield unique, and is an important source of revenue to city government. Thanks to the Harbor Commission members for their good work.

The vision and efforts of local citizens in years past turned two old buildings into valued civic infrastructure — the old county courthouse and the Lakeside Pavilion. These two structures are sort-of multi-faceted “side-hustles” for the city, providing revenue, preserving architectural heritage, and serving civic purposes.

Each is overseen by a committee of citizens and elected officials. In various city financial documents each has its own fund, as a way of tracking income and expenses individually. The auditors in their annual assessment of city finances include them in the “Combined General Fund” (sometimes denoted just “General Fund”) as “assigned” assets. Being assigned funds means that there is an intended purpose for them but the council has the legal authority to redirect them as needed. In the city budget there are separate entries of expenses and revenues related to each. 

Lakeside Pavilion

The pavilion income consists of short-term rentals for events, yielding $15,000 to $18,000 annually, and long term lease of office and ticket sales space to Apostle Island Cruise Service, at about $6,800/year. Annual operating expenses include wage and fringe benefits for the time city workers spend on the building (about $10,000 in 2022), utilities, insurance, and supplies. The city seeks to set fees for using the building so that operating expenses are covered and some savings accumulate to pay for larger projects. COVID reduced revenues considerably, so fees may need to be reevaluated. In 2023 a long-planned renovation of the west side of the building will be be done, with new windows and decking. The total cost will be about $75,000, with $50,000 from the pavilion fund and the rest from the tourism fund.

All-in-all, the pavilion serves as a much-needed event venue for local residents, visitors, and organizations, at no net cost to the city.

Courthouse 

The courthouse was renovated in 1978 so that it could become the headquarters of the Apostle Island National Lakeshore. The lease is renewed periodically (most recently for 5-year periods), following federal government procurement procedures. Annual rental paid to the city by the park is about $300,000, and operating expenses are about $110,000.

The most recent lease specified needed building upgrades. About $300,000 of work was needed to the roof, electrical system, elevator, and fire alarms. Some of this work was done in 2022 and the rest will be completed in 2023. Most of this will be funded through borrowing, with revenue from the lease used to pay the debt. Once the renovations are complete the rent will increase to cover the debt service. In recent years the council has drawn $75,000 annually out of the courthouse fund and applied it to general government (going into the unassigned portion of the general fund). This should continue, if renovations go as planned.

The courthouse seems a better-than-breakeven proposition for the city financially, it preserves a fine old building, and provides an opportunity for partnership with the Apostle Island National Lakeshore.

A Little History

These buildings have such great stories associated with them that a few notes on their histories seems in order.

The city’s webpage on the Lakeside Pavilion (https://www.cityofbayfield.com/lakeside-pavilion.html) is a good place to start. It apparently has always been about public gatherings, built in 1925 and owned by the city since 1939. A newspaper report from 1935 said that on June 27th one thousand folks attended a dance there marking the end of the Strawberry Festival. Dances and roller skating were common uses.

Apparently interest in the pavilion dwindled and the idea of tearing it down was broached. But a determined and energetic group rallied to organize and fund a major renovation, starting in 1994. This effort added windows, insulation, heat, and a small kitchen, making it, for the first time, a year-round community center. Former, but then newly-elected mayor Larry MacDonald recalls telling folks that it could be renovated in six months for $50,000. He was off by just a factor of five or six — it took three years and $250,000 to do the job. Let’s hear it for optimism and perseverance. No city funds were used — a Wisconsin Coastal Management grant and many individual contributions got it done. Larry says that it seemed like everyone in town contributed something, which he credits to memories of roller skating and dancing in the old hall.

The courthouse was constructed in 1883 and 1884, when Bayfield was the county seat. Some political hardball and an election in 1892 led to moving the county seat to Washburn, leaving the structure in search of a mission. It became the Bayfield town hall and then city hall in 1913. At this time the school district was leasing portions of it and in 1912 the first high school basketball game was played in the gym that had been built on the second floor. Through 1952 the building variously served as school facility, civic center, and in 1945, housing for prisoners of war. In 1952 the school no longer needed the space, and the building was little used for the next five years. Bids for demolition proved too costly for the city and the building and land were sold to a private party in 1957. A cabinet shop and storage were the main uses.

In 1974 the building was added to the National Register of Historic Places (https://catalog.archives.gov/id/106779993), its owner listed as McCarty Machinery Sales. In 1978 it was purchased by the Bayfield Historical Association, in anticipation of grants for renovation and a lease from the National Park System for the headquarters of the Apostle Island National Lakeshore. The AINLS had been created in 1970, and was headquartered at Little Sand Bay. Federal grants for renovation came from the Economic Development Agency and the Upper Great Lakes Regional Commission.

By 1978 the lease was agreed upon and the city became the owner of the property. The dedication ceremony was held on October 6 and 7, 1979. The program pamphlet for the event includes “The project is a pioneering example of the Public Buildings Cooperative Use Act of 1976, a federal law that directs agencies to use historic buildings to meet needs for office space.” One can’t but help see the savvy work and long-term vision of Gaylord Nelson and BHA folks like Jerry Phillips.

Both of these buildings speak to the power of collective action, vision, optimism, and persistence. Thanks to Larry MacDonald for conversations, and the great collection of materials that the Bayfield Heritage Association so kindly made available.

The Wisconsin state legislature in its 2015-2017 budget bill forced a sharing of municipal room taxes with a local tourism promotion entity. The Bayfield Chamber and Visitors Bureau was already operating and so was the logical partner here. The legislation capped how much of the room tax the municipality could retain and specified minimum amounts to be passed to the Chamber. 

The Tourism Commission was formed to implement the new rules. It has five members, including the mayor, another elected official, and a representative of the hotel/motel industry. The commission’s job is to oversee the Tourism Fund. This fund receives the room tax receipts, transfers to the city the portion it is allowed, and makes quarterly payments to the chamber. What is left over accumulates in the fund, to be occasionally spent on capital improvement projects that can be reasonably assumed to help increase overnight visitors to Bayfield. The commission has sole control of the fund balance. At the end of 2021 there was about $200,000 in the fund balance, restricted for tourism.

The upshot of these circa 2017 rules (after some years of transition) is that the city now retains about 30% of the room tax collected, the chamber receives about 42%, and the rest remains in the fund. (The formulas are more complicated but these figures are close enough.) About $400,000 of room tax is collected annually. The city’s general fund receives roughly $120,000 and the chamber about $170,000, annually. In 2023 the fund will contribute $25,000 to the Lakeside Pavilion renovation. Another project in the queue for the fund is the city-wide signage project that has been in development for some years.

In summary, the Tourism Fund is a significant source of revenue to the city, both directly toward general government and for capital improvement projects that support the tourism industry.