Marina Expansion in Talbot County, Maryland: A USDA B&I Model Study

Model study: an illustrative feasibility analysis built on public data for Talbot County, Maryland; not a client engagement.

Project summary

Costs, structure, coverage and returns in this table are model results or model assumptions.

The credit question

A lender here is reviewing an existing waterfront business that wants to roughly double its revenue at the same site, not a marina from scratch. That framing decides which equity test applies, whether a feasibility study is mandatory, how the permits treat the work, and what cash repays the loan. Four things must be proven.

1. The combined business covers the new debt from the first operating year, and the expansion eventually covers it alone. In the model, the existing marina produces about $528,000 of EBITDA less reserves in Year 1, against $701,488 of interest-only debt service in Year 1 and $810,625 from Year 2. Alone it would cover the new loan only 0.70x in Year 4, so the expansion must fill quickly.

2. There is enough boat demand to fill 48 larger wet slips and 144 racks in a state whose registered fleet is shrinking. Maryland had 160,409 registered vessels at the end of 2025, down 7.1% from 172,618 two years earlier [3][4]. Demand must come from beyond the Mid-Shore's own boat owners.

3. The permits are obtainable for an expansion, and the shoreline is defensible over a 25-year term. All work falls inside Maryland's Critical Area, the land within 1,000 feet of tidal waters, where the Buffer is at least 100 feet wide and only water-dependent structures can be permitted in it [5]. Sea level along Maryland's shores is likely to rise about 1.0 to 1.6 feet between 2005 and 2050 [6]. Both go to collateral value.

4. The structure fits 7 CFR part 5001. The borrower must be an existing business as the rule defines it, the guarantee and fees must follow the annual notice, and the repayment schedule must start principal and interest within three years and carry no balloon [1][2].

The rest of this study tests each point and marks where evidence is an assumption.

Location and county economy

Population and households

Talbot County is small, old and slow-growing. The Census Bureau's Vintage 2025 estimates put the county at 38,238 residents on July 1, 2025, up 1.9% from the April 2020 estimates base of 37,523, though slightly below the 2024 estimate of 38,295 [7]. The county counted 37,782 residents at the 2010 census [8], so growth has been slow for fifteen years. Easton, the county seat and largest town, had 17,293 residents in 2025; St. Michaels 1,083; Oxford 591; and Trappe 1,517, the one town growing quickly, up 29% from its 2020 base of 1,176 [9].

Percentages of housing units are computed from the ACS counts.

Two figures matter most for a marina. First, 8.4% of the county's housing stock is held for seasonal, recreational or occasional use, about four times the Maryland share [12][13]: 1,656 second homes, many bought with a boat in mind. Second, the county's median household income of $87,121 sits below Maryland's $102,835 [11], so resident earnings alone do not explain the boating market; second-home owners and visitors do much of the work. The median age of 50.6 [10] cuts both ways: older owners run larger boats and buy service, but ownership declines with age.

Employment and sectors

County Business Patterns for 2023 counts 1,468 establishments in Talbot County with 17,567 employees and $965.5 million in annual payroll [14].

Source: Census Bureau County Business Patterns 2023 [14]; shares computed.

Talbot is a regional medical and service center with a visitor economy on top. Health care, the largest employer, is the sector least exposed to the boating cycle, and its professionals are slip holders. Accommodation and food services, 13.4% of jobs, is the visitor economy's direct footprint.

The payroll line carries full dry-stack staffing, with dock hands, forklift operators and technicians, rather than assuming the existing crew absorbs the added work.

Visitors, second homes and access

This model study does not rely on county visitor-spending or property-transfer figures. The second-home stock above is the better demand signal, and a lender should weight the marina's waitlist and renewal history over any in-migration assumption.

Road access is over the Chesapeake Bay Bridge, which carried an estimated 27.6 million vehicles in 2019, up from 23.7 million in 2000 [15]. It ties the county to the Annapolis, Baltimore and Washington areas, where many slip holders live during the week. Summer bridge congestion favors dry-stack launch on demand: the late-arriving owner does not lose time rigging a boat.

Market analysis

Demand drivers

Boating in Maryland is large but contracting. The state's own count, published in the Maryland Manual, shows registered vessels displaying a state number at year end:

Changes are computed. The U.S. Coast Guard's 2024 report counts Maryland registrations differently and shows 168,202 for 2024 against 169,900 for 2023, a 1.0% decline, while the national total rose 1.1% to 11,674,073 [18]. The series differ on level but agree on direction: Maryland's fleet is shrinking while the nation's is stable. Personal watercraft held at about 19,000 [16][3], so the loss is in conventional boats.

Composition matters more than the total. Nationally, 55.5% of registered vessels are mechanically propelled boats of 16 to under 26 feet, 4.7% are 26 to under 40 feet and 0.65% are 40 to 65 feet (computed from [18]). Larger boats are a small share, but nearly all need a slip, lift or rack. Many larger yachts are federally documented rather than state-registered; this study treats them as unquantified upside. The other drivers are second homes, covered above, and access: Maryland had 531 public water access sites at the end of 2025, including 251 boat ramps for motorized vessels [3]. Ramps compete with dry stack for trailerable boats; dry stack wins when the owner values time and covered storage over cost.

Existing supply and pipeline

County Business Patterns counts nine marina establishments in Talbot County in 2023, with 88 employees and $4.8 million of payroll [14]. Neighboring counties report nine in Queen Anne's, four in Dorchester and fourteen in Kent; Caroline County has no published row, and Anne Arundel, across the Bay, has 54 [14]. Establishments are not slips, and no public source used here lists slips by marina or planned expansions. The supply method is therefore a field survey a lender should require: every marina within a 30-minute boat ride, with slips by length, racks, rates, occupancy and waitlists.

The one official 2026 rate sheet used here for an Eastern Shore marina is the Maryland Department of Natural Resources' Somers Cove Marina in Crisfield, which charges $75 per foot for an annual contract, $60 per foot for eight months, $22 per foot for a month, $10 per foot for a week and $2.00 per foot per night ($2.50 on holidays), with electricity metered and billed separately [19]. Somers Cove is a state-owned harbor in a lower-income county far from the Bay Bridge, so it is a floor, not a comparable. The model's Talbot rates are assumptions at about twice that level and the most important input a rate survey must confirm.

Demand method

The method is a resident-fleet penetration test, followed by an import test for the wet slips.

The inputs carry their sources; the boat estimates and capture rates are model results. The dry-stack test passes on resident demand: 5.1% capture of the Mid-Shore's trailerable-size fleet is ambitious but plausible for covered rack storage, with no Western Shore boat required. The wet-slip test fails on resident demand: 44 more boats of 26 feet and over would be 17.8% of the estimated local fleet in that band, part of which the existing slips already serve. The new slips depend on sources the per-capita method misses: documented yachts, Western Shore owners (Anne Arundel alone holds an estimated 832 boats of 26 feet and over), and second-home owners registered elsewhere. That is the file's main market risk. The model holds the wet-slip addition to 48 and assumes the waitlist pre-sells the first season; a lender should see that waitlist, with deposits, before closing.

Absorption forecast

New wet slips are modeled at 55%, 78%, 90% and then 92% occupancy in Years 1 to 4, and racks at 45%, 70%, 85% and then 90%, giving 174 boats in the new units at stabilization. Racks ramp more slowly because dry stack is new to this market, and most customers switch from a trailer or mooring only after seeing a season of service. The existing 120 slips are held at 94%, a level the rent roll must support. Incremental fuel, service and store revenue follow the average of the two ramps. All absorption figures are model assumptions.

Site and technical

Site requirements

The modeled site is an existing marina with its own basin, yard and road access. A lender must verify four things: depth for 40-foot boats without new dredging; dock placement within the usable water area the county allows; an upland footprint for the rack building outside the Buffer, which is at least 100 feet wide [5]; and parking under the county code, which may count slips, moorings and floor area. Each is a site-specific check against the county code and plans for an actual parcel.

Zoning and permits

One rule clearly turns on this being an existing operation. MDE's marina page states that existing 16-MA registrations continue to be covered under the administratively extended permit, while proposed new discharges are covered only through a Consent Order and a declaration of intent until the 25-MA permit is issued; MDE has scheduled a hearing on the draft 25-MA for December 2, 2026 [23]. The state Critical Area criteria and the county code also distinguish new marinas from expansions of existing ones, and that distinction is part of the asset's value; counsel should confirm how both treat this expansion and the site's Critical Area designation before closing.

The rules also shape the site plan: within the Buffer, only water-dependent structures can be permitted, subject to regulatory requirements and permits, and other new structures belong outside it [5]. The budget carries Buffer mitigation and a wash-down recycling system because both are likely conditions of approval (assumption).

Construction approach

Land-side work is a pre-engineered steel rack building with a forklift-rated slab and launch well, yard paving and new double-wall fuel tanks; it can proceed year-round. Water-side work is floating docks on driven piles with utility pedestals, fire protection and pump-out, the fuel dock, and lift-well piers for a 50-ton travel lift; it is subject to time-of-year restrictions the permits will set.

Construction cost inflation is a live risk. The model's 10% contingency on hard costs is an illustrative assumption and a minimum, and a lender should want fixed-price contracts for the dock system and the rack building before closing.

Schedule

Timings are model assumptions. Permits come before closing because the borrower must take no action that would limit the reasonable alternatives until the environmental review concludes [1]; a slipped review moves the first season with it.

Development budget and sources and uses

All amounts are modeled. Unit costs are assumptions: $53,000 per new wet slip including utilities, and about $29,650 per dry-stack rack including the forklift and site work. The working capital line is sized to cover the first-year seasonal cash trough shown in the quarterly table below. The 55% average draw on interest during construction reflects a 12-month build with costs front-loaded by the rack building. The debt service reserve is funded with equity, so borrowed money does not protect borrowed money.

All B&I uses in the budget are listed as eligible in 7 CFR 5001.121(c): land, buildings and infrastructure including expansion, machinery and equipment, permanent working capital, guarantee fees, lender fees, professional fees and fees for construction permits and licenses, feasibility studies, and interest before the first principal payment [1]. The budget avoids two ineligible uses: payments above actual cost to a contractor on a less than arm's length contract, and distributions to owners [1].

Revenue build and operating expenses

Assumptions

Year-by-year revenue

All figures in this table are modeled. Revenue grows from $3.74 million in Year 1 to $5.04 million at stabilization in Year 4. Slip and rack rent, the most dependable lines, are $1.79 million (35.5%) of Year 4 revenue; service and fuel are $2.54 million (50.4%) and more volatile. Rent is the base of repayment; service and fuel are the cushion.

Operating expense structure

All figures in this table are modeled. The 30.6% EBITDA margin at stabilization compares with 22.6% for the existing marina in the Year 0 baseline ($577,769 on $2,554,830). Rack and slip rent add revenue with little direct cost while fixed costs spread over a larger base. Insurance, at 5.0% of revenue, is the line to watch, and one scenario below raises it 60%.

Seasonal cash flow

Because marina cash flow is seasonal, 7 CFR 5001.202 requires a projected operational cash flow analysis on a quarterly basis for borrowers with seasonal cash flow, and a quarterly analysis through start-up where the lender requests the loan note guarantee before construction is complete [1]. The table assumes annual contracts are collected mostly in the second quarter, when the season opens, winter storage in the fourth quarter, insurance largely in the first and real property tax in the third.

All figures in this table are modeled. The first quarter is the trough: $217,741 short in Year 1 and $175,255 in Year 4 before spring renewals arrive. The $250,000 of working capital covers the Year 1 trough; a seasonal line of credit outside the B&I loan would be prudent later. Principal could also be scheduled to the season, since 5001.402 requires only that scheduled payments be made no less frequently than annually [1].

10-year pro forma

All figures are modeled. The pro forma covers the whole business, because the borrower is the existing business and the lien covers the whole marina. Year 1 is the first full season after completion, on interest-only debt service. Cash flow after debt service is positive every year but only $92,808 in Year 1, which is why the reserve and working capital sit in the budget.

Debt structure under the program

The rule leaves the rate to negotiation between lender and borrower, and caps it at what the lender customarily charges for non-guaranteed loans in similar circumstances [1]. With the 10-year Treasury constant maturity yield at 4.88% on November 9, 2026 [24], a fixed rate would likely price above the 8.75% modeled.

Guarantee and fees

Rates are from the FY2026 notice [2]; dollar amounts are computed. The maximum B&I guarantee is 90%, but the agency sets the percentage and fees each fiscal year [1]. The FY2026 notice, with fees effective October 1, 2025, set 85% under $5 million and 80% for $5 million to $25 million, a 3.0% guarantee fee, a 0.55% retention fee and 0.50% for a loan note guarantee issued before completion [2]. The guarantee fee rate is the one published for the fiscal year in which the loan is obligated [1]; the retention fee, on the December 31 outstanding principal balance times the guarantee percentage [2], is passed through as an operating cost. The 5001.454(c) fee is modeled on the guaranteed amount, by analogy with the initial fee; the lender should confirm the computation with the agency.

A Federal Register API search on November 11, 2026 found no FY2027 notice; the newest OneRD annual notice is the FY2026 notice of March 9, 2026 [25], so a loan obligated in FY2027 or later will carry rates not yet published, and this study uses FY2026 rates as the proxy. The reduced 1.0% fee needs a 5001.454(d) criterion, such as a county unemployment rate of 125% or more of the national rate, a persistent poverty county (20% or more in poverty over 30 years), a presidentially declared disaster in the prior 24 months, long-term population decline over the last three decennial censuses, or a listing as a distressed community [1]. Talbot's 2024 poverty rate is 9.9% [11]. The unemployment criterion and the other criteria were not tested for Talbot County, so the model pays the full fee.

Equity and the existing-business test

7 CFR 5001.105(d)(1) gives an existing business three ways to meet the capital requirement: at least 10% balance sheet equity at closing (or debt to balance sheet equity no worse than 9 to 1), a borrower investment of at least 10% of total eligible project cost, or owner-contributed capital of at least 10% of net total fixed assets plus depreciation [1]. The modeled borrower clears the second test with 28.8% of eligible cost, and the first with an estimated 44.9% balance sheet equity at closing (debt to equity of 1.23 to 1), on an assumed $3,150,000 net book value of existing fixed assets and $300,000 of existing cash with no existing debt. Equity cannot include appraisal surplus [1], so the book value, not the appraised value, of the existing marina counts.

The 27.7% injection is well above the minimum because coverage, not the rule, needs it; the agency may also increase the requirement for a loan it determines carries a higher risk [1].

DSCR by year and break-even

DSCR

All figures in this table are modeled. 7 CFR 5001.3 defines the debt service coverage ratio as EBITDA less reasonably expected replacement capital expenditures, divided by annual principal and interest [1]. The table follows that definition. Whole-business coverage is 1.13x in the interest-only year, 1.37x in the first amortizing year and 1.75x at stabilization in Year 4, rising to 2.07x by Year 10 as rents escalate against fixed debt service.

The expansion-only column, the expanded business minus the same marina without the project, is the harder test: 1.04x in Year 4 and 1.25x in Year 10, with the existing marina carrying the shortfall in Years 1 to 3. That is acceptable for an existing business with a stable base, and it is why 5001.202 asks for projections consistent with past performance, with increases in revenue or margins substantiated, and a global analysis where affiliated entities are involved [1].

Break-even

All figures in this table are modeled. The marina can lose a third of its slip holders before missing a payment, but a broad 23% revenue decline, such as a severe storm season or boating downturn, takes coverage to 1.00x.

Returns

Returns measure the expansion, because the sponsor's question is whether $3.08 million of new equity earns its keep. Incremental cash flow is the expanded business minus the business without the project; financing costs and the reserve are excluded from the unlevered basis.

All figures in this table are modeled. This is the structure's weak point for the sponsor, not the lender. The stabilized yield on cost is 9.0% while the debt costs 10.1% a year, so borrowing lowers the equity return: 7.4% levered against 9.7% unlevered. Distributable cash rises only from about $570,000 without the project to $606,000 with it in Year 4; nearly all the equity return is exit value. A sponsor might still proceed to pre-empt a competitor's dry stack, but its incentive to support the loan in a bad year rests on that exit value. Lower cost, higher rack rates or a cheaper fixed rate would help most.

Collateral

Year 4 NOI of $1,542,534 at 8.5% gives a whole-marina value of about $18.1 million, a 44.2% loan-to-value; the existing marina's as-is income value of about $6.8 million plus the expansion's hard cost gives 53.8%. These are model values. Because 5001.203 requires any business or going-concern value in an appraisal to be deducted from the reconciled market value before discounting [1], the real-estate-only appraisal will come in lower.

Sensitivity and stress tests

Two-way grids

The first grid varies the interest rate and the occupancy of the new slips and racks, holding the existing marina at plan. Values are Year 4 DSCR.

All figures in this table are modeled. The variable rate is the larger exposure: each 100 basis points costs about 0.13x of coverage at plan. When every volume (existing slips, new units, transient, fuel and service) falls 15% together, coverage is 1.23x at 8.75% but 0.98x at 11.75%. A rate cap or a partial fixed-rate swap would be worth more to this credit than a larger reserve. The rule allows swaps, though the guarantee covers only principal and interest and not any fees related to the swap [1].

Downside scenarios

All figures in this table are modeled. Each single shock leaves Year 4 coverage at 1.38x or better; the lowest single-year figure is 1.07x, under the boating contraction. The storm drops coverage to 1.18x for one year. The combined case takes Year 4 to 0.93x with a five-year cash deficit of $643,148. That is what the reserve and guarantees are for, and it is not remote: it needs only a shrinking fleet, coastal insurance repricing and rising rates together.

Storm, flood and sea-level exposure

The shoreline is the collateral. The University of Maryland Center for Environmental Science's 2023 projections for Maryland state that sea level is likely to rise between 0.3 meters (1 foot) and 0.5 meters (1.6 feet) by 2050 from a 2005 starting point, and that under the Current Commitments scenario the best estimate for 2100 is 0.8 meters (2.7 feet), with a likely range of 0.6 to 1.1 meters (2.0 to 3.5 feet) [6]. One analysis cited in the report estimated mean sea level rising by 4.5 mm a year or more since 1975 at tide gauge locations in Maryland's portion of the Chesapeake Bay, and the report notes Cambridge, the nearest gauge across the Choptank, subsiding faster than Baltimore [6]. Under the Interagency Intermediate scenario, the report expects minor tidal flooding in Maryland to rise from 2 to 5 events a year in 2020 to 50 events a year by 2050, moderate flooding from a 20 to 30% annual chance to 5 events a year, and major flooding from a 2 to 5% annual chance to a 20 to 30% annual chance [6]. Hurricane Isabel in 2003 created more than 2 meters of flooding in Washington, D.C., Baltimore and Annapolis [6].

Floating docks rise with the water, but the existing fixed piers should be checked against the 2050 projection, and the building and fuel tanks sited above flood levels that include it. Insurance may rise faster than the 5% a year modeled; at +60% Year 4 coverage is still 1.56x, but flood, wind and business interruption cover should be required.

Program compliance

Part 5001 was read from the January 1, 2026 CFR edition; the most recent rules affecting it in the Federal Register, of December 11 and 12, 2025 [26][27], predate that edition.

Expansion of an existing business versus a new business

A new-business version would need 25% equity (about $2.7 million on eligible cost), a mandatory feasibility study and a new-discharge path for the service yard. Existing status is an asset the lender should document with tax returns and a written agency view that the project expands, rather than significantly changes, the operation.

Risks and mitigants

Model determination

As modeled, the project is financeable under B&I: an existing-business borrower, eligible uses, equity nearly three times the minimum, 44.2% loan-to-value and whole-business coverage of 1.37x in Year 2 and 1.75x at stabilization, with every single downside at 1.38x or better in Year 4. Its weaknesses are that the expansion does not cover its own debt until Year 4 and that the equity return is thin. Neither is fatal; both call for conditions.

A lender reviewing a file like this would likely set these conditions:

1. Three years of business tax returns and financial statements showing stable operations, and the agency's written view that the project is an expansion of an existing business.
2. A rate survey and waitlist audit of competing marinas, and signed deposits for at least half of the new wet slips and a third of the racks before closing.
3. All federal, state and county permits and approvals and the USDA environmental decision in hand before closing, with mitigation costs inside the budget.
4. Fixed-price contracts for the rack building and the dock system; overruns funded by the borrower.
5. An interest rate cap or a swap on at least half of the loan, or a fixed rate if it prices within reach of the model.
6. A six-month debt service reserve funded at closing and released only after two consecutive years at 1.35x or better.
7. A minimum DSCR covenant of 1.25x from Year 3, tested annually on the 5001.3 definition, and quarterly cash flow reporting through Year 2.
8. Flood, windstorm and business interruption insurance on the building, docks and fuel system, with the lender as loss payee.
9. A real-estate-only appraisal that separates going-concern value, and a site plan that elevates the building and fuel tanks above the projected 2050 flood level.
10. Personal guarantees from every owner of 20% or more.