Although most state park operations and management are run on a top-down, public sector delivery model, the private sector has long played a role in the operation of public recreation areas and parks. A “whole park” PPP promises tremendous benefits for the hundreds of millions of visitors to U.S. state parks every year.
Like much of America’s infrastructure, the state park system that once seemed inviolable desperately needs a new management approach to ensure its fiscal sustainability. Among the most compelling proposals is the use of whole park concessions: long-term public-private partnerships (PPPs) used for holistic park operations and implemented via performance-based contracts between the government agencies responsible for overseeing parks and recreation management companies.
The Whole park promise
Whole park concessions differ from the more traditional food/retail-style concessions in place in many parks today in various ways. Broadly speaking, public and private roles and responsibilities are as follows.
- Public ownership of the parks.
- Public oversight of strategy, planning, character, and facilities for each park.
- Public control over policy decisions, user fees, and facility and capital investment planning.
- Concessionaire is responsible for day-to-day park operations and maintenance functions, such as visitor services, routine maintenance and repairs, landscaping, waste services, and utility payments.
- Concessionaire operates (typically) a 5–10 year commercial lease contract with a possible role for private financing for capital investment, which would lengthen the contract to 15-20 years.
- Concessionaire collects gate fees to fund its operations and maintenance costs, including labor.
- Concessionaire pays state a competitively bid percentage of the gate revenues to the public agency as an annual lease payment, allowing the minimization or elimination of public subsidies.
Benefits of Park PPPs
The U.S. Forest Service (USFS) realized more than 25 years ago that while ecology and land preservation were core competencies for park agencies, running recreation and commercial enterprises was not. USFS then began rapidly expanding its use of whole park concessions, and the agency estimates that over half of its thousands of developed recreation areas (such as campgrounds and day use areas) nationally are now run under park operation PPPs.
In 2012, California became the first state to embrace park operation PPPs in an effort to prevent the closure of several parks during a fiscal crisis. Analysis of these experiences allows us to make the following inferences about the benefits of park operation PPPs.
Source: Adapted from Warren Meyer, Recreation Resource Management, Presentation to Arizona State University Symposium on the Private Management of Public Parks in Arizona, November 9, 2010.
Financial Self-Sufficiency in Park Operations
Unlike traditional park concessions, park operation PPPs don’t just add a few more dollars in concession fees to the state coffers. They change the entire cost structure of operating the park by transferring the operating costs to the concessionaire and therefore reducing or eliminating the need for public subsidy. This is achieved by requiring the concessionaire to pay a set percentage of the annual park revenues back to the public agency as rent for the land.
This transfer of operating costs has the important benefit of significantly mitigating the appropriation risk facing many parks authorities across the country, where parks and other non-vital infrastructure must yield to other core funding priorities in the state budget process. States still face costs not directly related to the operation of parks, such as the costs of owning land, maintaining the title, and contract management, which still may require state budget allocations.
Optimizing Staffing and Operations
Financial self-sufficiency is a major draw—made more compelling by the opportunity to optimize operations through whole park operation PPPs. The key lies in the ability for concessionaires to dramatically lower operating costs, primarily through a more efficient staffing model. The traditional public operational model relies on high cost, inflexible labor that is ill suited to meet the needs of parks.
For example, state park agencies typically hire full-time employees for year-round jobs, and these employees often have credentials that overqualify them for the job at hand. These employees also require costly public pensions and other post-employment benefits, like healthcare. However, this top-heavy staffing model is inconsistent with the seasonal nature of parks visitation, which requires seasonal labor to conduct straightforward tasks such as cleaning bathrooms and maintaining campsites.
Collective bargaining and state procurement rules exacerbate these challenges, and often drive up the costs of public park operation relative to those seen in the private sector.
The government can set quality and maintenance standards at its own discretion and hold the private company accountable to meet them through a performance-based PPP contract. Well-written PPP concession contracts enable (or in fact require) the private sector to provide unprecedented quality in park service delivery, while maintaining (and often expanding) public sector oversight.
PPPs improve accountability over the status quo. State-run parks typically suffer from a conflict of interest because the state is responsible for both service delivery and oversight. By separating these functions, the private sector can specialize on innovating service delivery improvements, while the public sector can provide more effective regulation through structuring and overseeing compliance with the PPP contract.
Enhanced Risk Management
One of the most powerful and least recognized benefits of PPPs lies in the ability to use them to transfer major (and often hidden) financial and operational risks from the public sector—and thus, taxpayers—to the private sector. With regard to state park systems, PPPs offer an opportunity to better handle the full spectrum of associated risks, including revenue/demand, operational, legal/liability, and project delivery.
Tapping Private Capital for Park Improvements
PPPs can also mobilize private financing to upgrade or modernize facilities at a time when public funding is constrained by state fiscal challenges. For example, in recent years California’s state parks lacked the funds to complete a redevelopment project in one of its parks—it ran out of funding in the middle of the project. The parks agency modified an existing “traditional” concession in this park to extend the term of the contract out to 20 years, and expand the scope to include completion of the project. This allowed the concessionaire to get financing to develop the new loop, purchase and install the cabins, and deliver a project that otherwise would not have been completed by the state on its own.
With the right partners, a whole park concession accomplishes exactly what its name implies: maintaining America’s state parks as intact, natural resources, accessible and useful for generations to come.
This piece was derived from a larger study written for the Conservation Leadership Council (January 2013).