Archive for March 2010

Private Management and Infrastructure Maintenance

The NY Times has more on NY park closures. Many of these parks are ones our company could keep open, but to date I have been reluctant to approach NY as I have Arizona, as I am skittish about trying to operate a business in that state.

The other night, an executive of Arizona State Parks told a public audience that Arizona had invested a lot of infrastructure in the parks and private companies intended to “run the parks into the ground” for profit.  I found this ironic, as I wrote the Arizona State Parks director in response:

It is hilarious to me that [Arizona Sate Park] management is pointing the finger at my company for running infrastructure into the ground.  [One State Park executive] has shown me the deferred maintenance book [for the state parks system].   I would venture that none of the facilities we have operated for any amount of time for any public authority has the compounded deferred maintenance issues you have in many of your parks.  Over the last 3 years, above and beyond regular routine maintenance, we have spent nearly $3 million in capital maintenance and refurbishment, and over $2 million in new facilities or whole facility replacements, all at public recreations areas.

Increasingly, our company has been brought in to a number of park systems to bring private capital to repairing years of deferred maintenance that the public entity can’t afford to address (most recent example here).  It seems like the New York system may be yet another example addressing the myth that somehow private entities are worse than government entities at regular maintenance:

The agency has already absorbed significant cuts in the last three years and during the peak summer months has a skeletal staff in place inside the state parks. “It’s not an agency that’s been dripping with dollars,” Ms. Dropkin said. “They were pretty lean to begin with. They do their best, but the infrastructure is really crumbling. They keep the bathroom doors together with duct tape.”

Does Privatization Just Cherry Pick the Best Parks, Leaving Agencies Worse Off

A researcher for ASU’s Morrison Institute wrote me, as part of an email exchange:

“There is a fear, which I share, that privatization will peel off those parks that are either profitable or close to profitable”

This is a criticism I hear quite a bit, though I am not sure from what experience this even originates.  Some concerns expressed to me have real origins – for example, there have been poor-quality concessionaires and there have been local politicians who gave developers sweetheart real estate deals on public parks land, against the interest of the general public.  But I am not sure I know of any cases where public procurement strategy has been so short-sighted that it made this kind of mistake  (again, we see in this challenge the now typical rhetorical error of blaming a public failure, in this case poor contracting strategy, on private actors.)  My response:

  • We and other companies operate many whole “systems” in the US Forest Service, the largest public recreation agency in the world – a system being all the campgrounds and facilities in a geographic area.  In fact, this is really the only way the USFS offers parks nowadays in concession contracts, as regional mixes embodying all the parks under their umbrella, large and small.    In these contracts, money-losing small facilities are combined with larger facilities into a contract that can be economic while not leaving any parks stranded.  I operate campgrounds as small as 6 spaces, which clearly are not profitable on their own, but I do so as part of a larger contract.
  • While I have offered on some or all of 6 Arizona State Parks (ASP) parks, I did so to get ASP’s attention.  In addition to these 6, my offer very clearly states that I could likely run many of the smaller ones as well in a package with these 6 or 7, but that I needed a bit of help from ASP with some simple due diligence (e.g. electricity bills).  The only thing stopping me from offering on a large spread of both small and large parks is the absolute resistance of ASP to even talk to me.  There are some limitations to what I can offer totally blind, but these limitations have more to do with the lack of cooperation from ASP than any inherent limitation in our or a similar company’s ability to operate a broad mix of parks.
  • I am not sure why it is somehow gutting ASP to take money losing parks off their hands, even if they are close to breakeven.  First, they are still losing money.  Second, we are proposing to pay rent to the state — it would surprise me if a multi-year competitively bid contract for Alamo Lake or Lost Dutchman went for less than 10-12% rent.  This means converting a $10-$20 thousand dollar loss to a $30-$40 thousand gain for the state at each park.  And this is bad, why?
  • Companies like mine don’t “peel off” parks.  How could we?  We bid on parks packages as offered by public agencies.  There is nothing stopping AZ State Parks from offering a package of parks with the mix they want, not what private companies might want. This is what other thoughtful public recreation agencies do.  Positing any other outcome is merely to assume ASP is not competent in their procurement strategy.
  • Frankly, I have plugged the whole ASP park system into my cost models and I could easily run the recreation operations of the entire Arizona parks system, little ones and all, within the 2009 gate fees (without subsidies and without the 2010 ASP fee increases).  I haven’t made that offer, because it would scare the bejesus out of them.  But suffice it to say that ASP could easily find homes for most all the smaller parks with a thoughtful procurement strategy that mixes small and large parks in contracts — the USFS has been doing this for years

Morrison Institute Flub

I have never had much interaction with ASU’s Morrison Institute, a public policy school that seems to be held in fairly high esteem.  But I was unbelievably disappointed to read their report on revitalizing Arizona State Parks.  The document seems to be just a slick collection of all the State Parks organization’s talking points credibility stamped with the imprimatur of the Morrison Institute.

I am obviously not happy that the report is dismissive of private management options as a partial solution, but it is the way they were dismissive that irritates me.  They do not appear to have interviewed or studied a single private recreation operator, nor do they seem to have interviewed or studied a single government agency (like the Forest Service) that uses private operators.  All they include are a series of five or six highly negative quotes from Arizona State Parks employees that privatization is the worst idea ever.  These quotes are full of misconceptions that could have been reversed with, oh say, thirty seconds of actual, you know, scholarship.  It is roughly equivalent to doing a research project on Microsoft Windows by solely interviewing Apple employees.

USFS Backs Off Fee Pass Changes

As discussed before on this site, the Forest Service is going to rethink its discount pass changes.  Press Release:  3_15_10_News Release Campground Discounts

Editorial on Private Management of Public Recreation

Bill Schneider, who wrote an article skeptical of the role of private companies on public lands that I linked earlier, was kind enough to offer me a chance to give an opposing point of view.  My editorial is here.  Excerpt:

And this is the heart of the problem–that recreation costs money. Even a small roadside picnic area can require thousands of dollars a year to clean the bathrooms, haul the trash, and maintain the area to keep it safe. For decades, recreation costs in the Forest Service were funded by timber sales, but these have largely disappeared and Congress has not provided a funding source to replace them. Forest Service recreation budgets have, for years, been insufficient to cover recreation operations as well as necessary major maintenance and refurbishment of facilities.

The Forest Service, looking to stretch its meager recreation budget as far as possible, has turned to private companies to run many of its campgrounds and developed day use facilities. This partnership has largely worked well, with the Forest Service benefiting from the efficiency and customer service focus of private management while retaining tight control over operating standards (concessionaires can’t change a fee, or modify operating hours, or alter any number of other aspects of a park’s operations without the Forest Service’s written approval).

Private concessionaires play a critical role in keeping fees reasonable. Without private concessions, the Forest Service would be forced to raise fees substantially or to close hundreds of recreation areas, a story we unfortunately see being played out in many state parks organizations. For an illustration of this, we can look to my home state of Arizona, where the state parks organization is closing some campgrounds and day use areas and doubling entry fees in many of the others. Similarly, the proliferation of new use and access fees on Forest Service lands has nothing to do with private companies that actually serve to keep fees reasonable. The problem is not privatization; the problem is appropriations, or the lack thereof.

The State Budget Game

Matt Welch has some thoughts on how state budgeting works:

Here is how the system works, ladies and germs: First, during the good times, when people are (rightly) paying attention to concerns outside the dreary slog of politics and public policy, go ahead and double the cost of state government, in like five years, without a shred of detectable increase in the quality of services. Next, when times get bad, complain bitterly about “savage” and “annihilating” budget cuts, threaten to eliminate the very favoritest of all public services (say, access to the gorgeous state parks in California), and then cut your payroll by all of … a quarter of one percent. After all, why fire a single teacher when the stimulus package will pay for all of them? Finally, when all else fails, raise taxes, to “close the budget deficit” and “restore our education budget to current levels.”

Welcome Wild Wilderness Readers

Apparently I am the villain du jour at Wild Wilderness, a site that states its mission in part as:

When you venture in to the wilderness, do you seek nature and solitude or ticket lines and two-stroke engines? If recreation industry heavyweights have their way, your next walk in the woods will start at a toll booth and end in a gift shop with canned entertainment along the way.

Why? Because cash-strapped federal land managers have turned to corporate America to fill gaping budget holes. So the public must now pay private concessionaires to take a walk on public lands. Tent campsites are being paved over to build more lucrative RV parks. And hundreds of thousands of acres of public lands are being auctioned off.

I found my vilification at that site to be a bit odd, as I tend to be a big supporter of public recreation.  While there may be private companies doing things I am unfamiliar with, I can’t even imagine spending my time trying to add elaborate facilities the public doesn’t want to wilderness areas.  First, what a waste of time, even if I wanted to!  I can build any campground I want on private land, so why fight the complicated land use rules on public lands?  Second, I don’t have the interest — if I wanted to run highly developed campgrounds, I would be running KOA franchises.  Third, I don’t have the time.

What keeps me busy is trying to keep parks open and preserve public recreation by running recreation areas at a lower costs than can the public agency itself.  The Wild Wilderness folks would like to see all public recreation fully funded from general revenues without the need for fees or private companies, but my sense is that this is a reality that is long gone.  Federal, state, local parks are closing because elected officials cannot or will not fully fund recreation from the treasury.  When government agencies are not able to run these parks with the fee revenues at the gate, either fees go way up or the parks close (you folks in CA and AZ are seeing both of these happen).  We are trying to offer a third way, to keep parks open with private management.

We aren’t trying to take ownership of the land.  We aren’t trying to pave the wilderness.  We aren’t trying to build condos in front of Old Faithful.  We are in fact willing to accept whatever recreation mission or preservation mission the public owner of the park sets and manage the park to that mission. If the site is to remain primitive, we keep it primitive.  If the public agency wants new facilities, we help bring capital investment in new facilities (all approved in advance by the public agency).  What we bring to the table is that in many cases, we can operate the park and keep it open with the fees paid at the gate, without big price hikes and without the need for subsidies.  We currently have a proposal, for example, to operate six Arizona State Parks that are being closed — and we propose doing so without the fee increase AZ State Parks is imposing at its other parks.

Just check out a site like camparizona.com, which ranks the public’s favorite campgrounds in the state.  We run the #2, #4, and #5 campgrounds on the 2009 list.  All are in beautiful natural settings without a Starbuck’s or other corporate investment in site.  And all are ranked higher than most facilities run by the government.  Why?  Because I am as smart as you guys are.  If I asked you, I am sure you would say that if you ran the parks, you would never want to change their essential natural character, because that is what makes them attractive to visitors.  Give me credit for understanding that too.  The whole developed travel business got hammered in the recession last year.   While Westin struggled to sell $400 rooms, I had a record year offering affordable $16 camping to cash-strapped families looking to recreate during hard times.  Why would you assume I would want to change that?

Postscript: The USFS is beginning their planning process, and is having hearings here.  For some reason, the largest recreation provider in the world does not mention recreation in its planning topics, but I presume they will take comments from the public on anything.  In my vision, the USFS would, as part of its planning process, clearly designate individual recreation areas as to the character that should be maintained.  They have a designation system related to fees, but they really need a system that says what investments are appropriate for certain facilities – ie facility X will always be a tent camping site and no paved sites or RV hookups will be added.  Such a process would, I think, be of help to some of the concerns of Wild Wilderness readers.  The RVers (not me!) put tremendous pressure on the USFS to pave sites, add amenities, etc.  Despite the assertions on the Wild Wilderness site, these improvements don’t make the site any more profitable for our company.

Let me give one example of what a real planning process might address.  I hate generators when I camp.  Others love them, so fine, but in the campgrounds we run we are pretty diligent about enforcing quiet hours.  Why couldn’t there by no-generator campgrounds in the USFS?  I would love to designate a couple, but am not allowed to by the USFS (I know everyone seems to think I control the USFS, but we can barely change the brand of toilet paper we use without permission).  This kind of designation system would be a great kind of planning process, and could ensure a mix of facilities existed in every state for a variety of different visitor interests.

Goldwater Institute on Arizona Parks

Goldwater has another article on funding and management of Arizona State Parks here.