Year: 2010

Comment Apology

Last night when I migrated servers on the site, a bunch of unmoderated comments popped up that had somehow been invisible to me. I am sorry, they have all been accepted. Hopefully whatever was causing the problem was fixed in the update.

Symposium on Private Management of Public Parks in Arizona

The Parks and Recreation Student Association at Arizona State University had me in last week to speak.  However, through some diligent efforts of their leader, the speech really turned into a symposium on the pros and cons of private recreation management.  The speakers were:

  • Grady Gammage, Jr.  from ASU’s Morrison Institute, and author of a recent report on funding Arizona parks
  • Warren Meyer, president of Recreation Resource Management, a national operator of 150 public parks
  • Sandy Bahr, head of the Grand Canyon chapter of the Sierra Club

The video is a bit more than an hour long, but should be a helpful resource for those considering ways to keep public parks open.  Careful observers will see confirmation of two of my frequent complaints about criticism of public private partnerships in recreation:

  • It is fairly clear that most vocal public critics have not even studied actual implementations of privatization models that exist right here in Arizona, and are instead working off of hypothesized approaches that bear little reality to how things actually work on the ground
  • There is actually a lot of room for agreement between myself and critics.  Many of the fears the Sierra Club representative expresses are for functions most private companies in this business do not aspire to take over.

To the latter point, my key slide was probably this one:

I emphasized that private companies had few designs on the activities on the left, and were focused on the activities on the right.  The right-hand side tends to be a huge portion of the budget, with large opportunities for cost reduction, and I find most groups skeptical of privatization are generally more comfortable with it when it is clear the state will retain control of left-side activities.

Anyway, here is the video:

ASU Symposium: Can Public-Private Recreation Partnerships Help Arizona State Parks? from Warren Meyer on Vimeo.

Documentary on Private Management of Public Parks

Check out this most recent Reason.TV video, which includes your humble correspondent.

Arizona Urged to Privatize Parks

From the AZ Daily Star

The state should pursue more opportunities to turn parks over to private companies, or at least let them operate retail concessions, a panel appointed by Gov. Jan Brewer to study government recommended Tuesday.The initial report by the Commission on Privatization and Efficiency suggested turning more of government over to the private sector. Members also want to push Congress to repeal laws that now prohibit the state from letting private firms set up shop in rest areas along interstate highways.

But state Gaming Director Mark Brnovich, whom Brewer named to head the panel, said this is only the first step. He said the nine-member commission, all handpicked by the governor, is predisposed to believe that if a government service can be privatized, it probably should be.

“Like the governor, members of the commission are strong believers in the free-enterprise system and the free market,” Brnovich said in an interview. “History has shown that the private sector is able to come up with innovative and, very often, cost-effective solutions to problems.”

Brnovich acknowledged that private companies, unlike government, must make a profit. But he said commission members don’t see this as meaning higher costs for taxpayers.

“The free-market system, capitalism, works because folks are forced to come up with better ideas and create greater efficiencies and come up with new innovations,” Brnovich said. He calls it the “Yellow Book test.”

Arizona Parks Proposals

Arizona State Parks has actually issued a proposal for a whole-park concession.  Here is the AP story, which quotes me at the end.  Rather than run the quote they used for the article, here is my entire set of comments I sent to the reporter:

1.  Our company (and many others) operate public parks in public-private partnerships, and have been doing so for decades.  In certain agencies, such as the US Forest Service (USFS) or the Tennessee Valley Authority, this is totally accepted practice.  It is also accepted practice in any number of cities and counties.  Why state parks organizations have typically resisted this model, when so many other public recreation and conservation agencies have adopted it, is somewhat of a mystery to me.

2.  The Oracle RFP is pretty thin gruel.  When I presented to both Arizona State Parks (ASP) and the legislature some months ago (not last week as in your email), I said that there were many parks on their closure list that were standalone business opportunities but Oracle was not one of them.  I said that Oracle could probably be included packaged with another nearby park — I run many parks that lose money but are packaged with other parks that make money so the whole package is still attractive.  Also, by putting together several parks in one area, there are certain economies of scale in management and operations to be gained.  I have not been able to debrief my COO who went to the Oracle meeting, but his general sense was that the Oracle was encumbered with many restrictions that almost guaranteed it could not be a good commercial opportunity.  We are able to operate parks with much lower costs than can ASP at similar or superior quality levels, but at some point the revenue gets too small even for us to make work, and Oracle may well be such a case.  I am working from memory, but I think the state brings in about $20-$30K a year at Oracle and spend about $280,000 to operate the park.  Even if we cut the costs by 75%, it still does not come close to working.

3.  About 3 months ago, a guy named Leonard Gilroy, a local resident who works for the Reason Foundation, told me this:  He said the number one play in the anti-privatization playbook was to pick the absolute worst commercial opportunity in whatever organization that is facing privatization pressure, offer it as an RFP, and then when there are inevitably no private bids, say “see, we tried but privatization does not work — no one will bid on these parks.”  Given that I was told this months ago, I have to look on the Oracle RFP with some suspicion that it was purposely selected to be a poor opportunity in order to blunt the pressure for privatization.  However, this may be unfair as it is impossible as a third party to read motivations.  I know, however, that ASP 2nd in command Jay Ream has gone on the record at a public meeting for Lost Dutchman SP that he is in complete and total opposition to privatization or public private partnerships of any sort.  For this reason, our company has not ruled out bidding on Oracle, even if it is a money loser, merely to pre-empt this strategy

4.  I have not heard anything about Lyman Lake, so such an RFP is new information for me.  A whole-park RFP for Lyman Lake structured along the lines that the US Forest Service routinely offers these contracts might be a good opportunity for a private company.

5.  I would encourage you to visit my blog at www.parkparivatization.com.  The same exact arguments are used over and over against public-private partnerships in parks and these are addressed throughout the blog, but in a compact form right at the top in the FAQ.  ASP (and in fact most state parks organizations) acts like this is some kind of risky new rocket science.  In fact, our company does this all across the country, and runs 35 whole parks and campgrounds for the US Forest Service right here in Arizona.  Check our web site at www.camprrm.com for locations.  What has frustrated me through this debate is that nobody (including notably nobody from the Arizona Republic or Arizona State Parks) has bothered to do any basic due diligence on recreation public-private partnerships when we have numerous examples right here in the state.  Heather Procincio, district ranger for the USFS in Sedona (Red Rock District) could easily discuss the 20+ year history of the USFS having private companies manage nearly all of its recreation areas in the Coconino NF.  Brian Poturalski in the USFS Mormon Lakes / peaks ranger district in Flagstaff also knows a lot of the history.  The USFS is the largest public recreation organization in the world and has hundreds of contracts to privately operate parks and has been doing this for decades.

New Record: Most Outlandish Critique of Privatization

This episode in outlandish critique’s comes from someone who has an impressive-sounding title — Moshe Adler, who apparently teaches economics at Columbia University and at the Harry Van Arsdale Center for Labor Studies at Empire State College.

Apparently, the city of New York uses private companies to trim trees.  Which leads us to this critique:

Possible Cause of Death: Privatization

When a branch fell from a tree at the Central Park Zoo in New York City last month, killing a 6-month-old baby and severely injuring her mother, who had been holding the infant, Mayor Michael Bloomberg declared it “an act of God.” But in all likelihood it was the act of a mayor….

City officials told The New York Times that the tree in question had been pruned twice since December. But pruning requires expertise and is time-consuming. … But it is precisely because tree maintenance requires expertise and great diligence that the responsibility for it should lie within the city, and that the person responding to reporters’ questions should be a city arborist.  Initially, city officials did not even know exactly who was in charge of maintaining the tree.

As turnkey operator for over 150 parks with many trees, part of our duty is to identify “hazard trees” that present a danger to the public and prune or remove them.  We do so in close cooperation with the USFS.  I don’t know what arborists Mr. Adler talked to, but certainly they are correct that this process takes some expertise.  However, they were either incompetent, or Mr. Adler is not reporting his full discussion with them, if they said that even the best expert can reliably identify every tree or branch that is likely to fall.

We have an aggressive hazard tree program that is conducted with US Forest Service experts looking over our shoulder, and we still miss lots of trees and branches that fall.   That is because nature is complex and unpredictable and sometime inscrutable.  Whenever we have had an accident of a tree falling and damaging something, we have an expert come out and do a post-mortem, and almost every time the diagnosis is that there was no reason to believe that branch or tree was in danger.

The contractor for tree trimming therefore could be bad or could be good – this single event does not shed much light on the problem.  Since Mr. Adler is an academic at a prestigious university like Columbia, I am sure that to be so certain, he must have done a real analysis which would logically compare incident rates with falling trees either between periods in New York with both public and private operation of the tree trimming, or else compare between cities that use different methodologies.   Given this obvious analysis, it is odd that he would not share the results with us in this article – surely a professor at Columbia isn’t just trying to draw an ideological conclusion from a single data point concerning a function with which he is not very familiar.

One wonders, further, if public servants are so flawless, why someone in New York City hasn’t thought of the idea of supervising private contractors with a public expert.  This is the kind of 90/10 solution we use with the USFS, with the Forest Service getting 90% of the cost benefit of private operations while still supervising the tree trimming and removal with a tree expert from within their organization.  This strikes me as falling into the same category of many other critiques of privatization, where the failure (if there is one in this example) is one of public management of the process rather than privatization per se.

Mr. Adler is is correct, I think, to put a heavy weight on incentives.  He feels that the incentives problem makes the diligence of public employees inherently superior.  What incentive, after all, do public employees have other than to do the right thing for the public, while profit making companies will tend to cut corners to improve profits.

First, there are certainly companies that cut corners, and the great thing about a free market is that these guys tend to get weeded out through competition.  The only exception to this is in government contracting, where mindless low-bid contracting  (my private company almost never takes the low bid when we are looking for a contractor) and poor supervision give corner-cutting private companies room to thrive.  I would argue that the continued existence and use of these type companies is a government failure rather than a private one.  Incredibly, Mr. Adler seems to agree

The body that awards the contract is not a private party acting on its own behalf but officials acting on behalf of the public, and the level of vigilance is not the same as that which occurs between private parties

As to employee incentives, while in theory public employees are supposed to serve the public, in practice their incentives tend to be an awful mess.  A big part of this problem is that  they are almost impossible to fire.  Combine this with a seniority-based pay package, and there is absolutely no incentive to perform.  I laughed when Mr. Adler wrote this:

The rationale for contracting out is always the same: cost cutting. The taxpayer will save money, it is argued, because the workers of private contractors get lower wages and fewer benefits than city employees get, and because the workers of these contractors have no protections against arbitrary dismissals.

In fact, public “protections against arbitrary dismissals” in practice become public protections against any dismissals.  The difficulty, for example, in firing a NY teacher is well documented.

Further, if a tree falls and kills someone, and there is a liability claim, the taxpayer pays for it.  What do the public managers care?  In fact, you can see this in Mr. Adler’s article, the public agency’s relative indifference to this incident.  Do you really think the agency’s indifference would not translate to workers?  What super-men is Adler positing for these public tree removal jobs — their bosses are indifferent, their pay does not change if they do a good or bad job, and they can’t be fired — but they somehow have a ruthless dedication to excellence?   Has Mr. Adler never been to the DMV  (actually, if he lives in Manhattan all his life, he may not have).

If the same event were to happen in an area we manage, the claim costs me personally money.  You can bet that if we hire indifferent employees who do a bad job, they are gone, usually in weeks.  If I was stuck for years, as the public is, with every employee we made a hiring mistake on, I would have to shut down the company.

More Privatization Ignorance

Every time I hear a rant against privatization, I hardly have to wait 30 seconds before the “you will build a McDonald’s in front of Old Faithful” card is played.  Jeff Tittle of the New Jersey Sierra Club does not disappoint:

Private companies could end up determining public access, use, and costs….

Increasing privatization means we will see more battles like privatization of Fort Hancock at Sandy Hook, or the construction of “Disney Land” in Yosemite. More state lands would be turned into country clubs, amusement parks, or cute historic themed shopping centers. We don’t want to see a historic building where Washington’s army stopped turned into a fast food shop….

The sale of naming rights creates a potential for a cultural and historical disaster. New Jersey could end up with Jello Cheesequake State Park, Jeep Liberty State Park or Fort Mott’s Applesauce State Park. This would detract from the historic significance of parks that are public assets, not corporate assets.

It just doesn’t work this way, at least not in well-managed public agencies.  Check out any of these parks here — these are all public parks that are privately managed.  All of them look natural, because they are and are required to stay that way.  In not one single contract are we allowed to, under any circumstances, determine public access or use, and in no contract can we change fees without state approval.  I suppose there are examples out there of private companies that have been allowed to build condos in what should have been a wilderness area, but is that a failure of privatization or of the government agency managing the process?  I get that Mr. Tittle does not trust the state of New Jersey to be able to structure or run these partnerships, but I wonder, given that, why he trusts them to run the parks at all?  Take this for example

The lease of Farley Marina led to scandals in which state employees got favors in exchange for illegally leasing boat slips.

That is certainly a bad outcome.  So instead of kicking out the private vendor and getting a better managed one we should, what?  Hand it back to the state agency whose employees are accepting bribes?

Private companies will emphasize the bottom line over the visitor experience.

I am sure there are ways in which these two can conflict, but I can tell you that this is a fixed cost business, and every extra visitor is therefore a treasure, financially.  Why wouldn’t a profit-making venture care about the visitor experience?  People say this kind of thing all the time in privatization discussions without even thinking about it.  Let’s fill in some other names:  McDonald’s emphasizes the bottom line over the visitor experience; Wal-Mart emphasizes the bottom line over the visitor experience; Marriott emphasizes the bottom line over the visitor experience.  Do any of these statements make sense?  In every service business I have ever heard of, the Venn diagrams of “Improves bottom line” and “Enhances visitor experience” overlap a LOT.

Some privately managed federal concessions have multiple year long waiting lists and exorbitant rates. This shift would put our parks out of reach for lower income families.

What is he talking about?   The only thing that fits this description is some of the National Park lodges.  There are waiting lists, I suppose,  because the private concessionaire is doing such a bad job and is so unconcerned over the visitor experience that they are flooded with demand (lol).  The waiting lists at these lodges are because the National Park Service will not allow expansion of the lodges (they are rightly concerned with the character of the park) and will not allow the rates to go up.  As a result, any economics book will tell you that there will be waiting lists.  In effect, the waiting lists are a result of the federal authority worrying about exactly the kinds of things  (park character and fees) that Mr. Tittle wants them to worry about.  And besides, it is totally disingenuous for the author to hint at these examples and then somehow imply that they are in any way analogous to entrance fees at state parks.  As he himself says, managing a concession within a park is totally different than operating the entire park.

Privatization in other states and at the federal level has led to increased entrance fees for camping, cabin rentals and swimming.

Incorrect.   Totally.  Privatization has led to a reduction in the cost of operation of these parks, and thus has reduced pressure on fees.  The US Forest Service, which uses a lot of concessionaires to run whole recreation areas, used to subsidize recreation fees with timber revenue.  When, through the efforts of organizations like the Sierra Club, these timber sales went away, Congress refused to fill in the gap in recreation funding and thus the USFS was forced to cease subsidizing user fees.  Had the USFS not relied on more efficient private operators, fees would have gone up more and many USFS facilities would have closed.

Because private companies can operate much more inexpensively, our rates are often lower.  In Arizona, Arizona State Parks charges $20 in the summer per car at Slide Rock State Park.  Next door at Grasshopper point, a similar day use area in the US Forest Service, we charge $8 per car.  In California, California State Parks charges $30 for a camp site with no utilities.  In the public campgrounds we operate in California, we charge no camping fee for a similar site higher than $18.   When California State Parks recently raised camping rates, they demanded that we raise the rates proportionately on the cabins we operate in one state park — we refused.  In New Jersey, Island Beach State Park charges $20 per night for no-hookup camping.  With only one or two exceptions, none of our no-hookup camp sites rent for more than $18 a night.  New Jersey typically charges $5-$10 per car for day use visits.  Across the country, we charge between $5 and $8.

There is pretty much nothing in this criticism that is not addressed in my FAQ on public private recreation partnerships, so I refer you there for more information.

New Jersey Privatization Task Force

Apparently NJ is taking a very aggressive look at public-private partnerships to help close their huge budget gaps.  Recreation was near the top of the list

Park management concession agreements: Having written numerous articles in recent months suggesting that states embrace the private operation of state parks—something relatively “new” to states, but common at the federal level—it was particularly rewarding to see the Task Force embrace the concept, recommending that the state should enter into one or more long‐term concession agreements with private recreation firms for the operation and management of all state parks. Annual savings to the state were estimated to range between $6-8 million annually, a significant sum relative to overall park spending. This is the boldest, most sweeping call for state park privatization that I’ve personally ever seen at the state level, and Gov. Christie and NJ State Parks have an opportunity to blaze a new and transformational path forward on state parks management that policymakers in every state should be watching closely.

Park Privitization Debate in New York

Len Gilroy of Reason debates in favor of park privatization in New York as an alternative to park closures in their budget crisis.

Customer Feedback on Private Management

Got the letter from a customer of a US Forest Service park we operate.  I know the last paragraphs almost looks like a setup but we honestly got this letter out of the blue from a customer no one here knows.

Seasonal Closures

One of the key strategies for making ends meet in recreation is seasonal closures and/or service reductions.   With only a few exceptions (San Diego, maybe?) most parks have strong seasonality.  Here is one example that caught my eye in the news:

Two western Kentucky lawmakers say they don’t support plans to close resort parks two days a week in the winter and privatize restaurants and golf courses.

“Rather than shutting down the parks for two days, they should be promoting them to increase business,” Rep. Will Coursey, D-Benton, said. “It sends the wrong message.”

Let’s make sure we are clear on this — They are talking about closing Tuesday and Wednesday in Kentucky in the winter time, which (if you are not from the area) is typically cold and rainy.

My company runs several enormously popular parks in Western Kentucky for the US Forest Service.  They are so popular we have lines and wait lists in the summer to get in.  But we don’t even try to keep the place open from November 1 to March 15, and even then the dropoff we get in the late and early season is substantial.

I am not that familiar with these parks in the article, but I would have to take a good long look at them to see if I would support keeping them open in the winter at all, much less 5 days a week. I am currently looking at a resort type public park in Georgia with a lodge, and the cost of keeping a resort and restaurant open in the winter when there is no business is simply astronomical.

But let’s consider the lawmaker’s suggestion for a moment.  I am a marketing guy.  You ask me to do something to fill up a cold, rainy western Kentucky resort on a Tuesday and a Wednesday during the school year.  How?  I am sure you could hire someone who would gladly take your money for this project, but what possible chance of success does it have?  Who is going to go when their kids are in school to spend two mid-week days in a cold and rainy resort? In the Georgia example I am looking at, there is nothing one can do to reasonably get occupancy high enough even to break even — the mid-week and winter off seasons are too much of a drain if the lodge remains open during these slow times.

The only possibility is selling to the business meeting market, to try to get businesses to come in.  This is a tough sell anyway, particularly in this area of the country, but it also requires some minimum facilities.  Small lodges don’t work well, and there needs to be good meeting space, good A/V and internet infrastructure, and  catering capability.  And even if all this capability exists, there will not be meetings all the time and the rest of the time the costly capability will just sit unused, burning money.

Which leads to another inherent problem with government management of recreation — their labor force tends to be both expensive and, more importantly, inflexible.  One reason they cannot just shut down for the winter is that it begs the question, what do we do with all of our salaried staff?  One reason companies like mine can offer such large cost reductions without sacrificing service is that our labor force is enormously flexible.  I have mobile employees (in RV’s), some of whom want year-round work and some of who only want seasonal work.  This allows us to match staffing to demand better, so we don’t pay a 30 person staff in the winter to sit around looking at empty parks.

Oh, and I thought this was funny, from the same article:

“I agree with Will on the closing, and I’ll have to hear a lot of discussion on privatizing the golf courses before I could support that,” Cherry said. “If they’re privatized, it means a profit for someone. The state may have to make changes in procedures so that it earns the profit.”

A couple of thoughts.  First, of all the different kinds of public parks, is there any type with a more proven track record of successful private management than golf courses?

Second, God forbid anyone make a profit.  I am sure the state is losing money on the operation, so why do they care if someone makes a profit if their loss goes away and the golf course remains open to the public?

Third, this just shows lawmakers again talking without any knowledge of the subject.  All private management deals include rent payments back to the state, so whether the private entity makes money or not, the state is going to convert a current loss to a gain via rent payments.   In effect, private cost reductions and performance improvements result in additional surplus, and that surplus is split with the private company retaining some as profit and paying some out to the state as rent.  Win-win.

Keeping New York Parks Open

I did a video for a New York group on how public-private recreation partnerships work, and why they can help to keep state parks open.  While the presentation is nominally to a New York audience, the presentation could apply to any state.  The video is below, and also at this link.

More Support for Private Solutions to AZ Parks Budget Shortfall

From the Goldwater Institute:

The Goldwater Institute responded to recommendations that state parks be funded through a new license plate fee with a simple suggestion of its own: instead of raising taxes for parks, keep them under state ownership but let one or more private companies manage them.
Senator Barbara Leff wrote and won approval for Senate Bill 1349, which gives the Arizona Parks Board authority to immediately contract with a private company to run state parks. Despite an offer from a Phoenix-based company, the parks agency has shown little interest and even outright hostility to the idea.

As an alternative, local communities have been making extraordinary efforts to keep open parks they deem important to their local economies.While private contracting is not always simple, its benefits in this case are clear. Parks would stay open and the state budget would face less pressure. Unfortunately, the State Parks Board has shown little willingness so far to move on this important issue.

Alberta Considers Private Park Operations

From the Calgary Sun:

The solution, says Alberta Parks Minister Cindy Ady, is to open the park gates to private enterprise — allowing developers to build and operate campgrounds under licence.

“The policy hasn’t been completely nailed down yet, so I can’t say how it will work, but what we know is this: It could be anywhere in the province,” said Ady.

“If somebody can bring to us a solid plan, there are private campground opportunities.

“They would build it, they would run it.”

The private campground scheme is imminent — Ady said she plans to bring it forward in the fall, as part of her capital budget plans.

“I’m hoping within this year to have that policy work done, so we can at least tell people the rules of engagement,” she said.

The article raises, and actually addresses, one of the great mythologies of private park management — the whole “neon sign in front of Old Faithful” meme.

Images of neon signs and Seattle-based coffee chains may have wilderness lovers horrified, but Ady assures those who head to the woods to escape the rat race, that respite won’t change.

“It will absolutely be the same standards as now — any time we let anyone in on contract, we’d be very careful because they’re still on park land or crown land,” said Ady.

The Power of Incentives

I can pretty much guarantee that our company does not have this situation with our assets in our public recreation management operations:

City Controller Wendy Greuel released an audit today showing that various City departments could not locate hundreds of items purchased with taxpayer funds, and that hundreds of other items had been sitting unopened or unused for up to 7 years….

* Of 254 items that we attempted to locate, 115 were not where they should have been. While 56 items were ultimately found in the wrong location, 59 were unable to be located at a cost of $938,000.
—Some of the items that were never found included a video recorder purchased by ITA for almost $60,000.

* Departments are supposed to conduct a physical inventory of items every two years to maintain accurate physical inventories of equipment. ITA and Sanitation have not conducted a review in at least 5 years and Recreation and Parks has not conducted a review of all items in at least 7 years.

* ITA and Recreation and Parks have 138 items that were purchased at least 1 year ago, still in warehouses or staging areas. These items are worth $237,000, and some were purchased over 7 years ago.
—Some of the items not placed into service included 9 microwaves, 1 deep fryer and 2 television sets by the Recreation and Parks Department and various computer equipment by ITA.

Parks are closing around the country for lack of money.

Ignorance, or Knowing Misinformation

This comes from New Jersey:

As the Christie administration considers privatizing New Jersey’s state parks and forests in order to keep them open and run more efficiently in tough budget times, environmental groups say the public could lose access to the open spaces if private vendors or corporations move in.

“The [DEP] commissioner said they were going to keep parks open, but with those kinds of [budget] cuts I don’t know how they are going to be able to run programs or have services at our parks,” said Jeff Tittel, the executive director of the Sierra Club in New Jersey. “These lands were bought by the public for public use and when you start privatizing it can change the hold dynamic on how we use or visit our parks.”

Tittel said private operators would potentially be under no obligation to guarantee public access.

“There’s a difference between having outsiders come in and let’s say run a concession stand like hot dogs or kayaking and things like that, versus actually managing the parks because they are going to be managing for a profit,” he said. “What we’ve seen happen in other states is that services go down and fees go up, and public use gets pushed to the side.”

Again, we see someone hypothesizing harms from public-private partnerships in recreation without ever having actually, you know, checked to see how it works in practice.  In reality, well-managed public-private recreation partnerships almost never fulfill these fears, though I will say these are the standard bogeymen trotted out whenever the privatization concept is raised.   Most of these issues are addressed in this FAQ, but a few quick thoughts:

  • Our company has 30 recreation operations contracts.  We don’t have a single one that allows us to change services, facilities or fees without the written permission of the parks agency
  • In a number of states, including Arizona and California, we operate facilities side-by-side with public agencies and in nearly every case, the fees we charge for similar facilities are lower than those of the state agency.  For example, in Oak Creek Canyon, Arizona State Parks charges $20 per vehicle to park at Slide Rock Park while right next door we charge between $8 and $10 at US Forest Service parks.  In California, standard State Park camping fees have risen to $30 for a site without utilities, while we charge no camping fee for a similar site higher than $18 at any of the facilities we operate.
  • At the end of the day, our company can run facilities to the same quality level much less expensively than can the civil service bureaucracy of most states.  Many folks who only deal with public management are unused to thinking in terms of productivity increases, and so assume reduced costs can only be obtained with decreased services.  While this is true in government jobs dominated by public sector unions that resist productivity increases, it is not true of the private sector.

I have run the numbers on New Jersey parks, and run their facilities and revenues through our costing models, and there are a number that may soon be closed that we could easily keep open without public subsidies — ie operate them within current fees collected.  One false assumptions embodied in this piece may be a vision that privatization means complete takeover of the public parks organization. In fact, though, in public-private partnerships, the public sector retains many responsibilities, and is only privatizing operational tasks.  Here is a picture of the typical public-private partnership in recreation:

Talking Public-Private Recreation Partnerships in Virginia

Len Gilroy of the Reason Foundation has a good overview of the benefits of using private companies to help manage public recreation.

For cash-strapped states, concessions offer the opportunity to turn money-losing parks into revenue generating assets that can be leveraged to help keep other parks open and thriving. And the idea seems right at home in Virginia, a state that has for decades embraced the concept of public-private partnerships and privatization to deliver new highway capacity, mental health facilities, prisons and other vital public infrastructure.

It’s for all of these reasons that parks concessions seem like a no-brainer to consider as a viable and positive alternative to budget cuts, park closures, tax hikes and other sub-optimal policy choices. Even if policymakers believe that it is a core function of government to provide public recreation land and facilities, it does not then follow that government has to be the one to operate those facilities. The federal public land authorities have realized this, and it’s time for states to follow suit.

Public Testimony on Private Parks Management

I will be testifying in Pennsylvania in a hearing on public-private partnerships, with my 20 minutes on private parks management:

Tuesday, April 6th, 1:00 PM

Grove City College Hall of Arts and Letters, Sticht Auditorium

100 Campus Drive, Grove City

Topic:  Public Private Partnerships

Grove City Campus:   http://www.gcc.edu/Campus_Map.php

My presentation slides are here:  Keeping Parks Open with Private Management

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