Coyote Blog

The campgrounds we operate for the US Forest Service in Wisconsin does not seem quite ready to open

For those who may be interested, we are having a one-day conference on public-private partnerships for park operations on November 7 in Reno, Nevada.  The US Forest Service and those of us in the business have gotten a lot of inquiries from recreation agencies over the last year or so.  These folks are trying to keep parks open despite declining budgets.

The USFS figured out a way to do this over 30 years ago, and only now are other agencies starting to copy the model  (California State Parks just started using it this year, for example).  The USFS, like most agencies, charges a fee for the public to visit certain parks or to use campgrounds.  They found that they could not cover their high operating costs with just these user fees, and so had to use a lot of general fund money to keep the parks open.  Many complain that public recreation user fees are too high, but typically they cover only about half the agency's costs to run the park.  When general fund money started to go away, the USFS faced park closures, exactly the situation today in many state and local parks agencies.

The USFS found that private operators with a lower cost position and more flexibility could keep these parks open using just the user fees, and in fact actually pay the USFS some rent.  So instead of having to subsidize the park's operation with tax money, the parks began to generate funds for the USFS.

It took decades to get this right.  The USFS made mistakes in how they grouped parks into contracts, how they wrote the contracts, and how they did oversight.  The private companies made operating mistakes and some failed financially at awkward times, since when this program started there did not exist a pool of experienced operators.  But over the years, many of these problems have been worked out, and most privately-run sites operate to a standard at least as high as publicly-run parks.  Here in Arizona, three of the top five highest-rated public campgrounds are operated by private companies in the USFS program.

At this conference, both private operators and agency people experienced with this model will describe how it works as well as years of hard-won lessons learned.

The conference is free to most government agency officials, academics, and media and we have obtained a really inexpensive $49 hotel rate  (since by definition the agencies most interested in the model don't have much money).   The web site that describes the agenda and logistics is here.  Readers of this site who don't fit one of these categories but would still like to attend can email me at the link in the above site and I will get you in.

The trade group that represents companies like mine that privately operate public parks is looking for a college student to work part-time for us, either this summer or into the fall.  The ideal committment is 20 hours a week for 6-10 weeks but we could accommodate fewer hours for a longer span of time.  We are willing to pay in the ballpark of $13 an hour plus expenses (phone and Internet bills, etc).  We anticipate the candidate would work from his or her own home (or dorm) and already has access to a computer and Internet connection as well as a word processing software of some sort.

Job responsibilities would include:

• Working with our members to accumulate and organize our intellectual property vis a vis this business.  This includes marketing material, regulatory and statutory information, how-to guides, etc.
• Working with our partner agencies, like the US Forest Service, to get statistics on our members' scope  (e.g. we don't even know how many US Forest Service parks are run privately) and to synthesize these into marketing materials

The candidate need not have any specific knowledge of our business, and we have experts in the organization that can supply contacts and information.  Being an all-volunteer organization, we need someone with the time and the focus to gather and organize the information we have.  The candidate will have direct contact with the CEO's of most of the key players in this industry as well as with senior staff officers of a number of public recreation and lands agencies.    We want someone who is bright and unafraid to approach, even pester, strangers for information.  Quantitative skills and/or economics or business-related studies are a plus but are not required.  Experience with web tools such as content management systems like WordPress also a plus.

If someone is interested, have them email me at warren -at- camprrm *dot* com or hit the email link above.

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.

From a commenter at Instapundit

It seems to me that whenever there is a threat of a government shutdown, it’s portrayed as just this side of a tsunami-level disaster. When government workers – teachers, sanitation workers, etc – go on strike, it’s portrayed as the middle-class worker sticking up for himself. Why is it that a government shut-down caused by a desire to spend less money is different than a government shutdown caused by workers failing to do their jobs – isn’t the effect the same?

Its been a long day here.  As many of your know, my company privately operates public recreation facilities.  We operate nearly 150 campgrounds and other parks on US Forest Service land, helping to reduce the cost of these facilities and keep them open despite declining budgets.

Because we pay all the expenses for the campgrounds and do not accept any government money (we operate solely using the gate fees paid by visitors), keeping these facilities open is not at all dependent on government appropriations.  As such, the facilities we operate have never been subject to closure in past government shut downs.  The Grand Canyon has to close because it is operated with government employees, but the public recreation areas we operate do not.

Or at least that was the position of the Forest Service until last night.  However, this morning, the USFS began to take the position we had to close, despite the fact that the law does not require it.  Through most of the day I have had to be on the phone pushing back against this bad idea.

At first, I thought it was some sort of scheme to purposefully make the cost of the shutdown worse, by shutting down public recreation facilities that did not need to be shut down.  However, I have come to understand that this is likely driven by a need for "consistency."  Senior administration officials were concerned it would be confusing to the public if the National Park Service was totally closed but a substantial number of US Forest Service sites remained open.  I have spent a lot of time trying to convince folks that it was dumb to close literally thousands of the most popular recreation sites in the country merely in the name of mindless consistency.

Hopefully we will win the day, and we are starting to see some evidence the Forest Service will see it our way, and allow private operators who do not take Federal money or use Federal employees to remain open serving the public during the busy Easter week.

Some Federal agencies are able to maintain their mission over many decades without much change from administrations that come and go.  The National Park Service is a good example.

Other agencies, in the desire to get funding, constantly recast their mission based on whatever flavor of the month is hot.  Here was one example I cited before, from the NIH, which, amazingly, managed to recraft its mission in the context of climate change to make itself more immediately relevent to the Obama folks:

Remember, the point of this all is not science, but funding.  This is basically a glossy budget presentation, probably cranked out by some grad students over some beers, tasked to come up with scary but marginally plausible links between health issues and climate change.   Obama has said that climate is really, really important to him.  He has frozen a lot of agency budgets, and told them new money is only for programs that supports his major initiatives, like climate change.  So, every agency says that their every problem is due to climate change, just as every agency under Bush said that they were critical to fighting terrorism.  This document is the NIH salvo to get climate change money, not actual science.

I have worked with the US Forest Service for years as a private operator of many of their recreation sites (for whatever faults they might have, they have been an early innovator on privatization -- without it, they could never have kept all their recreation sites open given their budget constraints).  The USFS has always had a mission challenge.  They are specifically tasked with balancing five missions -- Environmental preservation, timber, minerals extraction, recreation, and ... I can't remember the other one.  Grazing maybe.

In practice, this has meant of late that whatever interest groups among these five who are willing to spend the most time in court are able to shape the USFS mission in their direction, and in practice this has meant environmental groups.  As a result, Timber, the main source of USFS funding (from private timber fees) has pretty much been killed in the USFS, creating a funding crisis.  With their very logical timber mission gone, the only thing the USFS is unique at is recreation, as it is (surprising to many people) the largest recreation organization in the world.  However, this seems to be next on the environmentalists' target list.

So I suppose it is no surprise that the US Forest Service has decided to abandon any sense of long-term mission and simply glom onto whatever is the pet issue of the current administration.  For this year, they have latched onto climate:

The Forest Service has issued a national road map for responding to climate change, along with a performance scorecard to measure how well each individual forest implements the strategy.The new blueprint outlines a series of short-term initiatives and longer-term projects for field units to address climate impacts on the country's forests and grasslands.

"A changing global climate brings increased uncertainties to the conservation of our natural resources," Agriculture Secretary Tom Vilsack said in a statement. "The new roadmap and scorecard system will help the Forest Service play a leadership role in responding to a changing climate and ensure that our national forests and grasslands continue to provide a wide range of benefits to all Americans."

The last sentence could be rewritten as "we will continue to do everything we have done in the past but relabel as much as we can as having to do with climate change."

I can only speak to the recreation component, but this is the largest recreation organization in the world.  In some sense this new mission is roughly equivalent to the National Park Service hypothetically announcing in the Bush administration that it was going to focus on the war on terror.  In many areas of the USFS they, at their own admission, have years or decades of deferred maintenance.  From watching them at close range, they very clearly don't have the resources to handle the missions they have already taken on, and so it is going to dedicate its resources to this:

Immediate assessment actions include providing basic and applied science to help managers respond to climate change, conducting workshops, utilizing national monitoring networks, furnishing more predictive information, developing vulnerability assessments, tailoring monitoring and aligning service policy and direction.

Longer-term assessment will focus on expanding the agency's capacity for assessing the social impacts of climate change, implementing a genetic resources conservation strategy and fortifying internal climate change partnerships.

To the extent that some of this means "monitor forest health," I thought the organization was already doing that.  As to the value of the rest of this stuff?  Forgetting for a minute if the work should even be undertaken, under what possible allocation of expertise in the Federal bureaucracy does "assessing the social impacts of climate change" fall under the purview of the Forest Service?

Due to budget cuts, Arizona State Parks is closing 13 of its 22 state parks.  This last week, I have been making the rounds of the state government, from the state legislature to the head of Arizona State Parks, with a proposal to keep the 7 largest of these closed parks open, and pay the state money for the privilege.  Unfortunately, we have had only mixed success with a proposal that seems to me to be a win-win for everyone.  Our local newspaper editorialized against my proposal, without even knowing the details  (my response here).  So in this post, I am going to give the details of our proposal, and solicit your feedback, especially those of you in Arizona.  All I ask is that you read the whole thing, and not just leap into the comments section having just read and reacted to (positive or negative) this first paragraph about private operation of public parks.

Background

Our company, Recreation Resource Management (RRM), is over 20 year old, and we operate over a hundred public parks under concession agreement for the US Forest Service, the National Park Service, the Tennessee Valley Authority, California State Parks, and many others.  Traditionally, park concessions used to be limited to private companies running the gift shop or the bike rental inside a park.  And we do some of that (for example we run the store and marina at Slide Rock and Patagonia Lake State parks).  But our preferred niche has always been to run entire parks on a turnkey basis.  We run a huge variety of facilities that largely parallel anything we might find in the Arizona State Parks system -- including campgrounds, day use and picnic areas, boat ramps, hiking trails, wilderness areas and historic buildings.  The largest parks we run are twice as busy as Slide Rock or Lake Havasu and four times as busy as any of the parks we are proposing to manage.  We currently run parks today literally right beside some of these Arizona State parks.  All of this is to say that the parks in Arizona are absolutely normal and typical resources that we manage.

A concession contract works much like a commercial lease.  We sign a contract allowing us to run the park for profit, and then pay the state a rent in the form of a percentage of fee revenues.  The typical operating agreement includes over 100 pages of standards we must conform to, from fee collection to uniforms to customer service to bathroom cleaning frequency to operating hours.

Our Proposal

At all of my meetings this week I made three offers, each of which we were willing to commit to immediately  (we could actually be up and running with about 21 days notice):

1. RRM offered to keep some or all of six parks open out of thirteen on the current closure list.  These parks are Alamo Lake, Roper Lake, Tonto Natural Bridge, Lost Dutchman, Picacho Peak and Red Rocks (park but not the environmental center).  Not only could these stay open, but we could pay rent as a percentage of fee revenues to the state, money that could be used to keep other operations open.  While these parks represent about half of the closure list by number, by visitation they represent well over 90% of the closure list.  Combined these parks had a net operating loss of $659,000 to ASP, which we propose to turn into a net gain for the parks organization.
2. RRM offered to operate five parks that are currently slated to stay open but where we could pay rents that are higher than the net revenue figure ASP showed for FY2009.  These parks are Patagonia Lake, Buckskin Mountain, Dead Horse Ranch, Fool Hollow and Cattail Cove.  Combined, this group of parks lost money for ASP in 2009 which we propose to turn into a solid net gain.
3. While we would need to do more study, RRM suggested it might take on some of the smaller, money-losing parks beyond those mentioned above if they were packaged in a contract with some of the other parks listed above

To avoid problems with the procurement process, we offered to take as short as a 1-year contract to give ASP time to prepare a longer-term bid process.  We also agreed to maintain all current park fees for the next year without change (in contrast to ASP current plans to raise fees), and agreed that no fee could be changed without ASP approval.  The only help we asked for was

• We perform rules enforcement, but we need law enforcement backup form time to time
• We perform routine maintenance and keep the park safe and attractive, but many of these parks have substantial deferred maintenance problems that we cannot take on with only a 1-year contract  (but would be willing to invest capital to repair under a longer term arrangement)

And if the ability to keep almost half the parks slated for closure open was not enough of a value proposition, we proposed one additional benefit.  Any parks that are put under private concession management immediately cease to be a political football.  For years, parks organizations have closed and opened parks in a game of chicken with legislators, with the public as the victim.  Parks under private concession management no longer are subject to such pressures, as they are off the budget.  Back in the 1990's, when the new Republican Congress squared off with President Clinton over the budget, the government was shut down for a while, including all federal recreation facilities -- EXCEPT those under private concession management.  We got calls from the media saying, why are you open?  To which we replied -- hey, you have now discovered one benefit of private concession management -- the parks we manage are no longer political pawns.

Reactions

So far we have had really good and positive reactions from Arizona legislators  (I have not been able to see any of the Governor's staff).

The reaction from Arizona State Parks has been more muted.  While they are publicly open to all proposals, in reality this is the absolute last thing most of their organization wants to do  (you should see the body language in some of our meetings, it is a lot like trying to sell beer at a Baptist picnic).  They have not said so explicitly, but from long history with this and other parks organizations I can guess at some of the issues they have:

1. Distrust of and distaste for private management runs deep in the DNA of the organization.  Many join parks with a sense of mission, seeing unique value to public ownership of parks and lands.  I attempt to explain that this value still exists, that what they are turning over is operations, not management and control, but I don't get very far.  I try hard to give the new management of Arizona State Parks a clean slate, but I can't help but be affected by something I saw their previous director say.  Back in about 2004 we hosted a breakfast at a convention of state parks directors up in Michigan, I believe.  Someone must have forgotten to throw us out of the room, because we witnessed the head of Arizona State Parks stand up in front of his peers and demand that they all hold the line against private management as one of their highest priorities.  It was made clear that state organizations that stepped out of line would incur the wrath of other states.  This summer we participated in a series of meetings in California called by Ruth Coleman, who is the head of the parks organization there and someone I admire.  She was trying to break the organization out of its old culture, but it was very clear in roundtable discussions that the rank and file would rather see the parks closed to the public than kept open using private concession management.
2. I mentioned earlier that private management brings a benefit to the public of keeping the parks from being a political football.  But the parks organization feels like it needs that football.  Without the threat of park closures, it feels like its budget will be gutted like a fish.  And, now that its budget has been gutted, it still holds out hope its money will be restored and needs the park closures to keep up the pressure.  As long as there is even the slightest hope of budget restoration, a hope which I am pretty sure will "spring eternal," my proposal, no matter how much it makes sense for the people of Arizona, will never be adopted.

Again, these are just guesses.  Renee Bahl of Arizona State Parks has told me they are open to all new ideas, and I will take her at her word.

Libertarian Concerns

Those of you who know me to be a libertarian might wonder how I function in this environment.  The answer is, "with difficulty."  I have a strong philosophic passion to bring quality private management to public services, and this opportunity is a good one.  And I am not adverse to making money while doing so.  But I am adverse to rent-seeking, and there is admittedly a thin line between trying to make positive change and rent-seeking in this case.

I generally avoid this by insisting on short initial contracts (in this case 1 year) to prove out the concept and to allow time for the public agency to figure out how to put this beast through a procurement process that probably was not well designed for this type of thing.   This is what I did when the US Forest Service approached us with an idea to bring private management to the snow play area at Wing Mountain near Flagstaff.  We took it on a one-year contract (which grew to 2 years) and then the contract went out for public bid  - which we won - for 10 years.  We are very good at what we do and are not at all afraid to compete.  The only time I will not compete is when I perceive someone has a political connection that gives them an inside track.  After two or three losses in Florida counties to a company with no experience but a brother-in-law on the County commission, I realized it was just a waste of time to bid on these situations.

Conclusion

Please give your reactions and concerns in the comment section.  For those who disagree with private management of public resources, I will be honest and say you are unlikely to change my mind, as I have dedicated all my time and my life savings to the proposition.  But you may help me better understand and tailor our service to address public concerns.  I will try to keep the FAQ below updated based on what I am seeing in the comments.  If you are in Arizona and know someone you think I should be talking to, drop me an email at the link above.

FAQ

Does your company take ownership of the park? No.  The parks and all the facilities remain the property of Arizona State Parks.  We merely sign an operating lease, with strict rules, wherein we operate the park, keep the fees paid by the public, and pay the state a "rent" based on a percentage of the fee collections.  Even when we invest in facilities, like this store building and cabins, they become the property of the public at the end of the contract.

How can the state afford to pay you if they have no budget? We are not paid by the state, and receive no subsidy.  100% of our revenue is from fees paid by visitors to the park we operate.  If we don't run a good operation that is attractive to visitors, we don' t make any money.

Doesn't the state lose out if you keep all the fees? No.  Mainly because in all the parks we have proposed to take over, the state has net operating losses of up to $200,000 or more a year.  By taking over the park, their losses go away AND they receive extra money in the form of rents we pay.  We are able to do so because we have developed efficient processes for managing campgrounds and have a flexible and dedicated work force.

Are you going to build condos and a McDonald's? No.  The fact that this is such a common question is amazing to me, as we operate over 100 parks in this manner across the country and you would not be able to tell the difference between the facilities we manage and any other public park.  Under the terms of our operating contract, we cannot change fees, facilities, operating hours, or even cut down a tree without written approval form the parks organization.

Are you going to just jack up fees? No.  We have committed in our offers to keep fees flat for the next year.  We cannot raise fees without state approval, and we work hard to keep public recreation affordable.  Last year was a very good year for us because, in a recession, our low-cost recreation options gave many families on a budget a chance to have a quality recreation experience.

Why just a one year contract? We would actually prefer a longer contract, as this allows us to actually make approved capital improvements to parks (for example, we have installed many cabins in public parks we operate).  However, we have offered to take these under an initial contract that is just long enough to allow longer-term contracts to be fairly offered on a competitive bid basis.

Maybe no one trusts you because you are small and unproven? Well, perhaps.  But last year our total fee revenue was nearly $11 million, making us slightly larger than the Arizona State Parks system.  We have a proven record with decades of positive performance reviews from government agencies around the country.   For example, for those of you form Arizona, if you have stayed at a US Forest Service developed campground near Flagstaff, Sedona, Payson, or Tucson,  or sledded at Wing Mountain, you probably have stayed in a facility we operated.  We already operate two concessions in Arizona State Parks, and have a great record working with the organization.

For the last year, I have watched in total frustration as Arizona State Parks threaten closure after closure to fix budget problems.  This is, of course, when they are not begging for new taxes to be dedicated to them.

For those who don't know, my company is in the business of privatizing public recreation.  At the moment, we are so swamped with requests from public authorities to keep parks open that I don't really bother going out and seeking new business.  But it is frustrating for me as an Arizona resident to know that many of these parks could remain open  (and user fees kept reasonable) under some sort of private concession management.

I know this may seem weird to you given that I work so much with governments, but I have no idea how to lobby government.  Unlike, say, John Murtha related enterprises, we get all the business we need simply responding to inquiries from public authorities who need help and submitting proposals in response to RFP's**.  In fact, if I had to lobby to keep the business running I would shut it down first.

So I have had no idea how to approach those involved in the Arizona parks debate to tell them there are alternatives.   I get frustrated each day as I see folks in the parks organization tell the media that private management would not work because none of their parks would make good business opportunities, when I know for a fact this is not true  (I operate stores in two of the parks and am familiar with several others, and have sent them unsolicited management proposals to run these parks -- again, I am not necessarily seeking the business, but I want to give the lie to the statement that private companies would not be interested).  Interestingly, two of the largest private recreation managers in the country are located in the Phoenix area, and neither of us have ever gotten a media call on this issue.

Of course, I am not completely naive.  I know there is a tried and true kabuki dance here where parks departments threaten to close down the Washington Monument in a bid for public sympathy that will either deflect budget cuts or spur new taxes.  I also know that state parks directors have sworn a blood oath together never to let private concessionaires run whole parks, even if the parks have to be shut down  (our company runs whole parks for folks like the US Forest Service and TVA, but most state parks only let concessionaires run the store or marina, not the whole park).  I know this anti-private law of omerta exists, because our company once sponsored a breakfast at a national state parks directors conference and we were in the room (unknown to the speakers) when this no-private-company discussion was held.

I have called and sent letters to nearly everyone in the state, but have not gotten any response.  To assuage my frustration that no one is even reading them, I will reprint one here just to say that someone, even if it is a reader in Australia, actually looked at it:

Janice K. Brewer, Governor;   Reese Woodling, Chair, Arizona State Parks Board; Maria Baier, State Lands Commissioner; Rene Bahl, Arizona State Parks Director

Many of the state parks currently proposed for closure could easily be kept open to the public under private concession management.  I run one of the larger operators of public recreation concessions in the country, and our company is the current store and marina concessionaire at Patagonia Lake State Park and Slide Rock State Park.  I know from experience both with public recreation in general as well as with Arizona State Parks that these parks (as well as many other in the ASP system) could easily be operated by a company like ours, retaining high quality recreation options for the public while converting a liability for the state into a financial asset.

For years we have urged the management of Arizona State Parks to consider private operations of more than just the stores in these parks.  For example, we operate whole parks turnkey for the US Forest Service, the National Forest Service, the Tennessee Valley Authority, the United Water Conservation District (CA), and the Lower Colorado River Authority (TX).  By operating the park to high quality standards but at a lower cost, we are able to make a profit for ourselves and pay an annual rental fee (usually contracted as a percentage of sales) to the government authority that owns the park.

I find it tremendously frustrating that the private concession option has not even been put on the table for discussion, or gets sloughed off with tired clichés such as "private companies would just put up a McDonalds."  When we operate any public park, we operate under a strict and detailed operating agreement, typically running over 100 pages, that sets procedures for everything from bathroom cleaning frequency to approvals for fee changes.  We operate busy day use facilities such as Grasshopper Point and Crescent Moon along Oak Creek in Sedona side by side with Arizona State Parks at Slide Rock, and we maintain these facilities in at least as good a condition, while keeping fees to $8 (vs. $20 at Slide Rock) and still paying rent to the USFS for the concession.

I am not looking for any special consideration for our company.  I know such contracts must be competitively bid and we don't shy away from such competition.  However, I know that the management of Arizona State Parks has, for whatever reason, been resistant to the idea of private concession operations of entire parks, and I was afraid that this option may not have been presented to you as a viable alternative to closing these facilities.

I would be happy to discuss private concession management any time with you or your staff.

Sincerely,

Warren Meyer
President

Postscript: Interestingly, the most open state parks director to these ideas was Ruth Coleman in California.  Contrary to what one might expect, California State Parks is actually one of the more innovative and creative parks organizations out there in terms of privatizing certain functions and seeking private capital  (Texas, on the other hand, is one of the worst --  go figure).

Ms. Coleman was very supportive of our making investments in California Parks (example:  Cabins here) where no other park system has been so open.  She was nice enough to allow our company to sit on a panel of folks looking at potential solutions to the California Parks budget issues.  But her organization was openly hostile to any private participation, and essentially said they would rather see parks closed than remain open under private management.   For example, here was probably the most supportive comment we got:  "Well, I guess I could accept some private companies in the parks as long as we didn't allow them to make a profit."  Again, that was the least hostile statement.

**Footnote: The typical lifecycle of this business is that a public agency runs to us begging to take something over to keep it open.  We do so on a quickly negotiated contract, and then find ourselves spending a ton of money to fix all the deferred maintenance problems left by the public agency.   About when we finally get the place cleaned up and public trust restored and finally have the prospect to make a little money at the location, the public agency decides it is time to seek competitive bids.  Everyone who refused run the place when it was a mess now come out of the woodwork to bid on running the facility now that its fixed up, several of whom seem to have oddly close relationships with senior officials of the public agency.  We bid, some of which we win and some of which we lose.  If we win, we get to enjoy the fruits of our labor.  If we lose, we shrug and try again.

The US Forest Service is using a million dollars of its stimulus money to ... fix broken windows! How appropriate.  But these are not any broken windows -- these are energy inefficient windows for a visitor center that was closed two years ago and for which no budget exists now or in the future to reopen.   Beyond the nuttiness of building a multi-million dollar visitor center, then closing it only a few years after it was built, and then spending a million dollars on its abandoned carcass, no one was available to explain how energy efficient windows will save money in a building that shouldn't be using any energy any more.  Remember, for this spending to truly be stimulative, the money has to be spent more productively than it would have been in whatever private hands it was in before the government took it.

But even forget the stimulus question and just consider the issue of resource allocation.   I work on or near US Forest Service lands in many parts of the country, and know that their infrastructure is falling apart.  Congress loves to appropriate money for new facilities (like shiny new visitor centers), but never wants to appropriate money for capital maintenance and replacements of existing facilities.  So there are plenty of needs for an injection of $274 million in capital improvement money.  And I know that the USFS has had teams of people working for 6 months on their highest priorities.  And after all that work, they allocated  almost a half percent of their funds on upgrading windows in an abandoned building?

Postscript: I have vowed not to write about the US Forest Service because I interact with them so much and such interactions would not be improved by my dissing on them online [I am in the business of privitizing the mangement of public recreation and am constantly working to convince the USFS and other recreation providers to entrust more to private companies.  One thing many people don't know -- the USFS is by far the largest public recreation provider in the world, far larger than the National Park Service or the largest state park systems].  However, I feel on safe ground here, as I think virtually every frontline USFS employee I know would agree with this post and be equally angry.  In recreation at least, this is an organization that begs and pleads to get a few table scraps left over after the National Park Service is done eating, and it is crazy that they spend the few scraps they get this poorly.

This is welcome news for those of us who do business on US Forest Service lands, but pretty surprising coming from the 9th Circuit:

Judges aren't professional land managers.

The Ninth Circuit Court of Appeals acknowledged as much July 2, after
spending the past few years micromanaging the Forest Service in a
series of court decisions that forest industry groups called
"increasingly aberrant."

In a landmark ruling July 2, the Ninth acknowledged that it erred in
its interpretation of a key environmental law and botched Mineral
County's post-burn case.

"We misconstrued what the NFMA (National Forest Management Act)
requires of the Forest Service," a panel of 11 judges admitted in a
ruling released July 2. "We made three key errors in [the post-burn
case]...Today, we correct those errors."

The
ruling in "Lands Council v. McNair," involving an Idaho project,
overturned a 2-1 decision from 2005 in "Ecology Center v. Austin."
McNair and Austin are the forest supervisors for the Idaho Panhandle
and Lolo national forests, respectively.

The dramatic ruling concluded by suggesting that the Ninth should weigh
other public interests in the future, not just claims of potential
environmental damage.

"Though preserving environmental resources is certainly in the public's
interest, the [Idaho Panhandle] Project benefits the public's interest
in a variety of other ways," the ruling stated. "According to the
Forest Service, the Project will decrease the risk of catastrophic
fire, insect infestation, and disease, and further the public's
interest in aiding the struggling local economy and preventing job
loss."

The US Forest Service's mission is a mixed bag, requiring it to balance mining, timber harvesting, recreation, and environmental preservation on its lands.  Such a mixed mission is virtually doomed to failure in today's political climate.  This virtually impossible balancing act has been made more difficult with the recent explosion of lawsuits from environmental groups all attempting to narrow the USFS mission to preservation alone, to the exclusion of other missions.  The 9th Circuit has to date been a leading facilitator of this process of placing preservation ahead of all other goals, in direct contradiction of the will of Congress in any number of pieces of legislation.

What follows is by no means the worst excess of our Congress.  But it is an interesting demonstration of how Congress attempts to disguise legislation that is intended to help just one important contituent.  The program looks moderately innocuous:

[T]his year's farm bill contains a special-interest provision you've
probably never heard of "” the Qualified Forestry Bonds program. This
provides federally funded tax-credit bonds for forest purchases that
meet the following four criteria:

The forest must be adjacent to U.S. Forest Service Land;

Half of the parcel must be turned over to the U.S. Forest Service;

It must include at least 40,000 total acres; and

It must be subject to a "native fish habitat conservation plan approved by the United States Fish and Wildlife Service."

Well, it looks like it might be some land acquisition scheme by the US Forest Service, though by my observation they really aren't staffed or resourced to manage the land they already have.

But here is the truth of it:

But this farm-bill provision offers a lesson on how things are
sometimes done in Washington. Only one parcel of land in the entire
United States meets the criteria set for the Qualified Forestry Bonds
program. You see, the U.S. Fish and Wildlife Service has approved
exactly one "Native Fish Habitat Conservation Plan,"
covering a 1.6-million-acre parcel that reaches from western Montana
into eastern Washington State. And that parcel is owned by the Plum
Creek Timber Company, the single largest private landowner in the
United States.

Arizona has always lacked a managed snow play area.  In the past, when the snow first flies in Flagstaff, everyone in Phoenix would hop in the car and sled any place they could find, even some downright dangerous spots on Interstate overpasses. 

After a year of work, we have opened the Wing Mountain Snow Play Area, just north of Flagstaff, Arizona.  We have a huge, managed parking lot, portable bathrooms, and concessions which include hot chocolate and sled sales.  If you live in Arizona, come and visit us this winter.

Update:  I think the season is going well, and we have good snow.  We had an enormous number of visitors on Christmas day, more than we could ever have predicted, and I apologize if anyone was not able to get in and play.  However, that day was an anomaly, and most days we have plenty of space to park and play.

To the bathroom question, we only just got the permit to run this facility from the US Forest Service a few weeks ago, so yes the bathrooms are just porta-john types.  Once we have a little time with the facility, we will work for a more permanent solution.   However, last year before we took over the facility there was only Mother Nature.

Running for-fee campgrounds on public lands often gets us into some controversy.  For example, many people wonder, sometimes in a fairly excitable manner, why they have to pay for camping on public lands when they have already paid their taxes.  The simple answer to this is that Congress and administrations of all flavors have consistently ruled for years that fees rather than taxes should support developed campgrounds.  Read this post for more, or call your Congressman if you don't agree.  Also, here is my company's FAQ on camping fees and private companies operating on public lands.

However, there ARE many free camping opportunities on public lands, but because of Forest Service terminology, these are sometimes missed by the public.  In most cases, when the Forest Service has a named campground, it requires a fee because it has a number of minimum features for the facility:

• Graded, and sometimes paved, roads and spurs
• Bathrooms, and sometimes showers
• Picnic table, tent pad, and fire ring / grill at each site
• On-site host / security to enforce rules (e.g. quite time)
• On-site operator with property and liability insurance
• Water supply that is frequently tested and treated when necessary
• Hazard tree removal
• Trash and (for campgrounds not on a sewer system) sewage removal
• Leaf blowing from trails and roads, site raking, painting, etc.

This stuff does cost money, and so the typical campground we run charges $12-14 a night, with 50% off for Golden Access patrons (i.e. senior citizens).  Heck, the insurance alone costs about $1.50 per night's stay, thanks to our friends in the tort bar.

However, most National Forests offer what is called dispersed camping.  This is camping out in the wilderness, without any amenities, and, at least in most cases, is totally free.  Most of these camping areas don't have names, just locations and boundaries.   Expect to give up all of the above amenities, and be ready to pack your trash out, but you can still pitch your tent out in nature without charge.  And in many of these locations, you can get far away from other campers.  Just call the local ranger district (contact info here) and ask them for information on dispersed camping.

One proviso - the biggest problem with these dispersed, non-hosted areas is, if they are heavily used, they can be a worse experience than the paid campgrounds.  They can accumulate trash from thoughtless patrons, and they can get very rowdy.  Dispersed campgrounds attract the best of campers - those truly trying to get a natural experience; and the worst of campers - those who don't want to follow rules, don't clean up after themselves, and who don't want to shut down their loud partying just because it is two in the morning.  Many people who initially opposed paid camping are now big believers, since they have learned to value campgrounds with rules and security after a few late nights listening to loud generators and drunken parties.  Talk to the ranger district to know what you are getting into at a particular site.

Sometimes entrepreneurs are successful enough to buy themselves sexy toys:  It may just be a nice pool table for the office, or it might be that new Gulfstream jet bought with the IPO proceeds.  But little did I know that entrepreneurial success would allow me to buy this beauty (click to enlarge):

This septic tank truck can really haul a load, carrying over 3800 gallons of, uh, poop.

We have a new facility at Pyramid Lake  we run in LA County, where, due to its location, all the bathrooms run into series of underground holding tanks.  At some point in the past, someone converted all the bathrooms into flush toilets, which in this area makes for a real waste of water and creates a lot of liquid waste we have to pump out and dispose of, at the cost of over $80,000 a year.  This truck is the intermediate solution, letting us cut our pumpong costs in half.  The long-term solution we are working with the US Forest Service on is to replace the bathrooms with a great composting technology from Bio-Sun, which will cut the waste and water use both to near zero.

One of my company's primary businesses is to operate National Forest campgrounds.  We have been told that starting immediately, and for an unspecified period of time, many of the campgrounds in the US Forest Service in East Texas, Louisiana, and Mississippi will be waiving camping fees for the foreseeable future.  We have been told that anyone can camp for free, and that they do not need to prove they are a hurricane refugee, nor do they even have to be from one of the affected states, to get the free camping.  The Texas Campgrounds we operate are now free to campers, but we have been instructed to still charge fees for day use and for purchases (such as for firewood).  The number of states affected may be larger than just these three, but so far the campgrounds we operate in Kentucky, Florida, and New Mexico are still charging fees.  Update:  campgrounds in Alabama, Arkansas and Oklahoma are also included, see below.

Subsidizing camping for refugees makes sense, though I am not sure why the Feds are subsidizing camping for everyone, but I guess they despaired of coming up with a fair way to separate homeless refugees from regular campers, so they made it free to everyone.  I have not been instructed whether the usual 14-day stay limit enforced by the Forest Service is still in effect, but I will assume it is until informed otherwise.  The 14-day stay limit has also been waived.

Update:  OK, here is the release:

FOREST SERVICE WAIVES CAMPGROUND FEES FOR HURRICANE KATRINA SURVIVORS

Washington, Sept.3, 2005 - The USDA Forest Service is taking another
step to assist survivors of Hurricane Katrina by temporarily rescinding
the fee requirement for campgrounds and the 14-day stay limit for
camping on some National Forest System lands in the Southern Region.
The normal fee range is $4.00 to $25.00 depending on the location.

The forests offering free camping include the Kisatchie National Forest
in Louisiana, the National Forests of Alabama, the Ozark-St. Francis
National Forest in Arkansas, the Ouachita National Forest in Arkansas
and Oklahoma and the National Forests and Grasslands of Texas. In all,
106 campgrounds are open without charge to victims of Hurricane Katrina
as they transition through these first weeks of the disaster.

Per comment below, an update on free camping opportunities here.

Technorati Tags:  Katrina, Camping, Recreation

I have written a number of times about bureaucratic hellhole and most bureaucratic county Mono County, California.

Today, they confirmed by mail that my 11 campgrounds, all within 3 miles of each other and managed under a single contract as a single complex with the US Forest Service, now need to be registered separately with 11 tax ID's and 11 separate sales tax reports.  I must fill in the same detailed application 11 times, and each application has 3 pages plus 3 carbons for a total of 66 pages of information.  So, in order to collect exactly the same amount of tax that I have been collecting on exactly the same campgrounds for the last several years, Mono County needs 66 pages of paperwork, and apparently needs these same 66 pages filled out again each year.  Also, instead of filing a single consolidated sales tax report each quarter, I now must file 11 separate reports for a total of 44 a year. 

Can you imagine the insanity if the whole state adopted this approach?  That McDonalds in California or Unocal would have to file thousands of reports a month instead of one?  This is what happens when you let bureaucrats run amok.

Frequent readers of this site may know that my day job is running a company that manages recreation sites under concession contract to a number of public landowners, including the US Forest Service.  I take a lot of pride in this job, as our company helps keep recreation facilities open that the government might not have the personnel or the skills or the money to run.  The Forest Service's budget gets cut about every year, such that tax money comes nowhere near covering the cost of managing recreation sites.

Of late, the Forest Service has begun looking to actually close some recreation facilities:

The cash-strapped
U.S. Forest Service can no longer afford to maintain many of its parks
and has started ranking recreational sites, including campgrounds and
trail heads, for possible closure.

Supporters of public lands generally hate the onset of fee-based recreation, and wish it was still possible for all public recreation facilities to be free.  This was a realistic goal back when recreation facilities were cheap to run, but today campgrounds and other such facilities can be tremendously expensive(a single large campground might cost as much as a half million a year to operate), in large part due to actions by the same people who support free use of public lands.  Some examples:

• 50 years ago, campgrounds labor was essentially free because it could be staffed with volunteers.  With current labor laws, this is no longer possible (even if people still want to volunteer), and a large campground can require hundreds of thousands of dollars of labor to maintain each year, even at minimum wage.
• 50 years ago, people in the outdoors just drank water from a stream or out of the hand pump.  Today, in certain complexes, we spend tens of thousands of dollars keeping water systems in compliance with complex state laws.
• 50 years ago, if someone tripped over a root in the forest or twisted their ankle on a rock, they accepted that as a normal risk of being out in nature.  Today, everyone calls their lawyer.  Each year, campground visitors file millions of dollars of lawsuits for accidents once thought to be normal hazards of nature.
• 50 years ago, active timber sales in the forest helped fund recreation programs.  Today, timber sales in many forests are at an all time low, due in large part to opposition by nature lovers

So, I admit I don't know the person who said this:

"They will close
those sites the public has always enjoyed but which they cannot afford
because they are not profitable," said Scott Silver of the Bend group
Wild Wilderness. "It's the complete perversion of the meaning of public
lands."

But I would bet quite a bit that he supports some or all of the laws and government regulations listed above that make running recreation facilities so much more expensive than 50 years ago.

Update: By the way, though I might disagree with Scott Silver on the necessity of use fees at developed facilities like campgrounds or boat ramps, he is dead on in certain respects:

• Politicians love to fund splashy new recreation projects, but hate to fund basic maintenance.  This means that at the same time campgrounds and facilities are closing due to lack of maintenance dollars, new facilities are being opened all the time.  This strikes me as absurd. 
• Recreation facilities on public lands are missing the boat when they attempt to emulate private operations too much.  There are plenty of KOA's next to the interstate with pools and video game rooms.  Campgrounds on public lands have typically taken a different approach and served a different niche, that of providing a more primitive experience closer to nature, and I think its a mistake when they move away from this approach.

Unfortunately, as is often the case, I will never be able to see eye-to-eye with such groups because they refuse to acknowledge that as a private company I can be anything but Darth Vader with secret plans to put up a Walmart in Yosemite or put up billboards along a nature trail.  Crusading socialists often have the funniest ideas about the profit motive.  For example, if I make most of my money at a recreation site catering to people who want a wilderness experience, why in the world would I do anything to interfere with that experience?  It does not matter what the situation or the facts or the company, the first arguments are always that private companies just want to take a natural setting and put up advertising, then build a shopping mall.

By the way, Mr. Silver sees conspiracies among the private recreation companies.  I have sat on some committees in the "evil" organizations he cites, and I will tell you with complete assurance that these groups would have trouble crafting a successful plan to buy a 6-pack of beer from the local 7-11, much less shape government policy to their ends.  But maybe I got left out of all the really cool SPECTRE-type meetings. 

In the span of one hour this morning, I got to "enjoy" both my most and least favorite business activity.

My least favorite activity is always paying taxes, but within that broad category (remember that being in 10 states and 25 counties means that I file over 50 different tax returns or one sort or another every year) my least least favorite are business property tax returns.  If you have not run a small business, you may not be aware of what a pain these are (individuals don't have to file them, and large companies have poor schleps in accounting to do it). 

First, business property tax statements usually have to be filed by county, so I have to do a zillion of them.  Second, governments require that you report every year and in great detail on essentially every asset your business owns in a state or county.  A business must report these assets, usually with a description, date purchased, original purchase price and estimate current market value.  Imagine as an individual if you had to report this information on everything in your house - furniture, computers, appliances, tools, etc.  Now imagine doing it for a business, which owns a lot more miscellaneous stuff than you have in your house.

What really irritates me is that filing some of these statements requires the person filling out the statement to take a chance.  Clearly, no one is going to list every asset, down to the last pencil and paper clip -- you are going to establish some reasonable cutoff, and group similar assets into catch-alls like "miscellaneous tools" or "office supplies".  Note however, that this is taking a chance:  In counties that require detailed asset listings, there is never any statutory language like "you can ignore items under $100 as de minimis" or "you can group similar items".  Technically, you are supposed to list them all.  Take my word for it, this is very, very tedious.

But wait, as the Ginsu knife guy would say, for our business there is more aggravation.  We do business as a concession holder on federal lands.  For example, we might run a US Forest Service campground.  By US law, states and counties may not charge the US government property taxes on these facilities.  BUT, certain of the most acquisitive states, including California and Washington, have devised taxes that get around this requirement.  These two states make me pay the federal government's property taxes for them at the facilities I operate.  This is kind of like being forced by law to pay your landlord's taxes for him.  I always find this terribly irritating, all the more so since now that I know the game, when time comes to bid on concessions in these states, I just subtract the estimated taxes from what I am willing to pay the government in rent, in effect ensuring that the US government ends up paying the tax. 

This whole enterprise left me feeling depressed, when a couple who I had called about a manager position at a new store concession of ours at Clear Lake State Park in California called me back.  It turned out this couple is incredibly entrepreneurial, has great business experience, and are very well-suited to running my operation with minimal supervision.  I was thrilled to find them, and they were in turn thrilled to find an outdoor summer job opportunity in a nice location which could be flexible enough to accommodate a person with a disability (one of the couple has Parkinsons).  There is NOTHING I enjoy more than finding great people to work for me, and finding such people is all the sweeter if I can offer them an opportunity that uniquely fits their own needs. 

My company operates campgrounds and other recreational facilities on government lands, and the US Forest Service is our most important partner.  We work day-to-day with about 20 or so district rangers, who are the front-line general managers of the Forest.

My observation over time is that USFS district rangers have a nearly impossible job.  By their enabling legislation, the USFS is tasked with balancing logging, mining, ranching, recreation, forest health and environmental stewardship in running the forest.  In our modern day age of uncompromising special interests and conflict resolution by lawsuit, it is absolutely impossible to make any decision  without sending some party scurrying to the courts.  In particular, environmental groups have become expert at tying up any decision in court, and attempting to block any of the other competing interests.

The current Administration has introduced new rules intended to make this job easier.  As reported in the New York Times via the Commons Blog,

Forest Service officials said the rules were intended to give local foresters more flexibility to respond to scientific advances and threats like intensifying wildfires and invasive species. They say the regulations will also speed up decisions, ending what some public and private foresters see as a legal and regulatory gridlock that has delayed forest plans for years because of litigation and requirements for time-consuming studies.

I hope this is true, because I feel for front line forestry personnel who joined the service mostly because of their love of the outdoors and the environment, and have been forced instead to become amateur lawyers.  However,  I doubt much will change.  I think that intelligent planning and negotiation may be gone forever in working on environmental issues in favor of litigation.

By Federal law, U.S. Federal Government lands and property are exempt from state and local property taxes, just like sales to the U.S. Government are exempt from state sales taxes.  This means that, for example, the feds don't have to pay property taxes to Wyoming for the buildings and improvements in Yellowstone National Park.

Most states may sulk about this but they live with it.  However, a few of the most tax-avaricious states, including California and Washington, have found partial way around this. 

I just got my "Leasehold Excise Tax Return for Federal Permit or Lease" from the state of Washington.  What the heck is this?  First, some background.  My business runs campgrounds under concession contract with the US Forest Service in Washington State.  These concession contracts are legally like leases, in that I lease the facilities for a percentage of sales payment in return for running them for-profit.  Washington State can't charge property taxes on the campground itself, since its Federal property, so they charge a steep tax on the rent we pay to the Federal Government.  In Washington, the tax this year is 12.84% of the rent payed.

Yes, that's right.  The state only charges this special tax for rents payed to the US Government. No other rents get taxed.  The tax exists for no reason other than to get around the limitations on taxing the US Government's property.

If asked, Washington would piously state that, oh, we aren't taking any money from the feds, we are taking it from private entities.  Yes and no.  Yes, I as a private entity, I am paying it.  But, given how I bid for these leases, the state tax clearly comes right out of the Feds hands.  When I bid this project, I figured out what rent I could pay the government, and then backed out how much I would have to pay Washington State and bid the lower sum to the Feds.  In this case, Washington State is very clearly taking money right out of the US Government's pocket.

And for what?  Washington State provides no services or utilities to the campground.  The US Forest Service provides the fire protection, its own law enforcement officers, its own water and sewer systems, and its own roads.  There are no residents on the property, so no one associated with the property is using schools or other services.  And, because of sky-high sales and lodging taxes in Washington (from 10-12.5% of sales for camping), the properties are already contributing a ton to state coffers.

This is part 3 in a series of my real-world experience in dealing with the Department of Labor (DOL). If you have not already, you should also check out part 1 and part 2 for background.

In this post, I will show you how we defended ourselves in a case where the DOL was extremely reluctant to grant us a legal exemption to the Fair Labor Standards Act (FLSA). It is highly unlikely that this exemption is relevant to you - it is narrowly directed at seasonal recreation businesses, but I think the process and what we learned from it may help you out in your own interactions with the DOL.

Continue reading ‘Working with the Department of Labor: Part 3’ »

Note that this is part 1 of a three-part series. Here are part 2 and part3.

Over the past several years, we have been audited a couple of times by the Department of Labor (DOL). One of the audits was standard procedure (as a concessionaire to the US Forest Service, audits are sometimes required on certain contracts) and one was based on employee complaints. It never ceases to amaze me that some folks never even bother to call our HQ to complain and try to get it paycheck mistakes fixed -- they go straight to the government rather than our labor department if something looks wrong on their check.

Many times I have heard other small business owners say that the DOL is not "fair". If you were to ask me if I think they are fair, I would answer "yes" and "no". If you want to know if DOL employees are generally honest, well-intentioned, and law-abiding, my experience is that they are. However, if you expect, as a business owner, that the DOL will act as some kind of neutral court of law, in which you and your workers have equal status and equal rules of evidence, then you are in for a surprise. The DOL is not on the employers side and doesn't really pretend to be.

This should not come as a surprise to you. Young lawyers out of school generally don't seek out lower government pay scales with a vision of helping businesses manage their cost structures. They join the DOL because they are interested in defending downtrodden workers against rapacious capitalists who seek to exploit them (etc. etc.) The main mission of the DOL is to enforce labor laws like the Fair Labor Standards Act (FLSA). However, overlaying this mission is a strong institutional culture that mission 1A is to defend workers against employers. This culture will have a number of implications in any dealings you, as an owner or employer, have with the DOL:

1. Workers claims will almost always be believed by the DOL, and the DOL will generally not require much documentary evidence to back up workers claims. The flip side of this is that employers claims that contradict workers will always require extensive documentary evidence. For example, we had several weeks of time sheets burn up in an office fire. In cases like this, the DOL will generally always side with the worker's recollection of time worked rather than the employers, even if the time claimed is completely inconsistent with hours worked in all other documented weeks. The burden of proof, in almost any dispute, will be on the employer.

2. The DOL's first answer to any employer's claims of an exemption under FLSA or other labor laws will be "NO". Congress has granted a number of exemptions to labor laws for certain business situations. For example, one that applies to our business in some cases is the FLSA has relaxed standards for overtime for "seasonal recreation businesses". From my experience, the DOL hates to admit that these exceptions apply to your particular situation. Back to the fairness point, they CAN be convinced, but sometimes it takes a lot of work to do so. In part 2 and part 3 of this series, I will give more specific examples of how to do this.

3. The DOL will never point out to you an exemption or saving that you are missing. I know that many people get frustrated with the IRS, but I have actually had experiences where the IRS found a mistake where I had overpaid. I have never had this experience with the DOL. The DOL does not really have very good staff or tools to help employers comply with the law in the most efficient manner. They have LOTS of tools and people dedicated to making sure workers get every bit of what the law guarantees them.

If you recognize this culture and context, and put any frustration that you might have as a tax-paying citizen and business owner aside, you can get a fair shake from the DOL. You just have to be prepared in advance to argue your case and bring lots of evidence to bear. And, if worst comes to worse, and you are willing to pay the attorney fees, you can always refuse the DOL's finding and take the case to a court of law, where there are much more neutral evidence standards.

The next part of this series will discuss further some examples and lessons learned in making your case to the DOL. Part 3 of the series will include a specific example.

Note: These are my observations as a business owner and are not specific recommendations. I am not a lawyer, and, even if I were, I am not your lawyer.