HomeMy WebLinkAbout11092020 City Council Work Session Packet - Revising Municipal Camping FeesSeward City Council
Work Session Packet
Topic: Discuss Revising Municipal Camping Fees
November 9, 2020
City Council Chambers Beginning at 6:00 p.m.
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Sponsored by: Meszaros
Postponed: October 26, 2020
CITY OF SEWARD, ALASKA
RESOLUTION 2020-086
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD,
ALASKA, REVISING MUNICIPAL CAMPING FEES
WHEREAS, Seward Parks & Recreation conducts periodic reviews of municipal
camping fees to ensure rates are set appropriately in relation to community values and the
department's financial and service delivery goals; and
WHEREAS, per Seward City Code § 7.15.010, "Fees for camping in municipal
campgrounds shall be set by resolution of the City Council".
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF SEWARD, ALASKA that:
Section 1. The Seward City Council hereby approves the Municipal Camping Fees as
follows:
SITE
SUMMER
WINTER
Premium RV
$50
N/A
Partial Hookup (Water/Electric)
$45
$25
RV Dry
$30
$15
Tent
$20
N/A
Section 2. Fees are inclusive of sales tax at the prevailing rate.
Section 3. This resolution shall take effect ten (10) days following its adoption.
PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this
261h day of October, 2020.
AYES:
NOES:
ABSENT:
ABSTAIN:
THE CITY OF SEWARD, ALASKA
Christy Terry, Mayor
`a
AGENDA STATEMENT
Meeting Date: October 26, 2020
To: City Council
From: Scott Meszaros, City Manager
Through: Tyler Florence, Director of Parks & Recreation
Agenda Item: Revising Municipal Camping Fees
BACKGROUND & JUSTIFICATION:
Seward Parks & Recreation conducts periodic reviews of municipal camping fees to ensure rates
are set appropriately in relation to community values and the department's financial and service
delivery goals. Per Seward City Code § 7.15.010, "Fees for camping in municipal campgrounds
shall be set by resolution of the City Council." To aid the decision -making process, included
herein is market data compiled from similarly situated campground providers offering
comparable services, as well as information on cost recovery methodologies commonly used by
park and recreation agencies.
COST RECOVERY
There are a number of factors to consider when setting rates. As a publicly financed park and
recreation agency, Seward Parks & Recreation provides basic services to the public at no charge.
In order to supplement tax revenue and regulate park use, it is appropriate and necessary to
establish fees and other cost recovery practices.
The level of cost recovery is based primarily on who benefits from the service provided. Services
that benefit the community as a whole are funded mainly through taxpayer dollars. Examples of
services that provide broad community benefits include hiking and biking trails, parks, picnic
areas, playgrounds, and greenspace.
As services increasingly benefit individuals or a limited group of people, it is appropriate to
recover costs through fees at an increasing rate. Examples of services that primarily benefit
individuals or limited groups include ones offered on an exclusive basis, such as campsite rentals
and concession sales.
A cost recovery pyramid (Figure 1) is typically used to help illustrate this pricing approach.
y_ e iderahie
boa¢ 7itidiwidual $,et
4
Individual uninBeanef�tt
Considerable Ca7777]k4
G
Mostly Co
mniunity Benefit
Figure 1 — Cost Recovery Pyramid
The ultimate goal of these pricing strategies is sustainability, or the ability to provide programs
and services on an ongoing basis with sufficient funding and community support.
PRICING CONSIDERATIONS
Additional factors to consider when establishing fees:
• Available resources
o Staffing
o Facilities
• Impact on demand
o What price points are customers sensitive to?
a Secondary impacts, e.g., impact on visitor traffic at local businesses
• Ability to pay
o Does it create a hardship on specific users?
• Service level expectations
o Higher prices lead to higher expectations
• Comparable Market Rates
MARKET RESEARCH
Another pricing method commonly used when establishing rates is price benchmarking. Price
benchmarking means comparing your prices to comparable providers within the same market
segment. See tables below for a comparison of average regional campgrounds rates and our rates
(refer to Alaska Campground Rates attachment for full breakdown). This survey was unable to
capture sufficient data points to establish average winter rates.
REGIONAL AVERAGE NIGHTLY CAMPING FEES
j SITE TYPE I PEAK SEASON
Full Hookup Water/Electric/Sewer) $60
Partial Hookup (Water/Electric) $51
RV D $36
Tent $34
See "Alaska Campground Rates" attach meat forf dl breakdown.
CURRENT SEWARD NIGHTLY CAMPING FEES
SITE TYPE
SUMMER
WINTER
Partial Hookup Water/Electric)
$40
$20
RV D
$20
$5
Tent
$1 Q
N/A
Fees are inclusive of sales tax at the prevailing rate.
RECOMMENDATIONS:
Recommendation #1: Revise rates as follows:
PROPOSED SEWARD NIGHTLY CAMPING FEES
SITE TYPE
SUMMER
WINTER
Premium RV
$50
NIA
Partial Hookup (Water/Electric)
$45
$25
RV D
$30
$15
Tent
$20
N/A
Recommendation #2. Establish a "Premium RV" price tier.
Based on demand patterns, we recommend creating a "Premium RV" site designation in order to
account for the significant increased demand for sites that are otherwise identical in type, save
for highly sought-after amenities such as location on the waterfront, larger space, etc.
INTENT:
Revise municipal camping fees based on the data and recommendations Provided herein
CONSISTENCY CHECKLIST:
Yes
No
NIA
Comprehensive Plan (2030, approved by Council May 30, 2017):
3.6.1.1 Improve existing and develop additional recreational
X
infrastructure.
Strategic Plan (Approved by Council Resolution 99-043):
Provide diverse, year-round, indoor and outdoor recreation
X
facilities...( .3)
Other (list):
FISCAL NOTE:
Based on 2019 camper nights, implementing the proposed fee schedule (including the Premium
RV price tier) would increase revenue approximately $396,483 or 45%
Implementing the proposed fee schedule, minus the Premium RV price tier, would increase
revenue approximately $355,233 or about 401--�.
Approved by Finance Department:
ATTORNEY REVIEW: Yes — No Not Applicable
RECOMMENDATION:
Approve Resolution 2020. _ _ , to revise the municipal camping fees.
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Fees
RV Partial Hookup (water/electric 50/30/20 amp) 40/night
RV Dry Site **$20/night
Tent Site (max 2 tents per site) 10/night
Shower V/10 minutes
Dump Station 5/use
Trash Service FREE
*Water unavailable.
**Discounts available for 7 and 14 night stays (dry sites only).
Campground
Alice
Boulder
Forest Acres
Harborside
Iditarod
Marathon
Resurrection
Resurrection South
Spring Creek
Williams
Ballaine Blvd
Ballaine Blvd
2305 Dimond Blvd
111841h Ave
Railway Ave
Ballaine Blvd
420 Ballaine Blvd
Ballaine Blvd
Nash Road
Ballaine Blvd
RV Dry/Tent
RV Dry/Tent
RV Dry/Tent
RV Dry
RV Dry
RV Dry
RV Partial Hookup/Tent
RV Partial Hookup/RV Dry/Tent
RV Dry/Tent
Tent
*$tonight
S51night
Closed
Closed
Closed
Closed
No
No
No
No
No
No
Yes
Yes
No
No
8
From: Tyler Florence
To: Brenda Ballou
Cc: Norm Regis; Stephen Sowell
Subject: Revising Municipal Camping Fees Work Session
Date: Friday, October 30, 2020 1:58:10 PM
Hi Brenda,
Could you please include my written remarks in the packet for the upcoming work session on
revising municipal camping fees? You can pass this info along to council as well if they would like it
in advance. Thank you.
Premium Site Designation
There is a significant difference in demand for some of our sites based on features such as proximity
to the waterfront. This difference in demand is true even across sites of the same type; for example,
an RV Partial Hookup (water & electric) site located directly on the waterfront may receive roughly
30% more bookings compared to an RV Partial Hookup site located on the back row next to the road.
Establishing a "premium" designation for these higher demand sites would allow us to price in the
increased demand appropriately.
Cost Recovery
As referenced in the agenda statement, parks and recreation agencies commonly employ cost
recovery targets based on who is benefitting from a given service. This method allows park agencies
to help subsidize the cost of providing less profitable or free services that benefit the community as
a whole. Here's an example breakdown (cost recovery targets expressed as percentages):
Tier 5 — Mostly Individual Benefit - 150% (campsite rentals, equipment rentals)
Tier 4 — Considerable Individual Benefit - 100% (adult programs, tournaments, field rentals)
Tier 3 — Balanced Community/Individual Benefit - 60% (special events, camps, non-competitive
leagues)
Tier 2 — Considerable Community Benefit - 25% (youth programs, therapeutic recreation programs)
Tier 1— Mostly Community Benefit - 0% (park and trail use, at -risk programs)
Soliciting input from staff and citizen stakeholders is a best practice for determining how these tiers,
activities, and cost recovery targets are defined.
Year-to-date, the parks and recreation department (not including parking) has generated
approximately $660,000 in revenue and incurred $993,000 in expenses, which equates to a cost
recovery rate of roughly 67%. Our cost recovery rate for fiscal year 2019 was 69%. The national
average cost recovery rate for park and rec agencies is about 26%. The nominal FY19 cost recovery
rate for our campground budget alone was 214% (actual cost recovery rate is significantly lower
when you factor in park maintenance and administrative expenses, closer to—133%). For
comparison, Sports and Rec comes in next highest in terms of cost recovery, at 19% for FY19.
Using 2019 figures, if we implemented the proposed fee schedule (increasing revenue approximately
$396,483) the cost recovery rate for campgrounds would increase to a nominal rate of 305%, or an
actual rate of about 190%. Parks & Rec as a whole would increase from 69% to —94%.
Price Benchmarking
Included in the previously submitted packet, we conducted a survey of regional campground rates in
order to establish price benchmarks. It's important to note that the rates detailed in that survey are
overwhelmingly from private operators (1 municipal provider out of about 30). It's also important to
note that there are a variety of pricing tactics used by different providers that make it difficult to
establish a baseline price for sites fees, including:
• Dynamic pricing:
o Prices fluctuate based on demand, time, and other factors.
• Transaction fees:
o Credit card processor fees may or may not be included
o Taxes may or may not be charged separately
• Site lock fee:
o You are guaranteed a site, but you have to pay a site lock fee to secure a specific site.
• Group size fee:
o Many providers charge an additional per person per night rate for groups over a certain
size, typically 4.
• Pet fees
• Discounts
• Utility services maybe metered or unmetered
• Ancillary services may or may not be included:
o Wi-fi
o Showers
Due to the large scale of our municipal campgrounds and our organizational constraints, it is
absolutely critical that we maintain a simple and clear fee structure. We do not have the resources
or flexibility to enforce complicated pricing schemes. We believe that our current fee structure
largely fits that criteria. However, after reviewing various pricing methods, we do think it would be
prudent to implement a $5 per person per night fee for groups that exceed 4 people (not including
youth 4 and under). Maximum site occupancy would still remain at 8 people total. This approach has
several advantages over other pricing methods, primarily that it directly ties the cost of services and
facility impacts to the users utilizing those services and facilities. Furthermore, it helps reduce unruly
behavior often associated with larger groups by disincentivizing over -sized groups from sharing a
single site. It is also easier to process on our booking platform and to enforce from a compliance
standpoint compared to alternatives.
Decision -Making Methodology
So how are cost recovery targets and underlying fees derived? It comes back to community values
and sustainability. What are we trying to optimize for? Maximizing profit? Maintaining affordable
access to a public recreation resource? A mixture of both? Again, this requires input from all relevant
stakeholders.
There are pros and cons to both approaches, and there are risks to over maximizing in either
itt
direction. Setting prices too low runs the risk of users not valuing services appropriately, programs
becoming financially untenable, and making it more challenging for local providers that offer similar
services. Setting prices too high runs the risk of pricing out customers or prompting them to seek out
alternative cheaper alternatives (and in turn decreasing traffic at local businesses), and inflating
service level expectations without providing the corresponding amenities, i.e., reputational damage.
How customers respond to rate changes depends on a variety of factors, including the amount of
change, the time period over which the change is implemented, and what alternatives are available.
Thank you.
Respectfully,
Tyler Florence
Director of Parks & Recreation
City of Seward
tflorenceC@cityofseward.net
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