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A yacht tax break with many fathers

ALBANY—A sales tax exemption for expensive boats that was included in New York’s final budget had its genesis in both houses of the Legislature.

A version of the measure, which exempts from sales tax any portion of the purchase of a boat above $230,000, was included in a budget clean-up bill last year that was never actually introduced.

The carve-out was not included in Governor Andrew Cuomo’s original budget proposal, but both houses of the Legislature included some version of the provision in their one-house budget proposals this year, and its inclusion in the final budget means both the governor and the legislative leaders agreed on the final proposal.

The exemption, which Senate Majority Leader Dean Skelos defended Monday as a way to create jobs, could benefit not only yacht owners, boat manufacturers and retailers, but also marina owners and operators.


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Michael Fortenbaugh, who previously operated the North Cove Marine near the World Trade Center site, said New York State’s sales tax has been historically unfriendly to yacht buyers.

“When you purchase a boat, very few people will claim the boat to be located in New York State,” he said. “If you buy a boat that’s $5 million you’re talking a huge amount of money [in sales tax].”

Fortenbaugh lost his license when it was awarded to two close allies of Cuomo.

In January this year, the Battery Park City Authority, whose members are appointed by the governor, opted to award a 10-year license to operate the North Cove Marina to Brookfield Properties and Island Global Yachting, which is run by Cuomo’s former employer Andrew Farkas, and is an affiliate of Island Capital Group LLC, the real estate merchant banking firm run by Farkas, which once employed Cuomo as a vice president. (During his time with Island, Cuomo helped mediate a dispute with community groups opposed to a planned waterfront complex and marina on St. Thomas in the U.S. Virgin Islands.)

At the meeting to announce the awarding of the North Cove license, Battery Park City Authority chairman Dennis Mehiel, who was himself a major donor and fund-raiser to the state’s Democratic party, and once ran against Andrew Cuomo as a lieutenant governor candidate on the ticket with H. Carl McCall, admitted that he had, on occasion, docked his own yacht at marinas owned by Farkas.

Local community groups who supported Fortenbaugh, the marina’s longtime operator, charged that the authority’s selection of Farkas’s group and Brookfield as the operators smacked of cronyism.

Farkas and his company donated $124,000 to the governor’s campaign last year and Brookfield and its holdings have donated $813,000 to Cuomo and the state Democratic party.

Brookfield Properties spokeswoman Melissa Coley said the sales tax exemption would not impact Brookfield.

“The new sales tax exemption for boats does not affect us positively or negatively,” Coley said in an email to Capital.

A spokesperson for Island Global Yachting, which also operates a marina in Montauk on the far Eastern end of Long Island, did not immediately respond to a request for comment.

– David Giambusso contributed reporting. 



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8th Commodores' Cup Regatta on in Subic

The Saturday Afternoon Gentlemen Sailing (SAGS) Club will stage the eighth Commodores’ Cup Regatta from April 7 to 9 in cooperation with The Lighthouse Marina Resort and Philippine Sailing Association (PSA).

Hong Kong’s defending IRC Racing champion Jelik of Frank Pong and IRC Cruiser B winner Selma skippered by Ricky Sandoval are expected to compete in the two-day sailing event, according to PSA vice chairman Jun Avecill,.

However, IRC Cruiser A winner Red Kite II skippered by Anthony Root will not participate this year.

The inshore races are organized by the Saturday SAGS Club, in conjunction with the Asian Yachting Grand Prix and in cooperation with The Lighthouse Marina Resort, Watercraft Ventures, Inc., Standard Insurance and the Department of Tourism.

Every year, since 1962, international yachtsmen and women have pitted themselves against the cold rough seas off Hong Kong at the start of the race, and the languid, sun-drenched slope of the windless days off the coast of the Philippines.

This year, the race from Hong Kong will finish in San Fernando, La Union (480 nautical miles).

Avecilla said the Commodore’s Cup will have several races of different kinds of training boats. These are the Optimists, Flying 15, 420s and Streakers, he added.

“Blessed with one of the best race management teams in Asia, safe marina facilities and the wide expanse of Subic Bay, the Commodore’s Cup Regatta makes for an exceptional racing experience and it also renowned for good close racing on spectacular Subic Bay and hard partying back onshore,” Avecilla explained.

He said this year marks the expansion of the PSA sailing program in Subic Bay which is spearheaded by Judes Echauz, PSA chairman. PSA sailing coach Medy Fidel, who is aiming for Olympic qualifier, will be the head of the expansion training this summer.

Filipinos have always been considered as one of the best sailors in the Philippines. Pong’s crews are mostly Filipinos coming from Cebu, Bacolod and Manila. They have been sailing and competing for more than 20 years.

Pong, Asia’s top sailor and Asian Yachting Grand Prix Skipper of the Year, is one of the leading supporters of sailing in the Philippines. His donation of new sails for the training boats of the SAGS Sailing School in partnership with the PSA has helped jumpstart the sailing program in Subic.

“Whenever I can, we help out here and there. Oftentimes, youngsters have a limited budget and the people helping them also needs assistance, ‘” said Pong.

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New York state budget to offer sales tax break on yachts

The new New York state budget would offer sales tax breaks on purchases of yachts.

Not just any old boat.

The budget bill before the Legislature says it would exempt sales taxes on the portion of the purchase above $230,000.

It applies to any watercraft except a sea plane.

The Fiscal Policy Institute, a budget watchdog, called it “one of the oddest and most offensive additions to the final revenue bill that was not in the executive budget.”

In budget speak, that means the Legislature added the tax break to the budget proposed in January by Gov. Andrew Cuomo.

“I was not aware the YACHT-UP NY program was even on the table?” said Ron Deutsch, executive director of the Fiscal Policy Institute. “This seems like a case of some seriously misplaced priorities.”

Deutsch was referring to Cuomo’s Start-Up NY program, which offers tax breaks to new businesses on certain university campuses. Deutsch is disappointed the budget does not include property tax relief for middle class homeowners.

Senate Republican Leader Dean Skelos is already defending the luxury boat exemption.

“The justification for that is it creates jobs,” Skelos told the Albany Times-Union. “It makes New York state more competitive.”

The yacht tax break is, of course, under “Part SS” of the bill.

Contact Michelle Breidenbach anytime: Email | Twitter | 315-470-3186.

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Boat dealer: Yacht tax break is about competitiveness with Florida

ALBANY – A Long Island boat dealer defended a state sales tax break on yacht sales Tuesday, saying it isn’t so much about helping the wealthy but helping New York compete with Florida for the luxury boat business.

Florida caps the amount of sales tax a boat purchaser can pay at $18,000, said Jeff Strong of Strong’s Marine, a company with four Long Island locations. A provision tucked into the 2015-16 state budget would essentially match that, he said, crediting Gov. Andrew M. Cuomo for “listening to the Marine Trades Association and trying to keep New York competitive.”

“You might at first think it’s a benefit for the rich,” Strong said. “But what is happening is that we are losing larger boat sales. A lot of people who are in that buying category are buying them in Florida, keeping them there in winter time and bringing them up here in summer. And the result is, New York dealers are losing sales and New York state is losing sales tax.”

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Liberal and labor groups drew attention to the sales-tax credit Monday, just as state lawmakers began voting on the budget.  Tucked into the proposed budget, the provision said sales tax would only be applied to the first $230,000 of a yacht’s purchase price. Any amount above that would be tax-free.

Another provision would exempt general aviation aircraft from state sales tax.

Ron Deutsch of the labor-backed Fiscal Policy Institute called it an example of “misplaced priorities,” noting legislators took a pass on the minimum wage and a “circuit breaker” approach to property-tax credits that would help the middle class and working poor.

“It appears our legislative leaders could not agree to provide tax relief to struggling homeowners and renters through a middle-class property tax circuit breaker but managed to find the political will to provide sales tax exemptions for people buying luxury yachts?” Deutsch said.

Strong, a member of the New York Marine Trades Association, said, right now, someone buying a $500,000 yacht in Florida would pay $18,000 in sales tax. In New York? Around $43,000.

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“A customer says ‘Same boat. I’m going to buy it in Florida,’” Strong said. He said his company employs 55 full-time and 18 part-time employees at its four locations and that the tax credit could help job seekers.

“If I’m selling more boats, I’m employing more people,” he said.




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'Holy Moly!' moths: like 'F1 on water'

By Matt Majendie

(CNN) — A moth is fast, nimble, jittery and seemingly uncontrollable.

But this is no bug’s life, the moth shares its name with one of the most exciting sailing boats in global regattas from Australia to the United States.

They are the cutting edge of sailing design, so it’s no wonder moth racing has been described as “Formula One on water.”

The boats in question may just be over three meters long and weigh a mere 30 kilos but they effectively fly on water — or foil — at speeds of up to 30 knots (55km/h.)

They were also the inspiration for the style of boats and racing now employed in the America’s Cup, albeit on a much smaller and affordable scale.

KA Sail founder Andrew McDougall has been a leading light in how the sport has changed.

“It needed someone, something, some class to really push this to the point where people were saying ‘this is real, this is doable, this is fun, this is what we should be doing,'” McDougall told CNN.

“Once you sail this you can’t stop talking about it to all your friends, about how amazing it is to do this,” said McDougall, who was originally a computer designer.

“It’s the secret of sailing that’s now not the secret.”

True, McDougall has a stake in the success of the genre but the who’s who of global sailing that turned up in Sorrento, Australia, for the event’s World Championship in January, gives credence to his view.

Olympic champions like Paul Goodison rubbed shoulders with Tom Slingsby, part of Team Oracle’s America’s Cup-winning team, and Nathan Outteridge, who had won the previous world titles held in Australia and Hawaii.

Outteridge’s first foray into moths was after the 2008 Olympics in Beijing.

“There’s a huge element of fear, your heart is always thumping when you’re going down wind and when you get around the bottom mark and turn to go upwind, it’s a feeling of relief that you’ve finally made it,” said Outteridge.

“I think the main thing the moth gives you or teaches you is all about the little control systems of foiling and because it’s so small you can crash it and crash it and crash it and learn from it and not be an absolute disaster whereas you can’t afford to do that on the big boats.

“Without a doubt, if I hadn’t been sailing the moth we couldn’t have been getting around the course in the America’s Cup.”

There is a certain irony that the moth class — a development class in sailing meaning there are virtually no design rules or restrictions — has become so cutting edge.

It began as a simplistic homage from an Australian husband to his wife, Len Morris naming the boat he created in 1928 “Olive” after his spouse.

That first creation hangs in its restored form at the Albert Park Yacht Club in Victoria, Melbourne, though visually there is no likeness to the high-tech, lightweight vessels that battle for supremacy on the water today.

On the other side of the Pacific, a similar moth boat was designed the following year by Captain Joel Van Sant — known as “Jumping Juniper” — the aim being to build an affordable yacht for $150.

Through time, the technology has evolved. The first moths to foil were in 2000 and, by 2005, McDougall argues that if your boat wasn’t foiling you didn’t have a chance.

He goes on to describe the format as addictive, to the extent that once you foil, “there’s just no way back.”

He explains: “It goes quiet, you accelerate. The first time I foiled, I fell straight out of the back of the boat. The boat just took and I went ‘holy moly, this is amazing.'”

McDougall say the seemingly impossible is made possible by using the Bernoulli principle. In effect, as water moves over the top of the foil the pressure lessens, which causes it to lift out of the water.

Loick Peyron has won all manner of races and the Frenchman describes the moths succinctly as “pure bonheur,” or happiness, while long-time Team New Zealand skipper Dean Barker adds: “Even a bad day in one of these is still a lot of fun.”

But the current master of the moth is New Zealander Peter Burling, recently named as helmsman for Team New Zealand’s bid to win the America’s Cup in the wake of winning the recent Moth World Championship.

Burling, who won nine of the 14 races at the regatta, says of the discipline: “It’s super fast, super tight racing. I just really enjoy the racing.

“I love being out on the water but also trying to be innovative on the boat. If it’s not fun, you don’t perform well.

“I really enjoy the fast side of our boat but, if you make one wrong decision, it really shows it up. You’ve just got to race quicker than someone else.”

In Sorrento, Burling was just that. Whether he remains ahead of the fleet at the next Worlds in Hayama, Japan, in 2016 is another matter.

TM © 2015 Cable News Network, Inc., a Time Warner Company. All rights reserved.

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Budget includes sales-tax carveout for yachts

ALBANY—A measure in New York’s state budget would exempt very expensive boats from sales tax, under an agreed-upon budget bill printed over the weekend.

The so-called “yacht credit” has not been part of the budget discussion this year, but it appeared quietly over the weekend in a revenue bill, under section SS, that would exempt any portion of the purchase of a boat above $230,000 from sales tax.

The idea of the yacht sales tax exemption isn’t entirely new. As Capital reported last year, a so-called “clean-up” budget bill that was never introduced would have also contained some kind of sales tax exemption for expensive boats.

Ron Deutsch, executive director of the left-leaning Fiscal Policy Institute, called the measure “pretty ironic.”


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“We could not agree on property tax relief for struggling homeowners but somehow we can agree that people who are purchasing yachts shouldn’t have to pay sales tax in New York,” Deutsch said. “I wasn’t aware that there was a huge yacht lobby that was pushing for this. This really kind of seemed to come out of nowhere, and I’m surprised to see it in the final revenue bill.”

“The ironic part is that your average Joe in New York who wants to go out and buy a small 16-foot bass fishing boat for his own personal use will actually pay sales tax, but someone going out and buying a yacht isn’t going to be subject to the same tax,” Deutsch said.



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Rounding the Horn

Team Alvimedica , skippered by Bristol’s Charlie Enright, rounded Cape Horn Monday at the front of the shrinking Volvo Ocean Race fleet. The passage past sailing’s most respected landmark was a fast one with boats speeds in the mid-twenties. The night before, another of the entries, the Chinese Dongfeng Race Team boat, lost the top of its mast and was sailing in to port. That left five boats actively racing as the boats crossed from Pacific Ocean to Atlantic and headed for the Leg 5 finish in Itajai, Brazil. The fleet will next be racing to Newport with arrival in May. Photo by Rick Tomlinson/Volvo Ocean Race

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Pursuit Boats adds Southern California dealer

Posted on March 30th, 2015

Pursuit Boats appointed Alexander Marine California as its exclusive Southern California dealer.

Pursuit said the Alexander Marine facility is in Newport Beach, Calif., and has established itself in the market for 35 years.

“Our new-boat and yacht sales are focused on luxury brands with uncompromised quality and great business acumen. Pursuit Boats share the same values we have incorporated into our business over the years. We are excited about continuing the tradition and sharing the great heritage of Pursuit with our existing and future Southern California clients,” sales vice president Ray Prokorym said in a statement.

“We’re excited about working with the exceptional staff at Alexander Marine California and look forward to the upcoming Lido Boat Show, along with other exciting local events for our Pursuit customer base in the Southern California market,” Pursuit regional sales manager Ron Burkdoll said. “Pursuit remains a dominant brand in this market, and we expect to grow our brand even more through our relationship with Alexander Marine California.”

Pursuit is a division of Holland, Mich.-based S2 Yachts.

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Boat sales tax would be capped under NJ bill

New Jersey is charging boaters tens of thousands of dollars in taxes and fees, but two South Jersey lawmakers are sponsoring legislation that they hope will level the playing field for businesses who build or sell boats in the state. 

Sailing boat
Sailing boat (Lidian Neeleman, ThinkStock)

Under current state law, the state’s 7 percent sales tax is imposed on those that purchase boats in New Jersey and those that live in New Jersey, but purchase a watercraft vehicle in another state. In addition, the state also imposes the 7 percent sales tax on out-of-state residents that keep a home in New Jersey as well.

State Senators Jeff Van Drew (D-Cape May Court House) and Jim Whelan (D-Northfield) introduced legislation on March 9 that would establish a sales tax cap on boat purchases at $20,000.

“In my mind, overtaxing causes diminishing returns. We want to keep them in New Jersey. We want to keep people building boats in New Jersey. We want those who recreate in New Jersey and fish in New Jersey to stay in New Jersey,” Van Drew said.

The sales tax can be bad for business, especially since many other states already have a sales tax cap on the books. For example, Florida caps sales tax on boat sales at $20,000.

Under the proposal, the sales tax cap would cover non-commercial boats such as motorboats and larger vessels such as sailboats, yachts and cruisers.

State Senator Whelan said the higher the sticker price of the boat, the higher that 7 percent sales tax in New Jersey zooms. Whelan said charging the full 7 percent state sales tax is “limiting.”

Van Drew said he thinks capping the sales tax at $20,000 is fair.

“It’s similar to what some states have. I would actually like a zero figure, but I don’t know if we can get that through the Legislature. We’re going to have to fight to get this through the Legislature,” Van Drew said. He added that it’s possible the figure might lower to $15,000 if the bill can gain support.

Van Drew said the cap would also help other boat-related businesses along the Jersey Shore, repair facilities and those businesses engaged in supporting sport fisherman.


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Sailing-Cape Horn, bergs and a storm await battered global race fleet

ALICANTE, Spain, March 28 (Reuters) – Volvo Ocean Race’s six-strong fleet, already battered by the Southern Ocean, sails in to the toughest part of the nine-month marathon offshore challenge over the next two days.

It is now heading for Cape Horn in southern Chile, a graveyard for countless sailors since it was first used as a trading route in the early 17th century.

The region is the only time in the 38,738-nautical mile race where the boats are likely to see icebergs and to complicate matters, a huge storm is building up behind them in the Southern Ocean.

Earlier on Saturday, the Chinese boat Dongfeng Race Team, skippered by Frenchman Charles Caudrelier, led the leg from Auckland to Itajaí, Brazil, but by less than 10nm from four other crews.

Caudrelier admitted that the stress was becoming “wearing” on his eight-man team.

“I think it’s unique in the history of the Volvo Ocean Race (launched in 1973) to have a fleet battling like this in these latitudes,” he told Reuters on Saturday.

“Tomorrow, we’ll be even further south and the water temperature is going to drop. I’m expecting the hardest part of this race in the next 48 hours.”

Dongfeng was one of three boats to narrowly avoid capsizing earlier in the week when they crashed over on their sides midway through the Southern Ocean on the 6,776nm leg — a so-called ‘Chinese gybe’ or ‘death roll’.

Miraculously, all the crews avoided anything more serious than cuts and bruises and damage to boats have been repaired on the move.

After some 3,000nm miles of sailing in the toughest leg of the race, Dongfeng lead by just 5.1nm from Dutch boat Team Brunel with overall leaders Abu Dhabi Ocean Racing, MAPFRE (Spain) and Team Alvimedica (Turkey/U.S.) no more than 4nm further adrift.

The all women’s crew of Team SCA (Sweden) were nearly 100nm behind that pack. They and MAPFRE also suffered Chinese gybes on Tuesday.

The leg is expected to conclude around April 5-6 after three weeks of sailing from New Zealand. In all, the boats will sail nine legs and visit 11 ports. They finish the race on June 27 in Gothenburg, Sweden. (Editing by Sudipto Ganguly)

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