http://reason.org/blog/show/policy-stinker-of-the-day-ariz

In response to queries about the Morrison report, I told a reporter that we need to work toward making state parks pay for themselves, by granting long-term park management concessions to private companies. And I saw that Byron Schlomach of the Goldwater Institute told a TV reporter the same thing.

Of course, Morrison poo-pooed the idea of using private concessions in an interview with Howie Fischer:

Similarly, [Grady] Gammage said the Morrison Institute did not look at the possibility of privatizing the parks system.

He said only three parks -- Kartchner Caverns, Slide Rock and Lake Havasu -- actually make any sort of real profit and would be attractive to an investor.

The rest, he said, lose money.

Other options suggested in the report include:
- a dedicated statewide property tax;
- adding a tenth of a cent to the state sales tax, generating $44 million;
- higher off-road vehicle registration fees;
- development fees on all new residential construction

What these center-left wonks routinely fail to do is to look at offering potential investors the right to develop additional facilities at the parks that would be profitable. Yes, Grady, very few of our state parks are currently profitable. And yes, Grady, no one wants to invest in taking over our parks and running them exactly the way they're run now.

But most--and perhaps all--of our state parks could attract bidders for long-term concessions if we offer them some latitude in bringing more utility to the parks.

An example: The state could sell operating concessions in Lake Havasu State Park to private hotel companies, allowing them to build and operate hotels for a period of time, and build and operate their own marinas. With Mexico perceived as becoming increasingly dangerous, LHC could become even more of a spring break destination for the Southwest. If the hotels believe that the concessions (on prime riverfront property, by the way) would contribute $20 million annually in net income from operations on 5,000-plus rooms over a 30-year period, they should be willing to pay at least $120 million up front to obtain the concession (assuming they have an opportunity cost of 7 percent). And perhaps the casino on the California side would join some of the investment consortia. Arizona State Parks could design the contract so as to maintain public rights-of-way, including access to some of the new marina facilities.

Another example: The state could sell an operating concession on Kartchner Caverns to a nonprofit. The state parks system currently earns $2,500,000 a year in revenue on the caverns. If the nonprofit granted the long-term concession is allowed to enhance the facility by building a lodge, opening environmental education/outdoor recreation schools, etc, that could greatly increase the state’s revenue from the initial competitive bidding process. If the nonprofit’s managers believe that the concession’s contribution to its future income will be to generate $1 million annually in net income from operations over a 30-year period, it should be willing to pay at least $10 million up front to obtain the concession (assuming that it just wants to break even after inflation). The contract should be designed and overseen by Arizona State Parks so as to stay committed to the original Tufts-Tenen vision of protection through development. Similar concessions could be worked out for many state parks.

--Tom