Park PPP's

A while back I made a presentation at the RecX conference, held at the Department of Interior in Washington, DC.  The RecX conference is a venue for exchanging new ideas on the frontiers of public recreation.

In this brief, 13-minute presentation, I discuss our experience re-opening, refurbishing, and expanding two large TVA campgrounds.  In these examples we invested over a million dollars of private capital in exchange for a revenue-sharing operating agreement for the park.  Here is the story (You have to watch just to find out why this case study video uses the image below:)

Secretary of Interior Zincke has proposed more private operation of Department of Interior campgrounds.   As readers of this blog would expect, I think this is a good idea.  However, many critiques have been raised of late.  One example is this one from the Rebecca Moss of the New Mexican claiming that “many fear” that private operations of public campgrounds will cause their rates to “skyrocket.”  This is part of a letter I wrote her in response (my company was mentioned in the article but was not contacted by her for comment on the story).

Pretty much no one that I know of is advocating for a full privatization of public campgrounds.  It is not what we do, certainly.   We privatize the operation of public campgrounds, which is different in important ways, as described here:  http://parkppp.com/2012/09/essay-response-should-national-parks-be-privatized/I don’t mind folks being skeptical of things I am passionate about, but I do think this bit of your article was deceptive.  Let me quote it in full:

Private companies are contractually obligated to maintain the properties they operate in national parks. But the Center for American Progress found this doesn’t always happen. Instead, the organization said, some private companies have skirted these obligations and instead further added to the backlog of maintenance for which taxpayers are responsible.

All but one of New Mexico’s national parks had hundreds of thousands of dollars in deferred maintenance as of 2016, totaling more than $213 million, according to National Park Service documents. Carlsbad Caverns National Park has the highest backlog, with $44 million in deferred maintenance, about half for a modernized elevator system. Of the overall total, $16 million in maintenance is considered critical, according to the federal budget. The backlog at Bandelier National Monument is $23 million and it’s $17 million at Chaco Canyon National Historical Park.

The implication is that the second paragraph follows from the first, that these are examples of private companies not keeping up with regular maintenance in parks, but in fact this is untrue.  These are examples of the public agency not keeping up with deferred maintenance.  In fact, the deferred maintenance in privately-operated public facilities tends to be way lower than in publicly operated facilities

The reason the government can charge low fees for camping is in part because these fees do not cover the full costs of operating these camping areas. Oddly, in the same article you sort of brag about low public camping fees in NM while complaining about the amount of deferred maintenance, but you never connect the two.  Have you ever seen a free BLM campground after the campers leave? The cleaning and trash pick-up bill alone is enormous. That is why we get deferred maintenance in public campgrounds, because use fees do not cover the full costs or operation and maintenance while budget appropriations have fallen and the difference is made up by not fixing things. The American Society of Civil Engineers recently estimated the total deferred maintenance at state and Federal parks at $114 billion. Our company operates a number of Forest Service campgrounds in New Mexico and across the country — the total deferred maintenance for which we are responsible at these locations is essentially zero.

This deferred maintenance issue in publicly-operated parks is made worse by the administrative bloat in public agencies.  Rather than use the money they have to provide services on the ground for visitors, much of their budget goes to off-site administrative staff.  My company has 350 employees, two of which are not located in a park (one of whom is me).  Arizona State Parks, which I have studied, has about the same number of employees but over half sit in off-site offices away from parks. Even when these agencies get more appropriated money, they spend it on more administrative staff and not on working down their maintenance backlog.  Well over 90% of the money our company collects in fees gets spent right back in the park itself — no government agency can say that.  Even the concession fees we pay to the government generally go back into the park in the form of capital improvements due to the smart structure of US Forest Service concession agreements.  And when government budget crunch time hits and park funds get swept up into the general fund for other purposes, fees paid to private operators are protected and still go to the parks.

I would distrust private companies to fully control the character and access of parks.  Given a choice, if I had a really nice piece of public land, I might make more money turning it into an exclusive Ritz Carlton resort.  But that is not how these contracts work.  The government retains control of the development and character of its concession-operated parks, so Forest Service campgrounds are always going to be a lightly-developed in a natural setting with total public access for all.  Given that, what we are talking about is whether the bathrooms are cleaned by efficient private companies or by civil service employees with large expensive administrative staffs.

In California, the state parks agency operates its own campgrounds and charges $35 a night (soon to go up I hear) for a primitive campsite without any utilities.  My company operates many public campgrounds in California, many right next door to state parks, and we charge no more than $24 a night and often less for the same site.  And we receive no subsidy of any sort, while California State Parks also gets $400 million or so of taxpayer money in addition to their fees.  And we have no deferred maintenance, while California State Parks have deferred maintenance of $1.2 billion growing at $120 million a year (an older estimate but still probably close to the mark).

Sunset Magazine just had its annual “Best Campgrounds of the West” issue and we have four of the campgrounds we operate on the list — pretty good considering we only operate in two of the four regions they cover (we operate 4 of the 54 campgrounds they recognize in CA, AZ, and NM).

On the list were Sabrina (CA), Big Pine Creek (CA), Cave Springs (AZ) and Sleepy Grass (NM).  We always love getting positive feedback, of course, but are particularly thrilled in this case since the frequent criticism of private operation of public campgrounds is that private companies will somehow ruin the recreation areas for profit.  Exactly how we would make money by destroying the natural beauty which draws paying visitors to these parks is never explained.  But it is good to have confirmation that we private operators are doing a good job.

I have our trade group counting up the total number of privately-operated public recreation areas on the list and I will post the number here when I have it.

Glenn Reynolds is writing about colleges, but he could just as easily be writing about public parks:

Full-time administrators now outnumber full-time faculty. And when times get tough, schools have a disturbing tendency to shrink faculty numbers while keeping administrators on the payroll. Teaching gets done by low-paid, nontenured adjuncts, but nobody ever heard of an “adjunct administrator.”

Replace “faculty” with “people actually working in a park” and administrators with “headquarters staff” and he has described the management of public parks exactly.  Most parks agencies are suffering from administrative bloat, with more people in headquarters than out in the field actually running parks.  When they have layoffs, it is always of field staff and not headquarters administrators.   In the parks world they will even ignore major maintenance needs in favor of making sure they have the funds to keep paying headquarters staff.

It is just absurd.  Of course, in our case, we make a business out of this.  We operate public parks, and have 300 field employees actually in the parks and 2 in headquarters.  It allows us to cut costs while simultaneously doing a better job.

My article on private operation of public parks has been published by PERC and is now up at their web site.  It’s called “A Tale of Two Parks” and compares the costs of private and public operation, among a number of other issues.

Derrick Crandall has an article recently on ways the NPS can survive the sequester.  Here is a key bit:

Second, there are roles and functions that could and should be reviewed and could be transferable to private sector operations.  For example, NPS directly operates most of its campgrounds while a sister federal agency, the Forest Service, relies largely on concessioners.  NPS campgrounds are now underutilized, full only during peak seasons and some weekends.  Concessioner operation would add camper services, introduce dynamic pricing and start marketing these campgrounds.  NPS costs would drop by millions of dollars, its receipts from franchise fees would rise … and campers would have increased satisfaction levels.  Estimated net financial gain from this change is at least $25 million.

The other related advantage of private operation, particularly in a concession model where companies are paid with visitor fees, is that these fees are protected from legislative sweeps and government closures.  By contract, the user fees in concession contracts remain in the park, supporting operations and improvements.

I was on Huffington Post Live the other day in a panel discussion on privatizing National Parks.  The link to the video and comments is here.

None of the panelists, including me, advocated for privatizing National Parks.  The whole point of public lands, as I have written on this site before, is to change the decision-making calculus around development of and access to these lands from net present value to broader access and more natural settings.  In other words, no one wants a McDonalds in front of Old Faithful.

What I did advocate for, as discussed starting around the 7 minute mark, is for privatization of certain operational tasks, from bathroom cleaning to maintenance to landscaping, in order to reduce costs.  Already, the high cost of using civil service employees to perform these tasks are crowding out things like maintenance and renovation.

A relatively new group called the Conservation Leadership Council kicked off their tenure by sponsoring six articles on the future of environment and land management.  One of those size initiatives was called Parks 2.0: Operating State Parks Through Public-Private Partnerships.

I won’t be coy — the authors interviewed me several times and I helped them find the relevant data.  But they did a great job outlining how parks agencies can reduce operating costs and thus keep their parks open using PPP’s for park operations.  A great primer for those interested in this model.

We will be holding our national conference on November 7 in Reno, Nevada.  We have an amazing slate of speakers and a great program for agencies looking to understand the public-private partnership model for keeping parks open.

All the details, speakers, and agenda are at ParkConference.com.

I was asked to write a 400-word essay for an outdoor magazine on “should national parks be privatized”.  Here my response. By the way, I put the stuff about myself and my company in under duress.  It was not in the original draft and he wanted something personal.

Should National Park’s be privatized, in the sense that they are turned entirely over to private owners?  No.  Public lands are in public hands for a reason — the public wants the government, not, say, Ritz-Carlton, to decide the use and character and access to the land.  No one wants a McDonald’s in front of Old Faithful, a common fear I hear time and again when privatization is mentioned.

However, once the agency determines the character of and facilities on the land, should their operation (as opposed to their ownership) be privatized?  Sure.   The NPS faces hundreds of millions of dollars in capital needs and deferred maintenance.  It is crazy to use its limited budget to have Federal civil service employees cleaning bathrooms and manning the gatehouse, when private companies have proven they can do a quality job so much less expensively.  The US Forest Service, for example, has had private operators in over a thousand of its largest parks for nearly thirty years, and unlike state parks agencies or even the NPS, it is not considering park closures or accumulating deferred maintenance, despite having its recreation budget axed.  Why? Because its partnership program with private operators is a fundamentally sounder, lower-cost approach to park operations.

In fact, such public-private partnerships are nothing new for the NPS.  The NPS was an early innovator in this field, and currently private companies operate many of the visitor services in parks, such as lodges and gift shops.  The US Forest Service innovation, which has been copied by many agencies including most recently California State Parks, has been to turn over operations of the whole park, not just the lodge, to a private company.  These are highly structured contracts, wherein the private company cannot modify the facilities or change fees without agency approval, and must meet a range of detailed performance goals.

Most critiques of private park operations center around quality and fees.  While there certainly have been some isolated failures, in general the results have been quite good.  In Arizona, a recent poll by CampArizona.com ranked the top 10 public campgrounds in Arizona.  Of these, three of the top five were US Forest Service campgrounds run by a private operator, as was the top Arizona campground in Sunset Magazine’s “Best of the West”  (OK, I have to brag, these are all run by my company). As for fee concerns, state-run parks in California charge $30 for a no-hookup camp site.  Privately operated public campgrounds in California forests seldom charge more than $18.

My company operates over 150 state, county, and federal parks.  I encourage you to take the “Pepsi Challenge” and see some of them for yourself.  They are well-run, generally with more staff than a typical state park, and have no significant deferred maintenance backlog.  Oh, and not a single one has a McDonald’s, a billboard, or a neon sign in front of a national monument.