Privatization and Public Accounting

Dru Stevenson was nice enough to invite me to join him at the Privatization blog, which tends to address many topics in the privatization world.  The writers can be both skeptical and enthusiastic about the model, so the overall coverage is pretty balanced and it is a good resource on the topic.

Last week I introduced myself with an introduction to myself and private operation of parks.

In my second post, I addressed a topic I have been meaning to get to here for a while, which is the problem of making privatization decisions using public accounting processes that were never meant to support this kind of decision.  Here is an excerpt:

Back when I was in the corporate world, “Make-Buy” decisions — decisions as to whether the company should do some task itself or outsource it to companies with particular expertise or low costs in that area — were quite routine.  Even in the corporate world, though, where accounting systems are built to produce product line profitability statements and to do activity-based costing, this kind of analysis is easy to get wrong (in particular, practitioners frequently confuse average versus marginal costs).

But if these analyses are tricky in the private world, they are almost impossible to do well in the public sphere.  Grady Gammage, a senior and highly respected research fellow at Arizona State University’s Morrison Institute, has as much experience with public policy analysis as anyone in the state.  Several years ago, he spent months digging into the financial numbers of Arizona State Parks, with the full cooperation of that agency.  A critical question of the study was how much it actually cost to operate a park, vs. do all the other resource and grant management tasks the agency is asked to perform.  Despite a lot of effort by Gammage and his staff, he told me once that the best he could do was make an educated guess –plus or minus several million dollars — as to how much of the Agency’s budget is spent actually operating parks vs. performing other tasks.

The reasons that this is so hard is that the parks agency’s budgeting process was not set up to determine true net operating gains and losses at parks.  It was set up, like most public accounting systems, to enforce accountability to different pools of money that have been allocated by the legislature for certain tasks.  This tends to lead to three classes of problems that cause public make-buy decisions, as well as ex post facto third-party analyses, so difficult.  Since I am most familiar with the parks world, I will discuss these three issues in the context of parks:

California Issues RFP For Private Operation of Five State Parks

Via Leonard Gilroy of Reason

For years, Reason Foundation has recommended that cash-strapped states consider tapping the private sector to take over operations of state parks as a means to lower costs and rescue parks threatened with closure in a difficult budget environment. Both the U.S. Forest Service (USFS) and BC Parks (British Columbia) have long pioneered the use of public-private partnerships (PPPs) for park operations, but states have been slow to follow their lead…until now, that is.

California State Parks (CSP) has issued a new request for proposals (RFP) seeking a five-year concession contract (or contracts) to operate campground and day use recreational areas at five park units in the Central Valley (Turlock Lake SRA, McConnell SRA, George J. Hatfield SRA, Woodson Bridge SRA, and Brannan Island SRA). This is the first serious and robust parks PPP procurement of its kind at the state level. The RFP is here, and CSP’s sample contract is here. Bidder responses are due on May 1.

The contract would be structured as a concession, a commercial lease through which the state would retain ownership and control over the parks while paying the private operator nothing to operate them. Instead, the private operator would be allowed to retain the user fee revenues (e.g., gate entry fees, camping fees, etc.), in return for an obligation to pay a set percentage back to the state annually as a form of rent. CSP has set a minimum annual rent level for each park that bidders must exceed in their proposals. Bidders can submit proposals for individual parks, but the procurement is designed to give maximum weight to those proposals that cover all five parks. In fact, the parks in question appear to be a mix of revenue generating and revenue losing parks (once operating costs are factored in), so bundling all of them together is likely to be an attractive option to bidders to maximize their ability to mitigate risks.

While this sort of arrangement is quite common at the Federal and local level, state parks agencies have resisted it for a variety of reasons.  Now, however, with increasingly high user fees failing to cover the cost of expensive government operations, and with parks facing failing infrastructure and even closure, more state parks agencies are considering this approach.   California State Parks is both the largest and in many ways most respected state parks agency in the country, so this step may help give increased impetus to private operations proposals in other states.

It will be interesting to see what public reaction will be.  Traditionally, environmental groups and state workers unions have opposed this approach, often not realizing many of the parks they already use and enjoy are already privately operated.  For example, in California, over 500 Federal and local public parks and campgrounds are privately operated, including most of the recreation areas in the US Forest Service.

Update: Apparently one Canadian province is considering a similar initiative

This Sounds Like Our “Tale of Two Parks”

From the Daily via Mark Perry

“While the Senate barbershop is federally subsidized, the House barbershop is a private business. Its three employees, one of whom is part time, are independent contractors. The House barbershop was privatized in 1994, a decision that House Republicans made after they took control of the lower chamber for the first time in decades.

The dueling business models of the congressional barbershops have produced different financial results.While the Senate barbershop required a $300,000 federal bailout last year, the House barbershop turned a profit. And while Senate Hair Care Services, the formal name for the Senate barbershop, is not charged a dime for its work space, House Cuts pays the government $2,000 to $3,000 in rent each year.”

A similar side by side comparison in parks yields roughly the same results.

Customer Service Agents with Guns and Badges

I often get asked about how we handle law enforcement at privately-operated public parks.  After all, most state-employed rangers have law enforcement credentials, and our employees don’t.

But most rangers have law enforcement credentials because of the rewards for having these, not because there is so much demand in most parks for law enforcement (we run a few urban parks that are an exception to this). Park employees who obtain law enforcement credentials get monetary rewards in terms of higher pay and access to more lucrative law enforcement pension plans.  Some also get psychological rewards from being able to carry a gun and a badge.  In most cases, though, we can easily work with local law enforcement to set up procedures to handle the few law enforcement situations that arise.

The other answer I give folks is that it is a bad idea to try to provide customer service with law enforcement officers.  In many cases, the approach to problems is different.  Can you imagine McDonald’s employees who constantly wrote you citations for illegal parking?

Here is an extreme example:

A Montara man walking two lapdogs off leash was hit with an electric-shock gun by a National Park Service ranger after allegedly giving a false name and trying to walk away, authorities said Monday.

The park ranger encountered Gary Hesterberg with his two small dogs Sunday afternoon at Rancho Corral de Tierra, which was recently incorporated into the Golden Gate National Recreation Area, said Howard Levitt, a spokesman for the park service.

Hesterberg, who said he didn’t have identification with him, allegedly gave the ranger a false name, Levitt said.

The ranger, who wasn’t identified, asked Hesterberg to remain at the scene, Levitt said. He tried several times to leave, and finally the ranger “pursued him a little bit and she did deploy her” electric-shock weapon, Levitt said. “That did stop him.” …

Hesterberg, whose age was not available, was arrested on suspicion of failing to obey a lawful order, having dogs off-leash and knowingly providing false information, Levitt said.

Arresting and tasering people for off-leash dogs is absurd in the extreme.  We have this problem all the time with dogs – everyone thinks their own beloved dog deserves a special exception to the rules.  But we work hard to get compliance in a friendly way.  Some people ignore us, and when they do, we try to remember that its just a freaking off-leash dog, not a serial killer on the loose.  I could only imagine us calling out law enforcement if our employee was being ignored and the dog was being a particular nuisance or the person was known to have ignored the rule on repeated visits.

Case Study: Private vs. Public Park Operations

In private park management, the park continues to be owned by the public agency, and all decisions about the facilities, services, and character of that park remain in public hands.  The difference is in who actually does the cleaning and maintenance and operations of the park – high cost public agencies or more efficient private firms.

People love to hypothesize about the potential problems with private park operations as if there were no examples of such management to gather actual facts about performance.  But such examples do exist.  After years of such wild speculating (e.g. they will build a McDonalds in our park!) we finally took the state agency, legislators, and the media out to a pair of neighboring public parks in nature-loving, environmentally-sensitive Sedona — one publicly operated, and one operated by a private firm.

Here is the case study comparing the two

Broken Record

This is a generally fair discussion of private management of park operations in New Jersey.  But I am simply amazed at how this old trope keeps popping up every time

A chain restaurant in Wharton State Forest. A Ferris wheel at Liberty State Park. Weddings, flea markets, and corporate events taking over New Jersey’s historic sites and scenic lands.

That could be the future if the state goes forward with plans to privatize parts of its park system, some warn.

“Next thing you know, you have to pay more for everything and the public’s access is limited,” said Jeff Tittel, director of the Sierra Club of New Jersey. “You’ll be getting fee’d to death.”….

The problem, Tittel said, is “what happens down the road when private vendors take over park functions. They’re not professionals and don’t have the same level of caring for the parks,” he said. “Who’s screening them? Will valuables walk away?

“Then, there’s the loss of access,” he said. “If you can make more money on a Saturday afternoon renting out a park area, then the public doesn’t have access.”

The state could “bring in franchises that are detrimental to the theme of the park, like skeet-shooting, private golf courses, an amusement park, or a hotel catering hall,” Tittel said.

Readers will find answers to most of these questions both in the FAQ on this site as well as here.

But, in short, privately operated parks look just like the public ones, they are just operated less expensively.  None of our contracts allow us to add nutty new commercial facilities at will or limit access in any way.  The only differences are that we tend to actually charge less than publicly operated parks (because our costs are lower) and the facilities are in much better repair, because it is in our best interest to keep them nice (after all, Holiday Inn or McDonalds don’t make money by letting their facilities fall apart) and we don’t have to rely on the vagaries of the appropriations process get maintenance money.  Companies like ours are able to keep parks open and well-maintained using just the existing gate fees, without any additional taxpayer money — again because we are not saddled with the high costs and onerous work rules of a public agency.

To emphasize these points, we actually had a fact-finding trip of media, park officials, and legislators to two public parks in AZ, one publicly operated and one operated by a private company.  The case study from this trip is here.

Park PPP Conference Notes and Video

I have finally gotten the powerpoint slides and video from our November, 2011 national conference on Keeping Parks Open Using Public-Private Partnerships.  You can find them in the “training resources” tab above or at this 2011 Conference Recap link

Arizona Private Park Operations Case Study

Recently we held a series of fact-finding meetings for Arizona legislators and the executives of Arizona State Parks.  We held the meetings at a pair of public parks that are virtually adjacent to each other in Sedona, AZ.  Both parks are similar in size, facilities, and visitation.  The only difference is that one is operated by the state agency, and one is operated by Recreation Resource Management under concession agreement with the US Forest Service.

The key finding?  While the state-operated facility requires hundreds of thousands of dollars of appropriated money, above and beyond gate fees, to remain open, the privately-operated park actually generates positive cash flow for its agency.

See all the details in this short case study, in pdf format:  A Tale of Two Parks.

Since that meeting, Arizona legislators requested a specific proposal of what Arizona State Parks might be appropriate for private operations, and how much money the state might save.   The summary of our response is here:  Potential Test of Private Operations in Arizona State Parks.

Law Enforcement and Parks

As my company privately operates public parks, our employees are often taking over from state park rangers who have law enforcement credentials.  When we propose our services, we often get pushback on this issue — how are we going to live without all these law enforcement officers with arrest powers and guns and badges in the parks?

The answer I give is:  Things will be better.  It is an enormous mistake to handle customer service problems with a badge and gun and hard-ass attitude, but that is often what happens in parks.  You don’t see McDonald’s issuing citations to their customers, but state parks organizations do it all the time.

It turns out that the reason there are so many law enforcement officers in parks has nothing to do with demand — with very few exceptions, the parks we operate all require fractions of an FTE of law enforcement.  Maybe 20 hours a year per park.  But there are huge incentives for state workers to get a law enforcement license.  Beyond the psychic advantages of having a gun and badge, they typically qualify for a much richer law enforcement pension plan.   Park supervisors don’t care — the extra benefits don’t come out of their budgets.

Can Private Management Keep State Parks Open In California?

The San Francisco Chronicle addressed the issue of private management of public parks last week.  Unfortunately, despite the author’s stated goal of helping to answer questions about this approach, the article only interviewed people without any knowledge or experience with private park management and seemed to engage in some really wild speculation.  Here is the letter I wrote to the author

I was surprised at the tone of your article on December 15, titled “Private Funds or California Public Parks Questioned,” particularly the implication that private operation of public parks is somehow new and untried, thereby justifying wild speculation on its outcomes.  In fact, over 500 public parks in California are already operated privately, with examples of successful public-private partnerships that date back over 30 years.

This paragraph, which I presume is your private editorializing since it is not attributed to any source, struck me as particularly over-wrought

The question is, how will these agreements work over time? If parks remain open using donations, what is the incentive for legislators to put money for parks in the general fund budget? And who is going to stop a rich crook or pot dealer from taking a park off the closure list and using it for fiendish pursuits?\

I understand that the California State Parks system engenders deep loyalty and affection.  And if the state were proposing to entrust these vital public assets to some crazy, untried system, I suppose such hyperbolic language (“fiendish pursuits”?) might be justified.

But private management of public park operations was pioneered in California at least three decades ago by the US Forest Service.  The USFS has created a process in which the government still excercises the strictest control of park facilities, quality, fees, and access while harnessing the lower costs and innovation of private operators.  Numerous public agencies, including large park systems like the East Bay Regional Park District and the Metropolitan Water District, have used variations of this model, such that over 500 public parks are managed privately in this state alone.  You have likely been to one and never knew it.  That is because they look no different than the parks run by California State parks  — they don’t have condos or a McDonalds or billboards or anything that it is sometimes supposed private operators might build on public land.

What these parks do have is well-maintained facilities and very reasonable fees.  The facilities are well maintained because they must be by contractual obligation — they are not dependent on the vagaries of the appropriation process for their maintenance.  The reasonable fees are due to substantially lower operations costs.  Just as an example, California State Parks charges $30 a night for a no hookup camp site.  Very similar campgrounds in California in the National Forest that are operated by private companies never charge more than $22 a night for the same site, and often charge less than $20.

Our company, among many others, have operated public parks for decades.  The key is an intelligent division of responsibilities.  The public agencies we work with retain control over facility changes, conditions, fees, services offered, etc.  Companies like ours pay for all the operations, from insurance to staffing to maintenance to utilities, and pay for this solely with the gate fees already paid at the park, generally without any public subsidies.  The success of this model in keeping parks open can be seen in the US Forest Service.  The US Forest Service in California has seen its recreation budgets cut far more than have the budgets of California State parks, but in general the USFS is not talking about park closures.  They have found a more sustainable financial model for recreation operations.

Even in California State Parks, this is not a radically new idea.  While there are no California State Parks whose entire operations are managed privately today, private companies do operate large portions of a number of parks.  The conference center at Asilomar SP, the cabins at Big Redwoods Basin and Burney Falls, the stores and marinas at dozens of parks, and the tours at the Hearst Castle, are all operated privately under the close supervision of California State Parks.  And in these cases, no one expresses serious fears of Asilomar harboring drug dealers or Hearst Castle being operated for fiendish pursuits.  In fact, more than any other state in the nation, California already has the expertise and infrastructure in place to manage a private park operations program.

Remember, we are not talking about handing parks over to private entities to do with as they please  — these are highly structured relationships that substantially reduce costs because private operators can clean the bathrooms and do the landscape maintenance and staffing far less expensively than a public agency.

There are plenty of public public officials and private companies that can discuss this park operation model in more depth.  I would love the chance to discuss it with you in more depth, and there are plenty of public public officials and private companies who could demystify this for you.  And I don’t think any of us are pot dealers.

Terrific New Study on Park PPP’s

Holly Fretwell of PERC has completed a great new study of how use of private companies to handle park operations can help keep parks open and well-maintained.  The introduction to the study is here and the study itself is here.

Some state park systems rely on tax dollars provided through state general funds. When state budgets are tight, park funding is a lower priority than projects such as schools and hospitals. Hence park budgets are quick to hit the chopping block, leading to threats of park closures or reduced services.

Rather than ride the roller coaster of state budgets, some parks have leased their operational activities to private managers. These private entities have proven they can operate the parks more efficiently, and sites that were once a drain on agency funds are now generating revenue.

Private management can provide consistent, quality stewardship as well as more customer service.

She also gives a nice plug for our upcoming national conference on November 2 in Scottsdale.

2011 Keeping Public Parks Open Conference – Update

On November 2, 2011, I am hosting a conference in Scottsdale, Arizona on how public agencies can keep parks open through private recreation management partnerships.

For thirty years, the US Forest Service has seen radically declining recreation budgets, with far greater reductions than places like California is facing, but has not had to close parks and has kept most of their recreation areas well-maintained.

Their innovation was to take advantage of the substantially lower costs of private operators to run their campgrounds and picnic areas.

For the last couple of years, it has frustrated me to no end to watch states like California and Arizona — really almost every state in the country — let some parks accumulate deferred maintenance while other are closed when it simply is not necessary.

The event flyer is here, which hopefully you can also forward as an email from the link at the bottom.  If you know anyone in public recreation or in the your state’s legislature who is interested in recreation issues, please point them to this site where they can learn about and register for this conference.  We have gotten some sponsorships such that government employees can attend for free, and the rooms in the hotel, a fabulous resort in Scottsdale, can be had for just $105 per night.

Labor Costs

This relationship between public and private labor costs here is very similar to what we find in parks.  Most park agencies have about 80% labor costs, while ours for running similar facilities is between 30% and 40%.

The New York Times reports that labor currently represents 80 percent of the Postal Service’s expenses, while it accounts for 53 percent at United Parcel Service and only 32 percent at FedEx

The difference mainly lies both in productivity expectations as well as escaping civil service pay and benefits scales.  The difference is typically NOT about number feet on the ground — in fact, private companies tend to have more customer contact people in the park than do state agencies.

Hostility to Reducing Costs via Private Operations

California makes noises about being open to any option that keeps parks open, but then I see stuff like this, demonstrating that the legislature cares far more about protecting current government jobs than it does about reducing costs or maintaining services to the public

Apparently, the folks in Sacramento believe that cities looking for ways to reduce expenses are better off with no libraries at all than with privately operated libraries.

Assembly Bill 438, sponsored by Assemblyman Das Williams, D-Santa Barbara, is headed to Gov. Jerry Brown’s desk because Democrats in Sacramento voted to control local decisions and prevent cities from making choices about what is best for their own libraries.

The bill represents a dramatic overreach by Sacramento into local communities. Via AB438 the Legislature mandates that cities choosing to privatize are not allowed to reduce the size of their library staffs. Further, the bill mandates that every single current library employee must keep his or her job in any future public-private partnership agreement, which explains why powerful unions have been pushing the bill. Cities will also be forced to spend time and money preparing and submitting studies and reports to Sacramento in order to obtain the state’s permission to privatize.

“We hope the governor will veto the bill, since he has talked a lot about the importance of retaining local authority,” said Dan Carrigg of the League of California Cities.

California has been a national leader in partnering with the private sector to operate libraries. In fact, the first-ever public-private partnership between a local government and private operator was signed in 1997 between Riverside County and Library Systems & Services Inc. and this agreement is still in place today.

How did that work out?

In June 2010, Riverside County published a report highlighting the results of their 13-year partnership with LSSI. The study found taxpayers have enjoyed better services with longer operating hours. Staffing has more than doubled. The number of open library branches increased from 24 to 33 and more than $15 million was invested in new facilities or major renovations.

Why The US Forest Service Turned to Private Recreation Management

Many people in the US Forest Service, from both organizational pride as well as their own individual incentives (supervisors in the government make more money and have more prestige if they have larger budgets and more headcount) are to this day not happy that the Forest Service has private companies running campgrounds and other recreation areas.  However, this program has been successful for over 30 years and is used to operate over half the USFS recreation areas by number, and probably over 80-90% by visitation.

The USFS originally pursued private management out of necesity.  Here is the only chart you need to see.  Thought the Y-axis says board-feet of timber, it is direclty proportional to USFS revenue (source)

In effect, the USFS recreation program, previously funded in large part by timber sales revenue, lost most all of its funding over the last 20-30 years.  And Congress has made clear that it will not make this up through appropriations.  Worse, every few years, what recreation budget remains is often swept in its entirety into the fire budget during busy fire seasons.

But unlike many state park organizations who are facing budget cuts far less drastic, the USFS is not talking about closing recreation areas, or even building up a backlog of deferred maintenance.  In California, a cut of about $14 million on a $400 million budget has caused over 70 parks to be proposed for closure.  The USFS has, on a percentage basis, seen a much larger decrease in its recreation budget, but it still can keep parks open, mainly because it has learned to use lower-cost private operators to keep parks open.

Law Enforcement and Parks

I am often asked by state agencies how private operators of public parks handle law enforcement issues.  After all, many of these agencies have scores or even hundreds of park rangers with law enforcement titles or certifications.

My response is usually in two parts:

Large law enforcement staff not necessary

The number of law enforcement officers (LEO’s) in state parks organizations is NOT a function or indicator of demand.  We operate nearly 200 public parks, and in only one case (in the urban LA area) do we find it necessary to have law enforcement officers on site during busy weekends.  In no park we operate is it necessary to have full-time LEO presence.   Generally, we operate just like any other private campground or outdoor business — we attempt to enforce safe conditions ourselves, but call out the local sheriff when needed.  While state parks organizations might have 5 full-time equivalents (FTE’s) of LEO staff (or more) on payroll for a park, we typically find the true demand for full-blown law enforcement (rather than rules enforcement) staff is generally less than a tenth of an FTE per park.

So why do state agencies have so many people with expensive LEO certifications?  The reason has to do with incentives.   Having an LEO title is a big benefit for employees.  It provides a boost in pay grade and, perhaps more importantly, in most states gives the employee participation in the state law enforcement pension plan, generally far more lucrative than other public (or private) plans.  Further, the free training and certification has value after an early retirement (which is allowed under most law enforcement pensions) as the foundation for a second career.  Finally, there are a number of folks who simply get a psychic reward from wearing a gun and a badge.

Large law enforcement staff is counter-productive

The vast, vast majority of the time, staff at public recreation facilities are providing customer service to visitors, rather than enforcing laws.   My company has found that a law enforcement mindset and good customer service seldom mix well.  Yes, rules, have to be enforced for safety, but this should be done, if possible, via some approach other than issuing citations and legal threats.  I am sure the folks at McDonald’s are frustrated when a customer parks in the wrong spot or makes a mess in the bathroom, but they are not crazy enough to issue them tickets.

Part of the problem is cultural.  Some (but by no means all) law enforcement organizations seem to foster an authoritarian mentality.  We used to hire a lot of ex-police for camp hosts, but found they had a huge failure rate in the job.  Time and again, we found they were taking an overly authoritarian badge-heavy approach with visitors.  Again, we have examples of ex-LEO’s doing a good job, but have enough failures to convince us there are real dangers to mixing the LEO and customer service roles.

To this end, here is an example from Utah state parks as reported by Reason

Utah Park Ranger Steven Powers marked the 4th of July by pulling a woman over for driving too slowly, then yanking her out of her car and slapping on cuffs when the woman insisted on filming the stop with her phone. Unfortunately for powers, that woman happened to be Celia Sullivan, “a longtime Photography is Not a Crime reader,” according to the site’s proprietor, Carlos Miller. Sullivan is also 50 years old, a mother of two, and about as non-threatening a person as any cop could hope to interact with while miles away from backup…

Sullivan was charged with “disobeying a lawful order” and “resisting arrest,” and was kept in handcuffs for 90 minutes before being released.

This kind of behavior is not unique to law enforcement in parks, but that is my point.  This kind of attitude mixes poorly with a customer service missions, and is a good reason not to have park customer service staff all carrying guns.  Seriously, can you imagine if McDonalds and Wal-Mart employees all had guns and badges?

While many park authorities have allowed private companies to operate gift shops or rental concessions within parks, private management of entire parks under concession agreement is relatively new but growing rapidly.  As state and local governments come under increasing budget pressures, private management of public parks can be a useful tool for public authorities trying to keep parks open for the public.  A great introduction to this model is here.  Here is an example private park operator.

Private recreation operators aren’t trying to take ownership of the land.  They aren’t trying to pave the wilderness.  They aren’t trying to build condos in front of Old Faithful.  They 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. What they bring to the table is that in many cases, private companies can operate the park and keep it open with the fees paid at the gate, without big price hikes and without the need for taxpayer subsidies.

Frequently Asked Questions:

Conference Announced: Implementing Public-Private Partnerships in Recreation

In partnership with the National Forest Recreation Association (NFRA), we will be hosting a half-day national conference in Scottsdale, AZ on November 2, 2011 at 1:00 PM.  The conference’s full title is “Keeping State and County Parks Open — Implementing Public-Private Partnerships in Recreation.”  The conference will be at a great venue, the Hilton Scottsdale, and we have focused on keeping costs low:  registration costs just $100, which includes attendance at a joint reception with the NFRA, and rooms are available for as low as $106 per night.

I will be publishing more on the conference later, but it is aimed at elected officials and public agencies who are interested in the use of private companies to operate public parks, campgrounds, and recreation areas.  By holding this conference at the same time and locations as the NFRA conference, we are able to take advantage of the resources of the US Forest Service, which has thirty years of experience operating over a thousand parks and recreation areas nationwide using this public-private model.

Topics will include:

  • History of recreation PPP’s, including current examples you may contact or visit
  • Case studies from the US Forest Service, the world’s largest user of recreation PPP’s
  • Advantages of recreation PPP’s, and pitfalls to be avoided
  • Typical division of responsibilities between the public and private partners in these contracts
  • Best practice contract structure and contracting process
  • Supporting legislation and relationships between agencies

The schedule will be roughly as follows:

  • 1:00-2:00  Joint session with the NFRA — Introduction and keynote address
  • 2:00-5:00  Detailed discussion of PPP’s in recreation
  • 5:00-5:30  Q&A with industry leaders and experts, both public and private
  • 5:30-7:00 Joint reception with the US Forest Service recreation leaders and the NFRA

Much of the material in this conference has been presented in private sessions with state park agencies in states including California, Arizona, and Utah and with elected officials in states including Pennsylvania, New York, and New Jersey.   Co-locating this conference with the NFRA gives us the opportunity to have some of the most experienced recreation managers in the country presenting this material.

If you would like to learn more, or would like to register for the conference, you may do so here.

If you want to ask a question, email me at the contact link above or hit our Facebook page shown to the right.

Keeping California Parks Open

From a press release last week

Adopting a public/private management strategy used successfully for decades by the U.S. Forest Service can ensure that endangered California state parks remain open, are properly and professionally maintained, and are available to the public for years to come.

Due to the state budget crisis, California State Parks has been forced to cut millions of dollars from its operating budgets. To make ends meet, California has proposed closing 70 state parks.

“It doesn’t have to be this way,” says Warren Meyer, president of Phoenix-based Recreation Resource Management (RRM), a $10M company that manages public parks and recreation areas throughout the U.S.

“With a public-private partnership model used by the US Forest Service (USFS) for thirty years in hundreds of California parks and campgrounds, the government retains ownership of the land and control of the use and character of the park while handing over operational tasks that are time, money, and labor intensive to a more cost-effective private company.”

When operating public parks in these partnerships, private companies typically provide visitor services, routine maintenance and repairs (such as bathroom cleaning), landscaping, trash removal and payment of utilities.

“While these operational tasks by no means constitute all the work required to keep parks open, they account for the vast majority of the money spent by the state parks organization in the field,” says Meyer.

“In these contracts, private concessionaires pay for all these costs solely out of the gate fees paid by the public, without further taxpayer subsidy. In addition, we pay the public agency a substantial concession fee, often converting a money-loser to a moneymaker for the government.”

In these arrangements, the public agency ensures that the private operator maintains the land in the condition and character the public expects.

“This USFS program is already working in hundreds of locations in California, and over a thousand nationwide,” states Meyer.

The fact sheet in this same release is a useful resource

How Recreation Public-Private Partnerships Work

  • The public retains ownership of the land. Private companies must maintain the desired character and facilities in the park. Typical concession agreements include extremely detailed operational requirements and restrictions.
  • The Parks Agency retains responsibility for strategic planning, habitat development and restoration, facilities planning, environmental sciences, rule-making, oversight, and fee approval.
  • The private company takes on operational tasks (from maintenance to bathroom cleaning) that consume much of the state parks budgets but don’t impinge on these strategic tasks.
  • Private company’s expenses, and therefore most park operations expenses, are paid out of park visitor fees without any additional payments from the state. In return for retaining these user fees, the company pays a competitively-bid rent to the state.
  • The state may use this rent to help cover its other expenses, or may reinvest the rent, as does the US Forest Service, in catch-up maintenance and park improvements.

Advantages for California

  • The substantially lower cost position of private companies allows park operations as well as major maintenance to be performed using existing visitor fees without taxpayer subsidies. Even smaller parks can benefit when bundled together into larger contracts. The result is that more parks can be kept open to the public.
  • More efficient management also allows for lower use fees — for example, while California State Parks typically charge as much as $30 for a campsite without utilities, at similar public campgrounds in California RRM charges no more than $18.
  • Private concessionaires have incentives that are well-matched to the public — they make money only if happy and satisfied visitors come back to the park. As a result, the parks operated in California by RRM receive very high marks from customers and in third-party surveys.
  • If the public agency wants to improve the facilities in parks, private companies can be a critical source of capital. RRM has invested more than $3 million across the country helping parks catch up with deferred maintenance and improve the visitor experience. At McArthur-Burney Falls SP in California, RRM has invested nearly $1.5 million in a new store and visitor center, new cabins, and new boat docks.

Florida Considers Private Management of Parks

From FlaglerLive.com

The  Division of Environmental Protection is proposing to partially privatize 56 parks, including Washington Oaks Garden State Park and Faver-Dykes State Park. The proposal is being submitted to the state Acquisition and Restoration Council next Friday (June 10) as an expansion of camping and RV opportunities at those sites. But the camping and RV sites would be built and operated by private companies.

The council is an 11-member panel with representatives from five state agencies who rank the state’s environmentally sensitive land-acquisition priorities through the Florida Forever program. Florida Forever has essentially lost its funding, leaving the council to focus on its other mission: reviewing management plans for state parks and conservation lands.

Opening parks up to camping and RV sites falls under park management plans, which would have to be amended to enable the change. Those plans, called the “unit management plan,” are reworked every 10 years, with public hearings and involvement. Washington Oaks’ 10-year plan is about two years away from just such a review. DEP is asking the council to accelerate the process, though it would also make provisions for a public “meeting” at each affected park. The DEP’s proposal does not specify a formal public hearing, though that may be a matter of semantics.

“The new facilities will be designed, constructed and operated by private entities selected through the department’s procedures for soliciting and contracting state park concession services,” the DEP’ssummary proposal reads. “The Department will retain full control over all aspects of planning, design, construction and operation of the new facilities to ensure consistency with the mission and quality standards of the state park system. This system-wide expansion of camping opportunities will increase the level of public benefits state parks provide, enhance the economic benefits of state parks, create jobs, and move the state park system closer to economic self-sufficiency.”