Congresswoman Frankel’s fight to sell foreign flagged yachts in Florida

It takes a brave politician to stand up and argue for yacht owners. But Lois Frankel, US representative for Florida’s 22nd district is not worried. “The yacht industry is about jobs. We are talking about jobs. Jobs, jobs, jobs,” says Frankel. “I am not worried about fighting for jobs in Florida. But I do worry about antiquated laws holding back the yacht market.”

“We are talking about jobs. Jobs, jobs, jobs,”

A bill being sponsored by Frankel, a Democrat who is serving her second term in Congress, and Republican congressman Ted Yoho is attempting to end the 1908 Federal law that governs duty on the sale of foreign flagged, foreign built yachts in the US. At the moment duty is based on appraised values and has to be paid as soon as the yacht arrives in US waters. Although US duty is only 1.5% it is a lot to pay up front when you do not know if the yacht will be sold.

This is why it is common to see yachts advertised as: “Not offered for sale to US residents while in US waters” in magazines and on signs at boat shows.

The Florida Yacht Brokers Association has led the lobbying against the duty for several years and convinced Frankel to file the bill (H.R.4065) at last month’s Fort Lauderdale International Boat Show. Duty would still be paid, but only after the yacht is sold.

“We want to eliminate an antiquated law”

“We want to eliminate an antiquated law that prevents hundreds of foreign flagged yachts coming to Florida to be sold,” says Frankel. “It is estimated that buyers and sellers spend 13% of a yacht’s value tidying yachts up for sales and we want to encourage them to sell in Florida as well as giving yacht buyers and sellers more choices.”

She adds that they hope that buyers would keep their yachts in Florida. The association says that changing the duty would generate thousands of marine-industry jobs and create $2.4 billion dollars in economic activity.

“The marine business is an $11 billion dollar business in Florida,” says Frankel. “There are businesses up and down the coast that rely on it. In my district we also have yacht shows like the Fort Lauderdale International Boat Show and the West Palm Beach Yacht Show that attract thousands of visitors.”

Although the duty discourages many sellers from entering US waters, sellers have been able to sell foreign flagged, foreign built vessels during shows – like Fort Lauderdale – for more than 20 years.

Provided they are second hand and over 24 metres, yachts attending boat shows can post a bond (popularly known as boat show bonds) with US Customs. Boats can then be shown to buyers of any nationality during the show provided they leave US waters within six months. US residents can be shown yachts after the event, provided they first viewed it at the boat show (this means brokers need to keep accurate records). Frankel’s Bill applies to used boats of any size and says that no seller should be required to place any bond.

There is no guarantee that the bill will be successful or will be passed in the next year. As a financial bill it has been submitted to the House Committee on Ways and Means but Frankel says that the duty could also be amended as part of another bill.

“It will be good news for non-US flagged vessels”

“It is pretty remarkable that we have gotten to the point where a bill has been filed. If it goes ahead it will be good news for non-US flagged vessels – particularly yachts built outside the US and smaller boats,” says Robb Maass, shareholder and head of the marine group at Alley, Maass, Rodgers & Lindsay. “But it is still in very initial stages. It would be a mistake to get too excited now.”

Frankel’s district covers the coast from West Palm in the north, down to Fort Lauderdale, home to many yards, brokers and others marine businesses.

She was elected to the district in 2012 having served 14 years in the Florida state legislature Frankel was also mayor of West Palm Beach for two terms. As mayor she worked hard to encourage marine and other companies to set up in Palm Beach including supporting the Rybovich Marina in West Palm Beach. “We helped support Rybovich when it was a small repair yard. Now it can handle the biggest yachts,” says Frankel.

Although she is a keen supporter of the industry, Frankel does not claim to be a sailor. “I actually get a little queasy on the water,” she says. “But, as the boat shows demonstrate, you can enjoy yachts just by viewing them from land.”