Presenter: Walt Dabney

Commission Agenda Item No. 13
Action
Chapter 59 - Concession Rule Change
January 2006

I. Executive Summary: These items present a change to 31 Texas Administrative Code, Chapter 59, §§ 59.104, 59.105 and 59.108, the operation and leasing of park concessions. The amendments define the conditions for the issue of a revocable temporary contract, extend the term for the duration of these contracts and eliminate the reference to a set minimum amount of liability insurance coverage required by leased concessionaires.

II. Discussion: Under Parks and Wildlife Code, §13. 015, the Texas Parks and Wildlife Department may operate or grant contracts to operate concessions in state parks and may make regulations governing the granting or operating of concessions.

III. Recommendation: The staff recommends the Texas Parks and Wildlife Commission adopt the following motion:

"The Texas Parks and Wildlife Commission adopts Chapter 59, Operation and Leasing of Park Concessions, (located at Exhibit A) as published in the December 16, 2005, issue of the Texas Register (30 TexReg 8417-8419). The Texas Parks and Wildlife Commission adopts Chapter 59 as amended."

Attachments - 1

  1. Exhibit A - Operating and Leasing of Park Concessions

Commission Agenda Item No. 13
Exhibit A

Operating and Leasing of Park Concessions
Proposal Preamble

1. Introduction.

The Texas Parks and Wildlife Department (TPWD) proposes amendments to §§59.104, 59.105, and 59.108, concerning operating and leasing of park concessions.

The proposed amendment to §59.104, concerning Types of Concession Contracts, would expand the description of revocable temporary contracts. The current rule authorizes the department to enter into a revocable temporary contract when necessary to take immediate action to continue services or provide interim services. The expanded description would also allow the department to enter into a temporary revocable contract in order to test a new service. The amendment is necessary to allow the department to test the feasibility of some new services before they are incorporated into a park’s regular program. Determining visitor support prior to entering into a longer-term contractual agreement is an efficient practice for both TPWD and the prospective concessionaire.

The proposed amendment to §59.105, concerning Contract Terms, would allow the department to stipulate a contract length within a range of six to eighteen months. The current rule requires all revocable temporary contracts to be six months in length. The longer time period would allow staff to perform a more thorough critical examination of new and untested services. A calendar year or longer is usually required to examine customer reaction and support during seasonal visitation fluctuations.

The proposed amendment to §59.108, concerning Bond and Insurance, would eliminate reference to the minimum amount of liability insurance required of concessionaires. The current rule requires a concessionaire to carry a minimum of $300,000 in liability insurance. The department contracts with private service providers under the concessions program to offer a variety of park activities, with varying degrees of associated risk. The nature of these activities and the related competency skill required to perform the activities directly relate to the degree of risk. To ensure the department’s protection, the amount of liability coverage required of concessionaires must be commensurate with the associated risk (i.e., lower coverage required for minimal risk activities and greater coverage required for higher risk activities). A regulatory requirement for a specific amount of liability coverage can be misleading to prospective concessionaires. The proposed amendment is necessary to avoid potential confusion.

2. Fiscal Note.

Mr. Michael Creviér, State Park Business Manager, has determined that for each of the first five years that the rules as proposed are in effect, there may be fiscal implications to state government as a result of enforcing or administering the rules. Identifying the correct concession-provided services that meet demand and promote visitor enjoyment and satisfaction of the parks will sustain the current user base and their contributions to the financial support of the department. Potential state losses will be minimized by requiring leased concessionaires to secure an adequate amount of liability coverage that is commensurate with the associated risk.

There will be no fiscal implications to units of local government as a result of enforcing or administering the rules.

3. Public Benefit/Cost Note.

Mr. Creviér also has determined that for each of the first five years the rules as proposed are in effect:

(A) The public benefit anticipated as a result of enforcing or administering the rules as proposed will be the effect of sustaining park visitation and user support by meeting demands for some visitor services through the leased concessions program. Additionally, a public benefit is achieved by decreasing the potential loss to the state by ensuring adequate concessionaire liability coverage for these provided visitor services.

(B) There will be no adverse economic effect on small businesses, microbusinesses, or persons required to comply with the rules as proposed. The current rule requires a concessionaire to maintain insurance “against losses by fire, public liability, employee liability, and other hazards . . . in an amount satisfactory to the department,” but no less than $300,000. The proposed rule continues the requirement that a concessionaire maintain insurance, but does not specify the minimum amount of coverage. The proposal would therefore enable the department to require insurance coverage in an amount less than $300,000, so long as the amount is satisfactory to the department. As a result, the department would be able to require less insurance than currently required if warranted by the risk involved in the concession operation. As a result, any impact on small or microbusiness would be a positive impact. Thus, the proposed rule does not affect small businesses, microbusinesses, or persons required to comply, and, if anything, allows the department to reduce the expense incurred by a concessioner who enters into a contract with the department.

(C) The department has not drafted a local employment impact statement under the Administrative Procedures Act, §2001.022, as the agency has determined that the rule as proposed will not impact local economies.

(D) The department has determined that there will not be a taking of private real property, as defined by Government Code, Chapter 2007, as a result of the proposed rule.

4. Request for Public Comment.

Comments on the proposed rule may be submitted to Michael Creviér, Texas Parks and Wildlife Department 4200 Smith School Road, Austin, Texas, 78744; (512) 389-8560 (e-mail: mike.crevier@tpwd.state.tx.us).

5. Statutory Authority.

The amendments are proposed under Parks and Wildlife Code, §13.015, which authorizes the Texas Parks and Wildlife Department to grant contracts for operating concessions in state parks and to make regulations governing the granting and operating of concessions.

The proposed new rule and amendments affect Parks and Wildlife Code, Chapter 13.

§59.104. Types of Concession Contracts.

(a) A standard form long-term contract shall be used to grant major concession rights and privileges when the concessioner is required to make sizable investments in merchandise inventories, furnishings or equipment, and maintenance or repair of state-owned buildings and structures.

(b) A revocable short-term contract shall be used to grant minor concession privileges when the scope and size of the concession warrants it. Examples include merchandise vending machines, miscellaneous coin-operated machines, recreational rental equipment, and other miscellaneous services or accommodations the public has a right to expect and the executive director deems appropriate. A prospectus announcing the availability of this type of concession may not be issued.

(c) A revocable temporary contract may be used when it is deemed necessary that immediate action be taken to continue services, [or] provide interim services, or under circumstances when a test period is required to determine the feasibility for adding a new concessioner provided service in a park.

§59.105. Contract Terms.

(a) The standard form contract shall be executed for a term of years commensurate with the size of the total investment required of the concessioner. The duration of a contract shall be set for a period of time to allow for a reasonable opportunity for return on investment.

(b) Revocable short-term contracts shall be issued for a term of two years or less.

(c) Revocable temporary contracts shall be issued for a term of 6 to 18[six months or less].

(d) No renewal rights shall be made a part of any concession contract.

§59.108. Bond and Insurance.

(a) The executive director may require the concessioner to furnish a bond conditioned upon the faithful performance of his contract. When the contract award involves construction of public accommodations, the concessionaire will be required to obtain a payment bond.

(b) The concessioner shall carry such insurance against losses by fire, public liability, employee liability, and other hazards as is customary among prudent operators of similar businesses under comparable circumstances, and in amounts satisfactory to the department. [The minimum limit for public liability shall be $300,000.] The executive director has the authority to increase this limitation[s] when conditions warrant such action.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency’s authority to adopt.

Issued in Austin, Texas, on


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