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Annual Privatization Report 2013

Finding New Ways to Provide Parks and Recreation Amenities

Subsection of Annual Privatization Report 2013: Local Government Privatization

Harris Kenny
May 6, 2013

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Finding New Ways to Provide Parks and Recreation Amenities

Increasingly, communities are looking to public-private partnerships that go beyond traditional outsourcing to improve the operation and maintenance of amenities like zoos, theaters and farmers markets. The following series of 2012 case studies highlights discussion of this policy tool at the state and local level across the United States.

North Carolina Zoo: North Carolina lawmakers considered a bill (HB 12-958) that would turn operations of the 2,000-acre, state-owned North Carolina Zoo over to the private sector. Lawmakers are considering a partnership because the zoo has approximately $30 million in deferred maintenance, and has consistently been underfunded over the past 15–20 years.1 The bill would have also reduced public operating subsidies, allowed the zoo to generate more revenue, encouraged increased private donations and provided funding for the transition.

Specifically, HB 12-958 sought to transfer operations and maintenance duties to the North Carolina Zoological Society for 25 years in exchange for the following support:

The bill ultimately failed last session, but it will be discussed again in 2013 according to Representative Tom Moffitt, an Asheville Republican. Terms similar to HB 12-958 will likely be included in the 2013 reincarnation of this bill.3

Los Angeles Zoo: After years of discussion, and outright support from Los Angeles Mayor Antonio Villaraigosa’s administration, the city abandoned plans to implement a public-private partnership for the Los Angeles Zoo. Talks broke down in September amidst questions about how much autonomy the city would grant the Greater Los Angeles Zoo Association (GLAZA). The Los Angeles Business Journal reports that GLAZA wrote a letter to City Administrative Officer Miguel Santana explaining, “existing city policies and regulations made it too difficult for a private operator to function.”4

It is unclear what the city will do with the zoo in the face of ongoing fiscal woes. Last year the 1,100-acre zoo cost Angelenos $17.5 million. City officials estimate a $216 million deficit this year, following four years of deficits adding up to over $1 billion. Meanwhile the zoo has raised ticket prices five times over the last five years.5

Dallas Farmers Market: City officials spent much of 2012 mulling over what to do with the Dallas Farmers Market, and while there have been no substantive decisions made as of press time, a likely deal is emerging. The Farmers Market Group (consisting, among many others, of a real estate developer, architectural firm and restaurateur) won a request for proposals (RFP) seeking ideas for the facility. Details of their proposal have not been publicly released because of uncertainty over how it might impact existing tenants, according to The Dallas Morning News:

All we know for now is that it will involve a $58 million mixed-use development with restaurants, retail, apartments and a parking garage—for starters. What we don’t know is how many of the sheds will remain standing once the deal’s done, who will be responsible for what and which of the tenants will remain. Well, that’s not entirely true: It’s safe to say Pecan Lodge will stay; so too Shed 2, given the city’s $3.2 million investment in the air-conditioned food court. Everything else is a bit up in the air.6

Questions about financial feasibility loom large, like clarity on support from tax increment financing and addressing lingering debt from a 2006 bond issue. Various land use processes like surveys, appraisals, deeds, zoning and construction are also in question.

Elks Opera House (Prescott, Arizona): In May 2012 city officials gave City Manager Craig McConnel approval to issue a request for proposals (RFP) for the city’s historic downtown theater, the Elks Opera House, built in 1905. "We've been aware of a long-standing interest in getting out of the theater business," McConnell told the city council. Prescott Budget and Finance Director Mark Woodfill said the city spends $258,000 annually on theater operations, while collecting $105,000 in revenues; meaning the theater costs taxpayers $153,000 each year.7 City records show the theater cost taxpayers at least $100,000 each year since 2009.8 Among other things, the RFP required bidders to:

The Elks Theater Performing Arts Center Group, a local nonprofit organization, offered the city $500,000 to purchase the theater, which the city ultimately rejected. Even though the RFP did not include a minimum price, Prescott officials were seeking at least $1.39 million—approximately half the contested appraised value of the theater. Critics who contest the appraisal argue restrictions that come with building operations should lower the price, citing limited ability to generate revenue and persistent operational budget deficits.

City officials explained that $3.5 million has been invested in the theater over the last decade. However, these are sunk costs and only $1.38 million of that money actually came from the city; $420,000 came from public grants and $1.75 million came from philanthropic contributions to the Elks Opera House Foundation. The offer reportedly also included a “sizeable endowment” from a primary donor who has successfully completed two comparable projects elsewhere in the United States.9

In September the Elks Theater Performing Arts Center Group was able to purchase the top floor of the theater from a law firm that occupied the space; the Group now owns the upper portion of the building and much of the exterior façade. The group remains interested in purchasing the whole building eventually, but it will make use of the space it now owns for smaller performances, educational programming, instructional sessions, rehearsals and more in the meantime.10 The city of Prescott also owns a golf course and restaurant that officials have discussed divesting, but as of press time there are no substantive efforts underway.

Baltimore, Maryland: In 2011 Baltimore Mayor Stephanie Rawlings-Blake announced an ambitious plan to revamp the city’s recreational centers through public-private partnerships. In May 2012, the city signed an agreement with Parks Heights Renaissance to transfer operations of the Towanda Rec Center. The agreement provides the organization with a $100,000 seed grant from the city that will allow youth athletic, summer recreation and senior programs to continue at the facility. Four other facilities have been turned over to the private sector under Rawlings-Blake’s plan. Three of them received $50,000 in seed money from the city.11

Milpitas, California: In June 2012 the Milpitas City Council announced its first-ever public works public-private partnership. The move seeks to right size the department in light of deteriorating park conditions ranging from broken irrigation systems and dead shrubbery to graffiti and vandalism. The city awarded contracts to Colorado-based Terracare Associates for park and street landscaping and repair services.

According to a June article in the Milpitas Post, the one-year contract for parks maintenance has four one-year options for renewal that could add up to almost $7 million if every option is exercised. Terracare will maintain 24 city parks and sports fields, providing routine landscape maintenance (i.e. pruning, weed removal, turn care, plant replacements, irrigation system maintenance and fixture and equipment repair services). The streetscape maintenance and repair contract has a $125,218 annual cap for all aspects of landscape and irrigation system maintenance for the city’s landscapes, streetscapes, medians and rights of way.

Indian River County, Florida: The Indian River County Commissioners voted unanimously to contract with two firms to maintain county-owned beach parks, in a deal expected to save taxpayers $164,000 annually, effective February 2012. The first contract, for $56,642 with Clearwater-based Boro Building and Property Maintenance Inc., is for janitorial services. The second contract, for $15,120 with Okeechobee-based Integrity Lawn and Landscaping, is for outside maintenance. The deals eliminated two vacant positions and affected one maintenance worker and one foreman. Personnel decisions will be based on seniority according to the contract with Teamsters Local 769. The private contractors agreed to consider hiring the two displaced employees if they have openings for comparable positions.12

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Endnotes

1 Rosella Age, “Effort to partially privatize N.C. Zoo likely dead for the session,” The News & Observer, June 25, 2012. http://projects.newsobserver.com/under_the_dome/effort_to_partially_privatize_nc_zoo_likely_dead_for_the_session

2 Harris Kenny, Privately Operated Zoos Now Considered the Standard,” Annual Privatization Report 2011, (Los Angeles, CA: Reason Foundation), May 29, 2012. http://reason.org/news/show/1012913.html

3 Age, “Effort to partially privatize N.C. Zoo likely dead for the session.”

4 Howard Fine, “Plan to Privatize L.A. Zoo Stopped,” Los Angeles Business Journal, September 27, 2012. http://labusinessjournal.com/news/2012/sep/27/plan-privatize-l-zoo-stopped/

5 Rick Orlov, “New talks sought on Los Angeles Zoo privatization plan,” Los Angeles Daily News, October, 25, 2012. http://www.dailynews.com/ci_21856544/new-talks-sought-los-angeles-zoo-privatization-plan

6 Robert Wilonsky, “Unpacking the many reasons it’s taking the city so long to finalize deal to privatize downtown Dallas Farmers Market,” The Dallas Morning News, November 9, 2012. http://thescoopblog.dallasnews.com/2012/11/unpacking-the-many-reasons-its-taking-the-city-so-long-to-finalize-deal-to-privatize-downtown-dallas-farmers-market.html/

7 Cindy Barks, “City looks to private sector for operation of Elks Opera House,” The Prescott Daily Courier, May 17, 2012. http://www.dcourier.com/main.asp?SectionID=1&SubSectionID=1&ArticleID=106676

8 Cindy Barks, “Local group makes offer for Elks Opera House,” The Prescott Daily Courier, July 16, 2012. http://prescottdailycourier.com/main.asp?SectionID=1&subsectionID=1086&articleID=108754

9 Cindy Barks, “Elks Opera House sale negotiations end,” The Prescott Daily Courier, August 2, 2012. http://prescottdailycourier.com/main.asp?SectionID=1&subsectionID=1086&articleID=109345

10 Cindy Barks, “Nonprofit buys top floor of Opera House: Performing arts group wants to purchase entire Elks building,” The Prescott Daily Courier, September 27, 2012. http://prescottdailycourier.com/main.asp?SectionID=1&subsectionID=1086&articleID=111250

11 Mark Reutter, “Towanda Rec Center turned over to private operator,” Baltimore Brew, May 9, 2012. http://www.baltimorebrew.com/2012/05/09/towanda-rec-center-turned-over-to-private-operator/

12 Henry A. Stephens, “Indian River contracts out services, eliminates four parks maintenance positions,” TC Palm, January 10, 2012. http://www.tcpalm.com/news/2012/jan/10/indian-river-to-contract-out-services-layoff/?partner=RSS


Harris Kenny is Policy Analyst


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