Rates in the Grand Marais Recreational Park campground will go up in 2016, but the board opted to keep the increases somewhat moderate.
Grand Marais Parks Manager Dave Tersteeg presented several options for 2016 rate increases for the park board to consider at the November 4 meeting.
At the board’s October meeting there was agreement among board members to maximize revenues from the park to help keep city taxes lower and to generate more income to continue reinvesting in the campground.
Tersteeg presented 2015 comparisons between standard RV hook-up sites (spots without a lake view) that are rented nightly versus monthly, and lakeside sites that are either rented nightly or by the month.
“Nightly rates for lakeside sites are 20 percent higher than nightly rates for standard sites,” Tersteeg said. “Despite the higher rate, these sites have the highest occupancy for both tent and RVs.”
During the past season a standard site rented monthly ($2,915) was almost even with a standard site rented nightly ($3,027). Meanwhile, on average a lakeside site brought in $5,207 for the year when rented nightly versus $3,494 when rented monthly.
But the biggest difference in park income came when front row sites (closest to the lake) were rented nightly compared to monthly. Front row nightly rentals took in $6,550 per year versus $3,478 per year when put on the monthly rate schedule.
Simply put, said Tersteeg, “Lakeside and front row monthly sites are under-performing when compared to their monthly counterparts.
“Lakeside monthly sites yield roughly $1,700 less per site per year versus lakeside nightly sites rented nightly and front row monthly sites yield roughly $3,000 less per site year versus front row nightly sites.
“However, if front row monthly rates were priced on par with their nightly equivalents, the six guests that currently have a special choice to return to the front row would have to consider an 83 percent increase. For our lakeside monthly rates to yield nightly market comparable revenue, the rate increase would be 47 percent,” for folks who rent in those locations.
Tersteeg suggested raising the six front row sites to $4,600 for the year including on-site storage. That would be an increase of $1,122 for the six front row sites that have been long occupied by the same renters. He also suggested a yearly fee of $4,000 for lakeside sites and $3,500 for all of the standard sites.
Park Board Member Reid Dushek argued that the six longtime renters felt they had been promised the sites as long as they wanted them by past park boards.
“They feel they were given a deal and promised something. I wasn’t there, so I don’t know if that’s true or not. But we should wait. We don’t want to cause any ill will. I don’t think we should tell people to pack up and move from a site they have been at for a long time.”
Dave Mills, a park board member and city councilor said he had given the matter a lot of thought, but came to a different conclusion.
“This is a campground, not an RV Park. We have to get the best value and realize the potential for each of these sites. We aren’t kicking them out of the park. If they want to stay at those current sites, they will have to pay more. But if they want to move to another less expensive location in the park, we will be able to offer that to them.”
Tersteeg pointed out that about 15,000 people stay at the park in any given season, and most of these changes in rates will only affect, “15 to 30 people.”
Park Board Member Sally Berg said she had been told of promises by past park boards to the folks who rent on the front row, but said, “If there were promises made they weren’t set in stone. There should be a record of them and we can’t find any records in any minutes.”
When asked if the board needed more time to look over the various options Tersteeg had presented, and maybe slowly, incrementally offer some changes, Berg said, “I think we need a revolution, not an evolution.”
With that the board passed a motion 4-1 with Berg, Walt Mianowski, Dave Mills, and Kaye Tavernier voting for and Dushek voting no, to increase front row sites to $4,600 for the season, $4,000 for lakeside sites and $3,500 for standard sites. The front row and premium rates include 12-month on-site storage.
The standard 3-month peak rental sites will be charged the same next year for 9 months of storage, $67 per month.
The 3 month June-September front row rate will now be $800; $700 for May and October; $750 for three prime months for lakeside sites ($650 for May – October) and $700 for June- September for standard sites ($600 for May – October).
The board also voted to extend its prime rental season one month by making June 15 to September 15 prime rate season. More money is charged for overnight and monthly rentals during the prime season.
As far as tenting sites, Tersteeg said tent rates “have reached their peak market value,” and shouldn’t be increased. Nightly RV rates could be raised 50 cents per night, which would result in a 1.5 percent rate increase, he said, which the board, agreed to and passed a motion to do so.
Special meeting to discuss “premium” sites
Four out of five park board members attended a special meeting held on Tuesday, November 10 to discuss changing some standard sites to lakeside, or “premium” sites. Sally Berg wasn’t in attendance when Tersteeg took Walt Mianowski, Dave Mills, Reid Dushek, and Kaye Tavernier on a walk through the park to examine various trailers’ locations. Tersteeg asked board members for their opinions on whether they should be upgraded to premium status, a name the park board favored over “lakeside.”
The board voted 3-0 (Dushek had to leave to attend to family business) to designate sites 22W-28W, 61-63, 51-53, 41-49, 92-96 as premium sites. The decision was based on their location, size of lots, past rental history and views to Lake Superior.
The board also voted to establish three-month (June 15 – September 15) front row sites at $800 per month, premium sites for $750 and standard sites $700. Two-month rates will be $50 more than three-month rates and one-month rates will be $100 above three-month rates.
Tersteeg is preparing a letter to send to all Rec Park customers to let them know what is going on with rates in the park and some upgrades that will be occurring in the park next year. Mianowski said he thought the rates looked good, but Tersteeg said, “No matter what, we will get some blowback on this.”
Marina rates lowered
Currently the marina fee of $1.55 per foot for boats is the highest nightly rate on the lake, said Tersteeg.
“At $1.50 per foot we would shed this negative distinction and be on par with other marinas,” Tersteeg said. “The net yield on daily marina dockage for 2015 was $8,226; reducing the rate by 50 cents per foot would impact our bottom line roughly $260 annually with flat occupancy. However, more boats may decide to pay the new lower rate.”
The board agreed with Tersteeg and lowered the rate. Mills called it “symbolic,” but said in light of the fact that the marina wasn’t often busy and had seen a fall-off in business in the last couple of years, he also called the move prudent.
Based on comments received from both seasonal and overnight buoy renters, Tersteeg offered flat pricing of $500 to $700 per season; $200 per month; or $25-$30 per night to people who wanted to moor a boat in the harbor.
After some discussion the board voted to make the season rate $600 and charge $200 per month and $25 per night to rent buoys.
Looking ahead
With the season over and the park winterized, Tersteeg said the park generated $1.05 million in revenue with about $530,000 spent to run the facility.
“This will leave the city a profit of $425,000, nearly double our projected 2015 budget estimate.
“We had a great year. We have a great staff. I would really like to say thank you to my staff for the great job they did,” Tersteeg said.
He offered the park board a list of seven items that he felt needed to be upgraded over the next year.
The first item was replacing the antiquated fuel oil furnace in the park building and switching to propane at cost of about $5,000, he said, adding that it currently costs about $4,000 each year to heat the building with fuel oil. By switching to propane the park would see the investment paid off in about two years, he added.
The office building could be completely rehabbed for between $50,000 to $100,000, he said, noting the building needs a new roof, new siding, windows etc. If this renovation is done, the dream of a million-dollar office building erected by the marina would be put on hold for 20 years or more, but Tersteeg said he was okay with that.
The park needs 10 Americans with Disabilities (ADA) compliant picnic tables and 10 new in-ground fire rings with cooking grates at a cost of about $5,000. A new commercial mower could replace two current mowers at about $7,000. Wi-Fi could be installed at the park for between $5,000 to $10,000 and $50,000 could be spent to upgrade the park’s electrical system to high value sites.
The board will talk about these items at their next meeting.
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