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Public Private Partnerships

2012-04-01, Feature, by Phil Hayward

Warren MeyerWith budgets straining at every level of government these days, approaches and remedies are being offered with increasing frequency. Some may work and others not. Few will be popular with everyone, and among those, controversy is sure to arise. Depending on whom you speak with, public-private partnerships represent a spectrum of outcomes for cash-strapped parks--from godsend to the abdication of public responsibility. Interspersed is no small amount of confusion and misperception. The lightning rod for many of these issues is a businessman from Phoenix, Arizona, Warren Meyer, president of Recreation Resource Management. Over the last 10 years Meyer has increasingly expanded his work with the U.S. Forest Service into other public sectors. With more than 150 locations in 11 states, 400 employees, and annual revenues of $10 million, Meyer has become the genie that many people do not want out of the bottle. Meyer, who serves as head of the National Forest Recreation Association, has been a virtual public relations machine for his field. Via blogs, speeches, debates, and interviews, he has become the public face of the private side of the public-private partnership business model. In this article, Meyer and other players in the field of park operations discuss their views on the merits of public-private partnerships.

Meyer grew up in Texas where his first exposure to parks came with annual summer RV trips with his grandparents to a variety of states. Annual trips to Rocky Mountain National Park with his parents and siblings became Meyer’s favorite excursion. To this day, he remembers how he and his siblings had the audio trail guidebooks memorized. From high school he entered Princeton University where a degree in mechanical engineering prepared him for a stint in the oil industry. Meyer returned to college to obtain an M.B.A. from Harvard University which led to a five-year job with the consulting firm McKinsey & Company. “I learned a ton about how organizations work and a lot about how they fail—they failed in a relatively consistent manner.”

Meyer developed an expertise in industrial marketing for large corporations—electronics, aerospace, and technology. Working in the 1990s at the height of the tech bubble for internet start-ups, including one founded by Microsoft’s Paul Allen, was “fascinating, but weird for someone who came from a corporate/industrial environment where there is cost control. I was working with people who are running through millions of dollars to no result. You had sales forces that weren’t selling anything.”

But the Pacific Northwest climate managed to revive Meyer’s love of sunshine, which only the Southwest could satisfy. So, he picked up his growing family and located in Phoenix. Working in 2002 for a vendor to the National Park Service, Recreation Resource Management, introduced Meyer to outdoor recreation. He eventually bought out the principals and set about gradually expanding its role as a private operator of Forest Service campgrounds.

“The Forest Service was really innovative in this respect,” Meyer says. “But as I learned the business I became convinced that the things that had driven the Forest Service to need to seek private operators to help keep recreation parks open and well maintained were the same things driving other government institutions.

“It took a while for that to catch on,” Meyer continues. “It was only in the last several years that the pressure has become so intense on a lot of government budgets. We’ve been overwhelmed with interest in the last couple years.”

He’s now a decade into RRM, quite a feat of longevity for a self-professed person with attention deficit disorder.

“I’ve done many interesting things, but I have really stayed with this the longest, and I plan to continue to stay with this because I think we can contribute something on a national stage—to do something really important,” Meyer continues. “That’s why I latched on to this. Plus, it’s really a blast being outdoors. My business meetings aren’t just in airport hotels, but in parks a lot of the time.”

Making the Case for the Private Model 

A great deal of Meyer’s time goes to making the case for the RRM business model. Over the years he’s spoken before various groups for and against him, amassed a website of information and case studies (www.parkprivatization.com), debated the Sierra Club, and written his own libertarian blog, Coyote Blog, as well as a blog for Forbes.com. His message distills into several basic points meant to counter what he sees as misconceptions of his business.

“To some extent, the disagreements tend to be the ones from folks who have a different picture of this,” Meyer says. “[Parks] are public lands for a reason. If we wanted to make them private and have them used for the most profitable use, they would have already been sold off and states would have taken the money. The reason they’re public lands is because we have objectives for maintaining the land, which in some conditions may or may not be the most profitable condition. We have a goal of allowing very free public access, so they are lands that are not restrictive in some way.

“What we have to do a lot of is, ‘hey, this is not about a private takeover of the land,'” Meyer continues. “It’s not any kind of Trojan horse for building condos and McDonald’s.”

Meyer points to the Forest Service as the best counter-argument to the line of thinking that private vendors will degrade public lands and the recreation experience. In Arizona, RRM operates recreation services for approximately 40 Forest Service locations while other vendors operate as many as 400 in California, Meyer says.

“We make our money making the parks the way the public agencies want them to be,” Meyer says. “I don’t have a single agreement that allows us to change a price, change a service, change a product sold, or even put two boards together for a structure without the agency’s approval.

“So, basically, we’re expected to run a park as is, with current services, fees, etc.” he says. “We make our money doing that and doing that very efficiently and not by adding ‘adult bookstores.’”

RRM’s lower labor costs are often a source of consternation among Meyer’s critics.

“The folks I hire for my employees—there’s no getting around the fact the public agency people who are paid in a certain way and have these benefit packages are often hired for the full 12 months, even for a seasonal park,” Meyer says. “That’s the way civil service works.

“We just can’t hire that way, so we often hire different people with different expectations,” Meyer continues. “Our folks are not paid as much. But they don’t need it. We get folks without paying as much. We hire a lot of folks who have seasonal flexibility—that means RV-ers and such."

RRM’s training program stresses the public-private nature of the company’s client relationship. “We train with respect to the fact that we’re a tenant and we have restrictions on us, so when we train people on what the restrictions are and what we can and cannot do, then we seldom have problems with that. Our folks understand we are still on public land, that the public sets the rules and we’re aware of the rules. We almost never have a problem with that.”

And when he does have problems, Meyer finds the termination process significantly more efficient. “The good thing about being private is, if somebody is just not getting it, we can get rid of them,” he says. “That’s hard to do in a public space.”

The Ultimate Example of Giving Up 

Tom O’Rourke is executive director of the Charleston County (South Carolina) Park and Recreation Commission and a member of the NRPA board of directors. O’Rourke staunchly believes in the ability of public agencies to profitably operate public park and recreations programs. In fact, he likens his approach to a corporation. “This is no different from running a business, no different at all,” O’Rourke told Parks & Recreation late last year. 

Outsourcing of entire parks or even portions of parks greatly upsets O’Rourke as a professional.

“I feel like it is the ultimate example of giving up, when a government decides that they no longer can effectively manage a recreation resource,” O’Rourke says. “NRPA has schools, seminars, classes, and programs currently in place that can assist any agency with becoming a successful business enterprise. It isn’t as if there is not a multitude of examples of effective recreation management in governments.”

O’Rourke has concerns, shared by many park and recreation professionals, about the nature and impact of a private for-profit business model. When the emphasis is exclusively on profit, other key aspects of operating parks and recreation programs suffer, he says.

“A privately operated park that exists only for people with money has nothing to do with public parks and recreation,” O’Rourke says. “For most government recreation agencies our main emphasis is on our mission, our vision, and our values. For us, the events, programs, and parks that we manage all are tools used to make our communities better.  For a private business it is about making a profit.”

O’Rourke believes an emphasis on money and fees can get in the way of the bigger picture. “Some of the most successful recreation agencies in the country charge few fees,” he says. “For example, the Houston Park and Recreation Department is arguably the best agency in the country and they collect very few fees. They are great because they know why they exist, and I would stack their management up against any private recreation company.

“I find it unbelievable that a community would let private business make money on public land,” he continues. “I think elected officials will open themselves up to legal challenges when the citizens who paid for the parks through their tax millage for capital projects are kept from using their land because they cannot afford the fees that the new private businesses are charging.”

Degrees of Partnership 

At this point in time, outsourcing the management of the entire operations of the traditional park and recreation model is still more a notion than a reality. State parks appear to be the category most likely to be courted by the private sector. That’s a model that dovetails more easily with the experience of programs outsourced by the Forest Service.

Maricopa County, Arizona, however, embodies many of the elements of the more universal public-private partnership models. R.J. Cardin, director of the Phoenix-area county’s department of parks and recreation, has seen mostly pluses in his relationship with private vendors.

“We do many public-private partnerships at Maricopa County,” Cardin says. “Much like a good stock portfolio, we have tried to diversify our service delivery system.  One, we have a dedicated staff that provide direct service through facility maintenance, development, and interpretive/educational programming. Two, we have an impeccable volunteer corps that nearly triples our staff during the peak season. Volunteers provide everything from maintenance to customer service to guided hikes and other programs. Three, we work with other government and not-for profit organizations to develop facilities and programs that are mutually beneficial—such as the wildlife viewing ponds and watchable wildlife programs that we have partnered with U.S. Fish and Wildlife and our State Game and Fish Department. Fourth, and finally, we have been very successful in developing public-private partnerships that supplement our operating budget and, more importantly, provide recreation facilities and services that we could not otherwise provide.”

Cardin says that in most instances, his agency views “privatization” as service privatization. In this interpretation, government pays a contractor to provide public services or the government receives money for the lease of revenue-producing facilities or assets. In some instances, Cardin says, that could be an entire park.

“We tend to have a different approach in that we look at these truly as public-private partnerships,” Cardin explains. “We look to the private provider to not only come in and provide service but also to invest in the parks by putting capital development into the parks.  In return, our residents benefit through additional amenities and we generate revenue that can be used for other services and programs. We look to our residents and visitors to express their facility and program needs and we find the most efficient and effective manner to provide for that need when feasible.”

Private partners contribute approximately 20 percent to Maricopa’s overall park system operating budget. Those partners handle approximately 24 percent of the agency’s annual visitation of 2.1 million visitors.

Maricopa’s model does have downsides, Cardin says. He worries about the potential for pricing visitors out of agency programs as well as the additional level of management needed to monitor private providers. When a contractor takes over a property or facility, there can also be a loss of control. Such arrangements are often open legal challenges from various sectors, Cardin advises. Lastly, he says, there should be concern about “private providers who do not share your mission related to environmental education or environmental stewardship.”

One criticism leveled at private park managers is the potential for “cherry-picking” the best opportunities, leaving less viable locations to weather fiscal storms on their own. Meyer says agencies most often prevent this by spreading less viable parks in among the stronger locations and requiring the vendor to cover them all. This arrangement works when longer contract periods are applied to the relationship.

The Original Model 

Jim Bedwell is National Director of Recreation and Heritage Resources, the division within the U.S. Forest Service responsible for recreation programs in forests and grasslands. Within his purview are programs that protect and interpret archaeological and historic sites on Forest Service lands. Bedell estimates that private vendors like RRM manage just over half of the Forest Service’s campgrounds. He’s firm about the terminology associated with his program—he dislikes references to privatizing, instead describing his relationship with RRM and other vendors as “public-private partnerships.”

Concessionaires have managed Forest Service recreation programs for more than 25 years. “It’s been quite successful, although it hasn’t been without its controversy, certainly,” Bedwell says.

“I’d say the good points are they provide good service more consistently to the public in terms of day-to-day operations and maintaining the sites,” Bedwell says. “When we operate our own facilities, if there’s a forest fire in the area, we may pull all our people off running that campground to go fight the fire. You might have to close the campground or certainly the services and cleanliness might suffer for those couple of weeks. When you have the private sector operating it, that’s their job and they essentially have a contract to do that job and they stay focused on it.”

Bedwell says the arrangement calls for the vendor to take their percentage of the fees and return a percentage to the government.

“That’s a net gain for us in revenues,” he says. “We’ve estimated a value of around $50 million on savings to the federal budget. Since budgets are always stretched, those 50 million dollars we can utilize to maintain other aspects of our operations—like wilderness management, dispersed recreation, controlling off-highway vehicle use, and even our cultural resource programs—which do not generate their own fees or they are difficult to isolate.”

The downside to public-private partnerships in the Forest Service tends to mirror the concerns expressed by park professionals. Bedwell says the Forest Service tends to lose presence and identity with the public. His uniformed personnel are not out in front of the public answering questions and lending assistance.

“Also—and this could apply to state parks—governments work under a whole range of regulations and requirements and you lose some flexibility when you turn over operations for 10 years or so that you would have had if you were managing on your own.”

Bedwell cites his agency’s relationship with Native American tribes that often hold ceremonies in National Forests. The agency will often close off portions of forests to accommodate the tribes. That becomes problematic when the campgrounds are contracted to private vendors. In the end, the Forest Service must go through a complex reimbursement process.

The Forest Service also runs into problems on the flipside of concessionaire-operated campgrounds during forest fires. The agency will often house fire-fighting crews at its campgrounds; but when they are booked with campers through the private vendor, the Forest Service runs into problems. “We just can’t kick out the concessionaire to take over the campground for two weeks to fight the fire.”

For state and local parks considering such large-scale private-partnerships, Bedwell is cautious about recommending his system.

“It depends on their situation,” he says. “Can they retain the fees and put them straight back into the operations or do they go to the state treasury? What’s the nature of the state park? Is it a highly concentrated use, like campgrounds and visitor centers--those things lend themselves to management by a private entity—or are they large, dispersed recreation-type parks that have people all over and are complex and don’t lend themselves much to private management? There are a lot of situations to assess. There’s not really a straight yes or no answer to this.”

Warren Meyer believes that lately when agencies come to him, it’s usually as a “last resort.” Whatever the reason was that got them there, the options are two-fold: shut down or work with a private vendor. Tom O’Rourke insists it should not come to that.

“RMM is not the problem and really is not doing anything wrong,” O’Rourke says. “They are coming into governments that do not know how to manage an agency and have given up. For me, it makes much more sense to find someone who can manage your agency, not to give it away. 

“Governments can do exactly what RMM does,” O’Rourke says. “They can set up enterprise funds that do not need to have the same government scrutiny that the general funds have, thus giving them the flexibility that is similar to a private business. There is not one thing that RMM does that a government can’t do themselves.

“As an example, in our agency we exist to improve the quality of life in Charleston County. If we wanted to, we could very easily get rid of all the things that do not make money, but that would disenfranchise many of the people in Charleston,”  O'Rourke says. "Instead, we choose to create enterprise ventures that will make a profit so that we can keep open places that will never make money and were never intended to make money. I would put our efficiency model up against anyone, public or private. For us, it is not about money, it is about being able to provide our services for everyone."

Phil Hayward is Editor of Parks & Recreation.
 
 

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Anonymous


This article is balanced, and very factual. Being a member of the Arizona State Parks Board, we have dealt directly with this issue. We have met with RMM and other private sector operators as our park system was in fiscal trouble. As a result we reviewed all options and have stressed public/public partnerships including cities, counties, and native American tribes. We use concessionaires, and continue to look for partners, and sustainable funding. We will continue to be open to the private sector where it makes sense, and benefits all parties.


Anonymous


Great article, but, everyone needs to keep in mind that this system works because public sector employees with middle class living wage jobs and benefits like health insurance are laid off and replaced with part time employees and volunteers. The money 'saved' is put in the pockets of the government agency and the corporation with the contract. The net effect is a transfer of money from the middle class to the shareholders of the corporation, and also to the government agency.


Anonymous


Fair article but I am not convinced that the private sector is always less expensive. In the county park setting where I work our wages are already pretty low and I doubt if the private sector would be cheaper. Our public employees, many who have worked for us for quite a few years, have a sense of ownership that you may not find from a private employee. The model of using folks who are willing to work for less pay because they "don't need it" doesn't sound like the kind professional work force attitude the field should necessarily support. We already have too many people who think anybody can do this kind of work, that's why the wages are so depressingly low in the county and local sector. We operate our agency with an Enterprise Fund that enables us to keep what we make to put back into the sites, so in that sense we are not a true public agency anyway. I'd suggest that as a better model than giving up the profitable sectors of your agency to the private sector.


Anonymous


Just an observation: Meyer "dislikes references to privatizing," yet his website is titled parkprivatization.com