TVA Campgrounds and Marinas Face Big Fee Hike in 2013

June 1, 2012 by   - () 2 Comments

Red dots mark dams in the Tennessee Valley Authority. Gold dots mark fossil fuel electricity-generating power plants. Campgrounds and marinas are typically located near these structures. Map courtesy of Wikipedia.

A new fee system to be implemented by the Tennessee Valley Authority on marinas and campgrounds using TVA land will ultimately raise the rates local marina and campground owners must pay, those owners said.

“They will increase a great deal,” said Sabrina Brown, who owns Painter Creek Marina in Bristol, Tenn., with her husband, Franklin Brown II. The marina is one of a handful along South Holston Lake.

The new fee structure has been coming down the pipe since 2010, but will take effect in January 2013. The fee will affect owners of marinas and campgrounds that have land agreements with the TVA, reported.

How it works

Calculation of either of these fee approaches will take into account the total TVA land area involved in the commercial operation and any associated harbor limits over TVA land. All agreements will be subject to an absolute minimum annual rent, which in 2010 was set at $1,500. The two approaches are:

A) Fair Market Value: Payment will be based on appraised value of the raw land and any TVA-provided improvements and associated harbor limits. First year’s payment will be a percentage of that value based on TVA’s commercial recreation rate of return, which will remain 7.25 percent until Jan. 1, 2016. An escalation percentage also will be determined. After five years, property can be reappraised.

B) Percentage of Gross Revenues: Payment will be based on the percentage of gross revenues, which ultimately come out of the net revenue for the business. They include: boat and motor fuel sales – 1 percent; restaurant facilities – 2 percent; marina – 4 percent; campground on TVA land built by TVA – 6 percent; campground on TVA land built privately – 4 percent; and campground using marginal strip only – 4 percent.

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2 Responses to “TVA Campgrounds and Marinas Face Big Fee Hike in 2013”

  1. Tim Gilbert on June 11th, 2012 7:47 am

    Every TVA ratepayer and taxpayer should become aware of recent decisions TVA has made regarding the future of private recreational facilities on Tennessee Valley Reservoirs. The short story is that TVA is portraying private marina and campground owners as beneficiaries of public lands and is seeking new fees from them. This is a complex issue partially due to the variation in land disposals by TVA over the years. However, many marina and campground owners operate on property that was sold by TVA for recreational purposes. When TVA sold these properties certain rights were also deeded to them that accommodated both ingress and egress and construction of water use facilities upon the adjoining public shore lands. TVA now wishes to impose rental fees on these land owners for activities that in reality they have already paid for. To accomplish their revenue targets, it is my understanding that TVA has employed stringent deadlines in an attempt to coerce private marina and campground owners to enter into new permits and/or license agreements whereby TVA would gain voluntary compliance from them in order to circumvent the rights contained in their deeds. This is akin to TVA requiring ratepayers to pay a percentage of the value of their home because TVA provides them with electricity.

    Every TVA ratepayer should also be aware that at one time TVA also proposed implementing rental fees for private water use facilities but did not do so due to public opposition. This recent decision affecting commercial businesses is in my view a step toward that earlier objective. What this means to you is that TVA would have you fund their operations via unregulated electric rates and a variety of other fees including fees for campgrounds, marinas, and privately held water use facilities. Does this sound like taxation without representation? It does to me.

    No doubt the marina owners and ratepayers are perplexed by TVA’s actions. Common sense would suggest that TVA is only motivated by procuring additional sources of revenue. After all TVA has planned and managed its way into dire straits resulting from a massive debt approaching $30 billion, the Kingston levee failure costing ratepayers upwards of $1.2 billion, the Watts Bar Nuclear plant expansion cost overrun costing ratepayers an estimated $4.5 billion, the loss of coal fired generation capacity, the exorbitant cost of executive compensation wherein TVA CEO, Tom Kilgore receives almost $4 million per year, the disposal of publicly held generation assets to generate operating capital, fines by EPA and NRC, various lawsuits, continuous upheaval and reorganization of staff, and the loss of intellectual capital. To say that TVA is all hat and no cattle would be an understatement. TVA has lived beyond its means for too long and the consequences are painfully evident. And guess what; just like a spoiled child TVA wants its ratepayers and valley businesses to bail them out. TVA has become dependent on its ratepayers and were it not for its monopolistic status, TVA would be financially, morally, and socially bankrupt.

    Currently all of TVA’s activities including stewardship/management of public lands are funded by TVA Ratepayers. Prior to 1999 stewardship/management of public lands received taxpayer funds. It is critical for TVA ratepayers to understand that all of the public lands held by TVA are property of the United States. TVA is the federal custodian. The question we all should consider is whether taxpayers or ratepayers should pay for the management of public assets. I am in the taxpayer camp!! It is unfair for TVA ratepayers to subsidize management of assets held by the United States and pay federal taxes too! It is in effect double taxation.

    Please consider the following correspondence with TVA beginning with my note to the TVA Board of Directors on February 24, 2012.

    Dear TVA Board of Directors,

    I am perplexed about the recent decision to implement new fees for the operation of marinas and campgrounds on TVA reservoirs. I am a TVA retiree whose career spanned 30 years predominantly in reservoir land management. My career provided a deep understanding of TVA and its historical mission which has enabled the Tennessee Valley to grow from poverty to prosperity. As TVA began to grow, some of the public lands acquired for reservoir development were sold at public auction for private development. Many of these properties were restricted for recreational use via deed covenants. Consequently these properties were developed and now provide a base that supports the recreation and tourism engine along the Tennessee River. Early on TVA recognized the economic importance of private development in providing recreational opportunity and included protective covenants for the properties that were sold. Namely TVA included both specific and implied rights to construct and maintain water use facilities along shorelines adjoining the reservoirs. It is a result of these covenants that private marinas and commercial recreation facilities have operated free of charge.

    In my view the new fee policy borders on extortion and betrays the historical commitment made by TVA to purchasers of shore lands. It also fosters deep resentment among the marina owners who have in already tough economic times been blindsided by this. I find it confusing since TVA no longer provides recreational facilities that TVA now seeks economic harm to the very people who are serving the public by portraying them as beneficiaries when in fact they are the providers.

    What is the end game here? Is TVA prepared to seize assets and shutdown those who are unable or unwilling to pay? Is it not enough for the ratepayers to subsidize public land stewardship?

    Tim Gilbert

    Mr. Bruce Schofield of TVA provided the following response to my note:

    In response to Mr. Bruce Schofield’s response, I provided the subsequent follow-up note to the TVA Board of Directors:

    Dear TVA Board of Directors:

    Attached is Mr. Bruce Schofield’s response to my February 24 email. It is encouraging to hear and see in writing that TVA intends to honor past agreements with shore land owners.

    However, I must respond to Mr. Schofield’s assertion regarding rights conveyed in TVA deeds, namely that the right of ingress and egress and the right to construct water use facilities excludes commercial, industrial, or recreational activities. Having reviewed hundreds of TVA deeds for shore land properties and excepting of Section 4ka conveyances I cannot recall a single deed that specifically excludes those activities. Taking this a step further, Mr. Schofield’s assertion if valid would appear not only to apply to commercial uses but would apply to any use of public shore lands including those where residential water use facilities are present. My point is that most of the TVA deeds (Section 31 disposals in particular) do not specify the type of use whether commercial, private, or public. If Mr. Schofield’s position has merit then could/would TVA also determine to recover fees for residential facilities at some future date?

    The TVA ratepayers are painfully aware that TVA desires additional revenue to offset financial difficulty resulting from debt, the Kingston levee failure, aging coal fleet, reduced generation capability requiring the purchase of power from other utilities, nuclear violations, lawsuits, and excessive executive salaries. What is troubling is that TVA would chose to further alienate the customer base by invoking economic burden on struggling valley businesses, when for many of them these rights have been purchased and exist in perpetuity. Contrary to Mr. Schofield’s letter, there can be no fairness in leveraging money from those who may not be aware of their acquired rights nor truth and honor in changing the game to meet TVA’s financial needs under the guise of consistency, fair treatment, and public service. Commercial recreation facilities provide a beneficial public service that would not be available otherwise and now they are being adversely impacted by TVA’s Land Policy and the proposed fees. Although somewhat ironic, I personally remember a time when TVA subsidized the establishment and operation of commercial recreation businesses.

    I challenge each TVA Board Member to revisit this issue before agreeing to its implementation. It is my hope that each Board Member will both see and read this message and objectively consider this information apart from any cultural or organizational bias. In addition, the Board must take care to recognize the intellectual capital deficiencies that exist in TVA today resulting from constant reorganizations and the loss of knowledgeable personnel. Careful thought external to the financial objectives of TVA is needed to maintain honorable and honest service for the people of the Tennessee Valley and would facilitate restoration of TVA’s credibility and good name.

    Respectfully submitted,

    Tim Gilbert
    1512 Wyeth Drive
    Guntersville, Alabama

    TVA has assigned its Ombudsman, Wilson Taylor with the task of responding to my last note to the TVA Board. As of April 9, 2012 no further response has been received.

    TVA is banking on the unfortunate fact that most TVA ratepayers and power distributors are content to grumble and complacently acquiesce to the actions and decisions of TVA. Unfortunately it even appears that most if not all of our Federal congressmen/women have taken a laissez faire position in regard to TVA. As citizens, ratepayers, voters, businessmen/women we need to wake up and recognize that a fox is in the hen house relative to TVA. In essence TVA with no one to regulate them has no doubt succumbed to temptation of absolute power. Absent a public outcry nothing at TVA will change and the people of the Tennessee Valley will continue to suffer under TVA control.

    I am challenging every public official, electric board, power distributor, ratepayer and citizen to demand accountability from TVA. TVA is a public not a private agency. TVA leadership must:

    1. insure prompt, open, and honest communication with the ratepayers and citizens
    2. return the agency to its historic role of service
    3. adhere to commitments and historic policies
    4. promote internal agency stability (cease constant reorganizations)
    5. provide prompt unbiased service and due process for every applicant seeking a permit and/or use of public land
    6. Insure executive compensation aligns with public rather than private agencies. There are no other public agency paying such high salaries.

    Recent Articles about TVA Fees

    TVA INSTITUTING NEW SHORELINE FEES NEXT YEAR. The AP (2/23) reports that “the Tennessee Valley Authority is preparing to roll out restructured fees for shoreline marinas across the seven-state region that some smaller operators say could be the death knell of their businesses.” According to the article, “the fees to be applied in 2013 will affect about 450 riverbank businesses and properties on 46 reservoirs owned by the TVA, which is a federal government utility.” The AP mentions that “marina and campground operators are joined by at least two county chiefs” — Rhea County Mayor George Thacker and Meigs County Executive Garland Lankford – “in asking TVA to reconsider.”

    In a separate article, the AP (2/23) reports that while smaller operators are complaining about the fees, “TVA says these are private operators making money from public land and a restructuring of fees has been in order for some time.”

    On its website, WBIR-TV Knoxville, Tennessee (2/23, Meckles) reports that “TVA explains, the fee is comparable to a lease, not a tax.” TVA spokesperson Travis Brickey remarked, “It is a new fee structure for commercial operators who are using public land, public property for their business where they make a profit.” According to the article, “Brickey says the new system will create a level playing field for all.”

    Additionally, in an article about a coal mining operation in Walden’s Ridge, the Chattanooga (TN) Times Free Press (2/23, Sohn, 78K) briefly mentions that Rhea County Mayor George Thacker recently “pleaded with the Tennessee Valley Authority board to grant Rhea and Meigs counties a moratorium against higher TVA shore fees in hopes of allowing riverside campgrounds, marinas and restaurants a chance to bounce back. Of 20 such businesses that had existed in Rhea County in recent years, only four remain open now.”

    WCYB-TV Bristol, Virginia (2/23) also covers the story on its website.

    WBIR-TV Knoxville, Tennessee (2/22, 11:06 p.m., EDT) broadcast, “TVA will add a new fee system for commercial operations like marinas that use the utility’s land. It applies to about 200 marinas and campgrounds across seven states including Tennessee. Many of these operations already paid an annual fee which TVA says was inconsistent. The new system offers two options, a fair market value or a percentage based on revenues. TVA says it should put everyone on a level playing field.” Travis Brickey, TVA: “Some of them will see an increase, some of them will be in right where they are now, and some of them may even see a decrease, just kind of depends on where they are now.” WBIR-TV continues, “TVA collects about half a million dollars in fees under the current system. Officials say they don’t know yet how much they’ll receive under the new one.” WTNZ-TV Knoxville, Tennessee (2/22, 10:04 p.m., EDT), WCYB-TV Bristol, Virginia (2/22, 5:30 p.m., EDT) also cover the story.

  2. mike on August 4th, 2012 4:33 pm

    there is so much to say, but in a short readers digest version…….tva has become greedy & over taken by power & salaries that are far more then the employee worth….
    tom kilgore….3.95 million a yr…give me a break….& 155 of the top mangers share a 30 million salary budget…

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