Parks and Recreation Policy # 99-(P) Replaces Parks Policy

8

Parks and Recreation Policy #1.3

Revised March 1999

CONCESSION OPERATION

POLICY

This policy will govern concession operations in Michigan State Parks and Recreation Areas. All previous park policies on the subject are rescinded.

Under Act 218, P.A. 1919; the Commission "shall be authorized to rent or lease public service privileges in any such park or parks."

Concession Leases

The concession or "park store" has been an institution in Michigan State Parks for many years. Its only justification is to provide service to the public. All concessions will be operated under terms of a formal lease agreement with private individuals, firms, or organizations.

Public Act 135 of 1987 requires that each concession lease will be rebid or renegotiated every seven years. Approval by the Natural Resources Commission (NRC) is required for all concession leases in which the gross receipts for the preceding year were more than $10,000. (DNR Commission Memo 4/10/86.) The Parks & Recreation Division Office will directly supervise the bidding of all concession leases except for firewood leases and vending machines which have an annual gross of $10,000 or less. The bidding of firewood and vending machine leases of $10,000 or less is delegated to the Management Unit Administrator or Park Supervisor (Refer to Policy #1.3, Section III.)

Three factors are equally evaluated in selecting a concessionaire (DNR Commission Memo dated 4/9/87):

1.  Past experience as it relates to the desired services.

2. Available financial and other resources needed to equip and stock the concession (cash, supplies, equipment, etc.).

3. Remuneration to the State. This may be in the form of a percent of gross receipts (not including sales tax) or by flat fee payments. Additionally, personal services and approved capital improvements may be offered by or required of bidders. (DNR Commission Memo dated 9/17/65.)

On occasion, there are requests by large groups that wish to have private vending companies bring in mobile units to sell beverages and other items to the group. Concessionaires pay the State for the privilege of selling these products. They have the exclusive right of making the sale in those parks or parts of parks covered by their contract. Therefore, catering requests must be denied. The concessionaire does not have the right to waive or transfer lease privileges without the written approval of the Department.

Catering that involves action by a vendor to actually sell any item to individuals is expressly prohibited by Rule 1, Section d, of the State Park and Recreation Area Rules. However, where a group has made special delivery arrangements with a catering company and the group has paid for such services before they enter the park, deliveries only will be permitted. In the event groups wish to arrange for catering service during the "off-season" (field trials, etc.), the concessionaire should be asked to perform these services. If the concessionaire does not wish to, or cannot perform the services, a short-term use permit may be issued to a caterer (see Parks and Recreation Policy #8.7).

The Lease and Concession Agreement makes the concessionaire directly accountable to the Park Manager. The park management should visit each concession many times weekly. The responsibility for the day-to-day operation and accounting of the concession is as much the Park Manager's responsibility as any other operation in the park. The Managers must be familiar with the lease and this policy and procedure if good supervision is to be provided to the concessionaire.

A summation of the Public Acts and Commission Memorandums that regulate the bidding of state park concessions are as follows:

PUBLIC ACTS

Public Act 218, 1919, Section 5, as amended, confers upon the NRC the authority to rent or lease public service privileges in state parks.

Public Act 91, 1987, Section 8(1), directs that all fee and concession revenues derived by state parks be credited to a separate fund for the improvement and maintenance of state parks.

Public Act 135, 1987, Section 20; The Commission of Natural Resources shall provide that each concession in a state park be awarded every seven years based upon renegotiations or competitive bidding. The award of each concession in a state park shall be approved by the Commission of Natural Resources.

COMMISSION MEMORANDUMS

Operation of Concessions (Commission Memorandum dated July 14, 1954):

The concession or "park store" has been an institution in Michigan's state parks for many years. Its only justification is to provide service to the public. It shall be the policy of the Department that concessions be operated under terms of a lease to private individuals or firms. Concessions are awarded on a competitive bid basis to the highest bidder except that bids other than the high bid may be accepted if the ability, integrity, and experience of the bidder warrants such exception.

Selecting Concession Operators (Commission Memorandum dated April 19, 1987):

Concession operators are to be selected based upon the following three equally weighted criteria:

A. Past business experience as it relates to the services required.

B. Available financial and/or other resources to equip, stock, and operate the concession.

C. Remuneration to the Department. Remuneration may be in the form of rent and/or capital improvements and/or additional services i.e. cleaning buildings and/or other public use areas.

Awarding of Concession Leases (Commission Memorandum dated April 10, 1986):

Many concession operations gross a very low dollar volume. These concessions are operated by small businesses and individual local people. Because of the low profit margin on these operations, turnover of operators is high. It is common to have low dollar volume operators terminate their lease giving little or no notice to the State. It is important that the Department be able to react quickly to replace operators so that the loss of public services are held to a minimum. Therefore, the Commission delegates the authority to award all concession leases in which the gross receipts for the preceding year are $10,000, or less, to the Department. The Commission shall directly award all leases in which the gross receipts for the preceding year are more than $10,000.

Renegotiation of Concession Leases (Commission Memorandum dated September 18, 1965):

Concession leases may be renegotiated at their termination without the formality of competitive bidding, except as directed in appropriations legislation previously mentioned.

PROCEDURE

I. REPORTS AND FORMS

The Park Manager shall not allow a concession to open until Items A through D of the Reports Check List have been completed by the concession operator.

A. Concession Operator's Price List (PR-3001):

Concession operators will be expected to keep prices reasonably near those being charged locally for similar items. Concession operators must display prices for each item sold with a menu board or by marking each item conspicuously. The Park Manager will retain the right to approve the price of each item.

The Price List Form (PR-3001) will be used to report prices charged for service items like boat rentals, canoe trips, preserver rentals, dune rides, horse rentals, range fees, etc. An original and three copies of PR-3001 or PR-3001-1 will be given to the Park Manager by the concessionaire no later than 10 days prior to opening. The Park Manager will sign the list (if all prices are approved), and return one copy to the concessionaire with copies to his District Supervisor and the Parks and Recreation Division.

Although the Park Manager has the authority to approve all prices, a formally approved price list for other items like refreshments, food, bait, souvenirs, etc. is not required.

B. Performance Bond:

The amount of annual performance bond for new leases is determined by the commission paid the State for the months of July and August, or a minimum of $1,000. In all renegotiations of leases after a minimum of five years of satisfactory operation, the performance bond shall be set at $1,000 or the average commission paid the State for the months of July and August over the previous five years; whichever amount is less.

In the case of an operator who has a total of 10 years satisfactory experience with Michigan State Park concessions, no bond will be required. Proof of bond must be submitted direct to the Bureau Office by the concessionaire.

C. Insurance:

The concessionaire shall obtain the required amount of insurance including a lO-day cancellation clause. The "Certificate of Insurance" is to be mailed directly to the Bureau Office by the concessionaire. Bureau will send a copy to the appropriate park. Proof of liability insurance must carry the Department as additional insured, or, it is not acceptable.

D. Concession Equipment Inventory (PR-3067):

When a new lease is approved or renegotiated, the concessionaire shall prepare original and two copies of the inventory and provide the Park Manager with original and one copy. Should a concessionaire add a major item of equipment, he should submit a supplemental inventory form. The Park Manager will forward the original copy to the Bureau Office. Equipment which becomes permanently affixed in the building and is not on the equipment inventory shall be considered property of the Department.

E. Concession Operator's Report (PR-3007):

The concessionaire will complete two copies of this form each month of operation. The original and one copy, along with a check covering the commission or rent due the State, will be given to the Park Manager by the 15th of the month following the business involved. The Park Manager will bank the commission check locally and remit the funds to the Department of Natural Resources (DNR) Cashier by using State Park Remittance Report R-3010. Report the gross sales (minus sales tax) even if flat fee payments have been made and there is no revenue to remit with a certain report. The Remittance Report should still reflect gross sales and revenue paid the State no matter which method of payment is being used. Concessionaires who pay an annual flat fee to the Department rather than a percent of gross receipts must give the Manager one copy of the monthly report instead of two. This will allow the Manager to monitor the days the vendor is operating, as well as the actual amount of sales. Concession Operator's Report PR-3007 is to be kept on file at the park for audit.

The monthly report must be carefully audited for accuracy. The monthly report daily figures must be randomly checked against cash register tapes, ticket receipts, or register logs for a minimum of seven days each month. This audit must reconcile to the figures shown on the monthly report.

The following guidelines are to be used in determining whether or not sales tax should be charged on an item:

Tax Does Apply:

·  To the sale of items such as firewood, souvenirs, firearms, beach toys, etc.

·  To food that is not prepackaged and intended for immediate consumption.

Tax Does Not Apply:

·  If item rented had sales tax paid on it at time of purchase. (Firearm rental, boat rental, ski rental, horse rental, etc.)

·  To entertainment rides such as dune scooters, boat rides, wagon or hayrides, etc.

·  To prepackaged food or food items not intended for consumption on the concession premises.

F. Concession Price Analysis (R-3128):

The Park Manager will prepare three copies of the form after making the analysis in mid July and mid August. One copy will be sent to the District Supervisor and the other copy will be sent to the Parks and Recreation Bureau Office.

G. Concession Annual Business Report (PR-3068):

The Bureau Office will mail each concessionaire two copies in November. Concessionaire will submit the original copy to the Parks and Recreation Bureau Office. Information from this report is confidential.

II. THE LEASE

A. Lease and Concession (PR-3042):

The Lease and Concession Agreement gives the Lessee exclusive rights to vend the products and services at the location described in the Lease. The Lessee does not have exclusive rights to the entire park. However, when new services are desired at a particular park, it shall be the policy of the Bureau to offer the existing concession operator the first opportunity to provide the service. The concessionaire must be willing to provide the services, as specified by the Department, at the percent or fee established in the operator's current lease. Failing these conditions, the new services will be awarded by the competitive bid process.

When a concessionaire is selected, copies of the Lease will be sent to the appropriate park at the same time they are sent to the concessionaire for signature. They should be carefully reviewed. Any concerns should be brought to the attention of the Parks and Recreation Bureau before the Lease is returned by the concessionaire for execution (signature). The Lease is not executed by a Bureau signature until after the concessionaire has signed it.

B. Concession Managers:

The Lease and Concession agreement allows the concessionaire the opportunity to use a Concession Manager only after the Department has given written approval. Such requests should be reviewed by the Park Manager. If the proposed Concession Manager is competent to operate the facility, the Parks and Recreation Bureau will amend the Lease and give written approval to use a Concession Manager. Approval will not be given for more than one season at a time.

III. FIREWOOD CONCESSIONS

A. Firewood will be sold in one of the following manners:

1) From a woodrick built by park staff. Fee deposited in a collection pipe or collected by park staff. (Location of all woodricks must have the approval of the Parks Division.)