Recently, agencies have begun using recreation PPP’s to attract capital for park refurbishment and expansion…
The Next Frontier: Private Capital for Park Redevelopment and Expansion
Starting around 2010, public recreation agencies began approaching RRM to try to reopen parks that had been closed, in some cases sitting dormant for several years. In these new situations, the agency needed more than just an operations partnership: before the park was closed, it may have been starved for years of maintenance capital. The agency needed private capital to refurbish the park to make it ready for public occupancy.
By lengthening the term of these partnerships to 20 or 30 years, RRM has been able to make multi-million dollar redevelopment and expansion investments in campgrounds and recreation areas for the Tennessee Valley Authority (TVA), Alabama State Parks, California State Parks, and Coconino County (AZ), among others. In these contracts, the recreation agencies have reaped not only the operating benefits discussed before of recreation PPP’s, but also have gained new and improved recreation facilities without any cost or risk to their agency. Our investment is wholly paid for by our share of the revenues for the term of the contract, after which all new facilities become property of the agency.
There is no risk to the public agency. Historically, concession contracts that sought private capital often entailed risk for the agency. The agency might have to guarantee buy-back of the investment at the end of the contract (typical in many older National Park Service contracts) or the agency would have to guarantee some minimum revenue to the private operator. RRM does not ask for any such guarantees. At the end of the contract, any facilities we purchased or installed belong to the agency. And we don’t ask for any revenue or performance guarantees. This is a risk we gladly take — don’t worry, we have extensive experience and we know what risks make sense. Besides, the need to fill the park with happy visitors to repay our investment makes us a very strong marketing partner of your agency, and gives us a very strong incentive to provide great customer service that visitors will talk about online and in reviews.