TVA Overhauls Campground Rate Structure

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December 29, 2010 by   - () Leave a Comment

Red dots mark dams in the Tennessee Valley Authority. Gold dots mark fossil fuel electricity-generating power plants. Map courtesy of Wikipedia.

The sky may not be falling for campgrounds, but the front porches and gravel driveways will have to change, along with business fees, for campgrounds located through the Tennessee Valley Authority's (TVA) region across the South.

At last week’s Marshall County Fiscal Court meeting in Benton, Ky., a TVA representative attempted to ease concerns over the federally owned company’s proposed changes to commercial recreation agreements, the Marshall County Tribune reported.

James Adams, commercial recreation manager for TVA, said proposed lease agreement changes, which will take effect as current ones expire, are designed to increase public recreation opportunities and set a reasonable fee structure. Adams said that while fees for most campgrounds owners will rise, they most likely wouldn’t be as high as some operators fear.

“The largest payment valley-wide I would expect to be less than $80,000, and that wouldn’t be in Marshall County,” Adams said. “TVA’s been putting in agreements since 1933 and we’ve had different types of agreements. Over time, those have become inconsistent. We’ve had some of those agreements in place since the 1960s and the price hasn’t changed.”

While prices could be expected to rise, Adams said there were ways operators could decrease rates, especially in times of economic downturns.

“There’s some things we can do and will help [business owners] do to reduce costs,” Adams said. “You can reduce the agreement area and the harbor limits not being used and later, if the economy improves and you want to add more marina slips, you can go back and increase that. If you’ve got 20 acres in your harbor area and you’re only using five acres, let’s only put five acres in the license. Then, as your business expands, you can put in another five acres.”

Adams said some structures, such as restaurants, could also be built in adjoining private land which would not affect TVA fees.

As current lease agreements expire, business owners will have a choice of fee structures— fair market value or a percentage of gross revenue.

“TVA would provide a list of three or four appraisers in the area and [the business owner] would pick from that,” Adams said. “We look at the raw land only, we don’t look at improvements the operator has put on the land. And when we do this, we’re talking land for commercial recreation only.”

Residential values will not be considered.

Adams said the payments were payable in advance quarterly and were eligible for reappraisal after five years. In times of economic downturn, the operator can choose to have the property appraised again for a reduced fee. Likewise, in a booming economy, TVA will have the right to reappraise after five years. Adams also said no annual reports of income would have to be reported to TVA.

Fair market value annual payments would be determined by the value multiplied by 7.25%.

“Once we set a rate, it begins to escalate,” Adams said. “This is what we’ve not done in the past. It needs to escalate because if a payment stays static for 30 years, after time that’s a really good deal. So it will escalate at two percent per year.”

The gross revenue option would include four percent of money taken in on TVA land and harbor limits, excluding sales tax, directly metered electricity and hunting or fishing licenses. A 2% rate would be assessed for restaurants and a 1% rate on boat and motor sales or fuel sales.

“There is a minimum,” Adams said. “You need a minimum to make sure there’s a valid go trying to operate this as a business. You could say, if there were no minimum, I can buy this acre lot for $300,000, or I can get a lease from TVA for 20 acres for $3,000 a year.”

Adams also addressed concerns over permanent sites at campgrounds.

“Length of stay issues is something we’ve had a difficult time with,” Adams said. “We don’t want the campgrounds to be permanent residential. We go through and there’s an LP tank, there’s a mailbox. Those are permanent facilities. We’re trying with these lands TVA is providing to provide a public recreation opportunity. If it becomes just a residence, that’s what TVA doesn’t want.”

A large portion of campground revenues are generated from the permanent residences, but TVA will require campsites to be cleared two weeks out of the year. Past TVA regulations did not allow for permanent residences on campsites, but Adams said it was not previously enforced.

“We will allow a percentage of them to stay 11 1/2 months,” Adams said. “We want a percentage of those sites where transients coming through can have a place to stay.”

Plans are currently to allow for 75% long-term and 25% transient. The percentages are still being considered and will not take effect until 2013.

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