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Baysave proposals for 2017

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Environmental restoration projects on the Delaware Bay

Published in: Environment
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Baysave proposals for 2017

  1. 1. BAYSAVE 2017 4/4/2017 Aquaculture development project updates
  2. 2. Baysave 2017 Page 1 Baysave is a 501(c)(3) corporation in New Jersey that partners with government, nonprofit entities and commercial companies to develop sustainable and restorative aquaculture. Activity is focused in the Nantuxent Cove of the middle Delaware Bay. Amended April 4, 2017 The cover photo shows the town of Baypoint in the background that is scheduled for demolition under the NJ Blue Acres program in 2017. The middle photo shows wetlands in Lawrence Township under acquisition by Baysave and a sand bar that impedes oyster boats. The Shellfish Commission has proposed dredging. The near field shows formerly unsustainable shoreline in Downe Township that is now better managed under a Baysave conservation program. Table of Contents
  3. 3. Baysave 2017 Page 2 Overview 2 Vertical Integration of Commercial Crabbing 3 Shoreline Stabilization and Restoration 5 Oyster Hatchery 6 Land Use, Property Liabilities, Taxes and Land Use Regulation 7 Sanitary Wastewater Handling 8 Eel and kelp aquaculture 9 For more information 10
  4. 4. Baysave 2017 Page 3 Baysave 2017 AQUACULTURE DEVELOPMENT PROJECT UPDATES OVERVIEW Baysave proposes an ambitious schedule for 2017 that will require the coordination of government, nonprofit agencies and commercial fishery companies. Since its founding in 2009, Baysave Corporation has contributed to the gradual transformation of a failed bayshore fishing hamlet into a viable aquaculture facility with restorative potential for the Delaware Bay. The 2017 projects are listed in no order or significance. This is an evolving plan current as of the date on the cover. Updated plans will be published periodically. Comments and feedback are welcome.
  5. 5. Baysave 2017 Page 4 Commercial crab and oyster fisheries make up most of the local economy
  6. 6. Baysave 2017 Page 5 VERTICAL INTEGRATION OF COMMERCIAL CRABBING Background Blue claw crabs are abundant and manageable part of the vibrant local commercial fishery. The two seafood products are hard shell crabs (a natural live fishery product from the water brought directly to market) and soft shell crabs (an aquaculture product requiring intensive human cultivation). Soft shell crabs rely on wild caught shedder crabs that are then cultivate in land-based facilities until ready for market. The state of New Jersey issues commercial crabbing licenses to individuals only, not commercial fishing companies. Commercial fishing companies own and manage most of the physical resources required to run a successful crabbing industry. Most Individuals with crabbing licenses lack the working capital, business skills and physical resources to maximize their crabbing operation. As a result, the industry is largely controlled by a few wholesale buyers who restrict the development of a direct efficient farmer to consumer market. This also impedes the development of crab aquaculture. The primary inputs into a crab system are human labor and fuel for boat engine. The supply of crabs varies with environmentalconditions and is considered beyond human control. The cultivation of blue claw crabs (hard shell crabs) is possible but not commercially viable. The market price of crabs varies wildly with supply and demand ranging from $24 per basket wholesale price in the fall to $250 per basket retail price on July 4 weekend. The price of softshell crabs ranges from $2 to $8 each, depending primarily on the size and distribution system. Out average price at the dock has been $3 per softshell crab. Proposal Baysave proposes forming a crowd-sourced commercial crabbing operation where a group of limited partners fund a seasonal crabbing operation. The partners have rights to the physical product for their own consumption or other allowable
  7. 7. Baysave 2017 Page 6 distribution (community crab picnics, for example) or a share in the cash proceeds of crab products sold. The waterman (the individual with the crabbing license) provides the labor in return for a share of the crabs. Baysave arranges the boat, the crab traps, a dock, a retail distribution system. At the end of the season, the stakeholders have the option of “rolling over” to the next season or “cashing out” based on the net year- end operating results and asset valuation. Status We are beginning the search for a waterman to test this business model. We need a commitment of seed money from interested investors. A minimum of $10,000 will be required to launch in spring 2017. Ideally, an investment of $1,000 each from 25 limited partners. Our 2017-2022 NJ aquaculture license renewal application is already submitted; no further action is required. Our commercial crab harvesting license is pending. No additional licenses or permits are required. We already have the boat, docks, fuel system and soft shell crab equipment. We anticipate the need for substantial additional expenditures to upgrade the boat and purchase additional crab traps. An online text message based platform for communication among stakeholders and coordinate sales orders is required and will be launched in advance of the crabbing season.
  8. 8. Baysave 2017 Page 7 Blue claw crabs in one of our shedding tanks
  9. 9. Baysave 2017 Page 8 SHORELINE STABILIZATION AND RESTORATION Background Money Island lost most of its dry land mass due to sea level rise since the earliest detailed engineering studies in the 1930s. The land that remains is subject to increasingly frequent flooding, erosion and storm damage. Baysave is engaged in several projects and experimental techniques to combat this effect. The most significant of these projects is a partnership with The Nature Conservancy, Rutgers University, Partnership for the Delaware Estuary and others to stabilize and restore the eroding shoreline. Other projects include dune grass cultivation and berm recovery. Proposal We propose continuing existing projects and welcome new ideas and proposals. Status Baysave leased the ground to the partners in 2015 for $0. The partners applied for the necessary permits, obtained funding, and ran the major projects. Baysave ran parallel self-funded projects that did not require additional permitting. The projects are expected to continue for the foreseeable future. Initial results of erosion control measures of inshore grassy banks are impressive. We have concerns over implied benefits of oyster restoration in the intertidal zone ; local oysters growing in the intertidal zone do not survive the winter season.
  10. 10. Baysave 2017 Page 9 commercial boats at dock
  11. 11. Baysave 2017 Page 10 OYSTER HATCHERY Background An oyster hatchery is a necessary component in the developing commercial oyster aquaculture industry. The hatchery is labor intensive and risky from a business perspective. The only hatchery for commercial seed stock is operated by Rutgers University. Rutgers expressed interest in getting out of the hatchery business. Commercial growers have asked Baysave is we would be interested in running a hatchery/nursery. The business risk might be mitigated by involving more stakeholders and developing the operation as a hatchery/nursery. Proposal We propose to run a hatchery developed with a lead partner in the oyster industry. A lead partner has not yet been identified. Baysave will manage the facility for a share of the seed produced. Doug Rice, a CPA and marine biology student, would be the facility manager. Rutgers University and an established clam grower have offered to lend technical assistance and help develop and transfer its current production contracts to the new facility (especially those of commercial growers in Delaware State). Status Baysave has indicated willingness to provide physical space and onsite labor. The other partners have made initial positive indications but no commitments.
  12. 12. Baysave 2017 Page 11 Oyster harvester at the former recreational marina site
  13. 13. Baysave 2017 Page 12 LAND USE, PROPERTY LIABILITIES, TAXES AND DEED DEFECTS Background Baysave acquired low value water-inundated land by donation that was previously purchased through bankruptcy court. Other similar land acquisitions are planned. We believe the land has potential for future aquaculture use. The pre-existing liens attached to these properties far exceed the property value. Investors will not participate in a project that includes a pre-existing legal liability. Investors perceive this issue as an indication that government is “out of touch” with current land use issues. In fact, until recently some in NJ government denied the effects of sea level rise and the forecast of full inundation. Investors require some evidence that NJ government is “on board” with the realities of the local bayshore and the transformation to aquaculture-based land usage. Currently the land is the sole asset owned by the nonprofit corporation and all other assets and aquaculture ventures are controlled by separate entities. To clear the old liens and convert the properties to productive use, three steps are required: 1) Clear the property deeds of old liabilities 2) Reset property taxes appropriate for the current use 3) Effect land use regulations at state and local level suitable for aquaculture properties Proposal We propose an action plan in three consecutive steps: 1) Clear the deed liabilities through bankruptcy court to bring the land value back up to zero. 2) Partner with the EPA in an educational program for local land use regulators 3) Use the evidence of cooperation by government as a tool to attract new commercial investment.
  14. 14. Baysave 2017 Page 13 Status The chapter 12 bankruptcy for an aquaculture facility is planned for 2017. An application for an EPA grant for the education program was submitted in 2016 but awards have not been made yet. We anticipate that it might take longer and that our application may need to be resubmitted for 2018. State Senator Jeff Van Drew wrote a letter endorsing the education program. Congressman LoBiondo’s office expressed support for the same but a letter as not required. The mayor of Lawrence Township indicates support but has not been briefed on the specifics of the plan based on the request of primary landowners in his jurisdiction. The mayor of Downe Township was briefed in a face to face meeting in April 2014, He might not have understood the asset conversion plan and may have receive contradictory and incorrect information from a local attorney with adverse interests. We recognize the importance of gaining approval of local government for the long- term success of aquaculture at Nantuxent.
  15. 15. Baysave 2017 Page 14 SANITARY WASTEWATER HANDLING Background Human source wastewater is a primary risk in oyster growing habitats. The primary risk contaminant is E. coli bacteria. Yet the necessary physical interaction of humans in an oyster aquaculture zone dictates that some human waste solution is necessary. The dominant approach at marinas and working waterfronts is to use holding tanks (i.e. “port-a-pottys”) and then transport waste by truck to less sensitive facilities. The state recently passed regulations requiring oyster harvesters to use on-board toilet equipment. Baysave was recently approved for a grant to add a waste pump out system for boats. Our local inshore oyster growing region and docks are not served by public septic systems. All human wastewater handling systems in use to date in the Delaware watershed region have proved faulty during times of flooding. Nantuxent region has tested within normal bacteria levels throughout recent history except in one test in 2014 specifically designed to catch higher bacterial counts. The modified test did not identify the bacteria levels as human source. The test report likely improperly attributed the results to broken septic tanks at vacant houses. Since that time, all houses in the bayfront test zone of Baypoint and Money Island were purchased by the state for demolition. The remaining toilets at Baysave facilities will be served by the permitted marina pump-out system. Proposal We propose a two step solution: 1) Install a pump-out and holding tank solution as quickly as possible to address current regulatory concerns.
  16. 16. Baysave 2017 Page 15 2) Develop a local wastewater treatment solution. We believe that a viable solution is not as difficult and expensive as some have suggested. A working model of a wetland wastewater treatment facility has been successfully tested in Pennsylvania in the Chesapeake watershed headwaters. We believe that a modified system will work here. Status We resubmitted our grant application for pump out and holding tank in late 2016. Approval is expected in 2017. We have no indication of the schedule for grant funding or construction.
  17. 17. Baysave 2017 Page 16 EEL AND KELP AQUACULTURE Background Eel is the most abundant biomass in the Delaware Bay. A viable commercial fishery exists but faces significant obstacles. There is no commercial aquaculture of eels. We believe potential exists for this specialty. Likewise, some have proposed that kelp aquaculture offers significant potential. There is little active research and no commercial application but recognize the need for stakeholders to take a long-term view of our changing Delaware Bay ecosystem. Proposal A local marina biology student, Doug Rice, proposes additional research in this field. Baysave pledges support. Status No formal proposals or approvals for eel or kelp aquaculture are available.
  18. 18. Baysave 2017 Page 17 Wild caught eel
  19. 19. Baysave 2017 Page 18 FOR MORE INFORMATION Contact Tony Novak, President PO Box 333, Newport NJ 08345 Cell 856-723-0294 Email tnovak@baysave.org
  20. 20. Baysave 2017 Page 19 Amended Baysave Business Plans - April 4, 20017 This page confirms changes to the business plans and proposals originally drafted January 31, 2017 and complied in the document titled “Baysave 2017”. This amendment is drafted partially in recognition that Doug Rice will obtain legal advice on his future business plans. In summary, progress is more or less what we expected at this early stage. Boat and trailer ownership Several boats and trailers are now titled in the name “Money Island LLC” with Tony Novak acting as authorized representative and person identified on the “Corp code” issued by NJDMV. This practice is presumed to be effecting in managing liability and will be continued with the remaining boats and trailers. The marina will handle boats and trailers contributed by Doug Rice in the same manner. See ‘financing’ section below. Some idle unused boats and trailers on the properties have title defects and so registration will take some time. Boats and trailers are uninsured. Crabbing plans We have not yet recruited a commercial crabber or obtained a commercial crabbing license. While recruitment efforts continue, we are making alternate plans for a supply of shedder crabs as an important ingredient for the soft shell crab operation. The state of New Jersey renewed Tony’s crab aquaculture license for another 5 years through 2020 but has not issued a commercial crabbing license. We are working with State Senator Van Drew for a long term solution. The ‘worst case’ is that this operation limps along for another year.
  21. 21. Baysave 2017 Page 20 Bait plans Tony, Bruce and Doug will soon test new techniques for catching, storing and selling live and fresh bait. This is expected to contribute a small amount, perhaps $1,000 to $2,000 to cash flow this season. Financing through Nantuxent Corporation Nantuxent Corporation is a Delaware C corporation primarily involved in financing aquaculture projects. Shares are issued at $1,000 for every contribution of cash, equipment or real property for use by Baysave or Money Island Marina LLC or other contracted entity. Equipment and real property will be recognized at cost even if we acknowledge that current value is lower. Shareholders have the right to redeem shares by reversing the property contribution. 1,000 shares are authorized. Doug Rice will be offered shares in exchange for cash or property. The goal of this financing arrangement is to: 1) limit the legal and financial risk of shareholders, 2) allow shareholders to participate in gains, if any, and 3) allow shareholders to exit with greater ease by removing the property they contributed. Current shareholders are: William Novak 5 John Novak 5 Tony Novak 3 (additional shares pending at conclusion of Baysave reorganization) Doug Rice (planned) Tony Novak is the only current officer serving without compensation. An officer offer will be extended to Doug Rice.
  22. 22. Baysave 2017 Page 21 Other financing No progress to report on public or outside financing. This effort will resume after the court’s acceptance of the Baysave reorganization plan. The goal is to obtain public financing as a tangible show of governmental support as well as acting a leveraging and risk management tool. Wastewater treatment The pending Money Island Marina wastewater system application was rejected in March and must be resubmitted with deficiencies addressed. Our strategy is to stick to this plan until we get an approval. Waste water handling remains a significant long term issue. Real estate acquisition Tony Novak will purchase and gift to BaySave corporation 15 acres of open space adjacent to the marina. Doug Rice will issue a first mortgage to Tony Novak in the amount of $5,000. The land will be used for aquaculture research, crab harvesting and, eventually we hope, a site for thin spray dredging deposits. This is a new sea level rise response technique being tested to raise ground levels about two miles south of us in Fortescue NJ. It has the potential to raise property value over the long term. Baysave bankruptcy The chapter 12 reorganization is moving ahead as planned. The creditor’s meeting is April 17 and the reorganization plan will be submitted by May 15. The goal is to reduce total liabilities to no more than the appraised market value of the land. The attorney is fully paid and the appraiser is partially paid with $1,000 due.
  23. 23. Baysave 2017 Page 22 Rental boats The marina purchased and repaired two small rental boats for perch fishing. This brings the total rental fleet to 4 boats (counting the 12’ Lowe and the 14’ from Doug). So we have our opening to start the boat rental business this spring. Work boats The marina now has two work boats, titled and registered, that share one new portable engine. Dock construction The marina is in final stage of rebuilding 5 new finger docks that make 10 additional boat slips available for rent. Additionally, we are working on a “tiki bar” dock as a novelty to attract public attention. Total cost is about $8,000 and more than $6,000 has already been paid. Screened Picnic Deck Construction We are partnering with a commercial boat captain to build a screened-in picnic deck at the ‘point’ of the inlet. This project is in beginning stages with an expected total cost of $3,000.

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