Town eyes new way to do business

CAMPING OUT: Portsmouth Town Administrator John Klimm, left, and Finance Director Jim Lathrop at the Melville Ponds Campground. The town is looking for proposals for an operator to pay rent and share revenue. / PBN PHOTO/KATE WHITNEY LUCEY
CAMPING OUT: Portsmouth Town Administrator John Klimm, left, and Finance Director Jim Lathrop at the Melville Ponds Campground. The town is looking for proposals for an operator to pay rent and share revenue. / PBN PHOTO/KATE WHITNEY LUCEY

Portsmouth is looking to generate income from its municipal Melville Ponds Campground, part of a planned fiscal restructuring to lessen reliance on property taxes.
A request for proposals is out for a campground operator who will pay the town $25,000 in annual rent, plus a share of gross revenue. The deadline is 3 p.m. on Oct. 3 for proposals to arrive at the finance office at Portsmouth Town Hall.
Currently, the cost of the campground manager, staff and maintenance are all paid for by the town. The facility with 123 campsites for RVs and tents attracts campers from out of state and out of the country, particularly for events nearby like the Newport Jazz Festival and Newport Folk Festival, according to campground manager Bill Bryant, who has held that job for 24 years.
“We have campers who come from Germany, Spain, Italy and the Netherlands,” said Bryant. Those campers from other towns, states and countries are why Portsmouth officials are reworking the financial structure of the facility.
“The campground traditionally has not made a profit, and we should not be subsidizing activities, especially if they don’t benefit our residents,” said Portsmouth Finance Director Jim Lathrop.
The town’s broader goal is to get more of a return on several municipal assets and diversify its revenue stream through revised user fees.
“We have a heavy reliance on property taxes,” said Portsmouth Finance Director Jim Lathrop. “We know we need to fund certain activities, and we’re looking at alternative sources of revenue, as opposed to going to just taxes.”
Portsmouth gets about 85 percent of its revenue from property taxes, compared to the state average of about 77 percent of municipal revenue from property taxes, according to a report by the town’s New Revenue Working Group, released to Town Council on Aug. 14.
The report makes recommendations on changes for fees for the town’s municipal beach, moorings, ambulance service and motor-vehicle tax.
“We’re changing the business model,” said Lathrop, one of 14 members of the New Revenue Working Group. “The campground is one of our first big items.
“We’re looking for an outside vendor to operate the campground, so they truly have a profit motive,” said Lathrop. “We’ll share in the profits with them, with some guarantees on our side. That’s the shift.”
The shift to the guaranteed $25,000 annual rent on a five-year contract, with options to renew, is intended to encourage the operator to make investments in the facility, said Lathrop. According to the RFP, “the town will make no contribution to capital improvements” at the campground.
Town leaders are also putting other assets and fees under the microscope.
“In most other communities, there are activities that are traditionally paid through user fees, and that’s the financial process that is taking place in town,” said Portsmouth Town Administrator John Klimm. “Whereas most other coastal communities have a beach sticker fee and mooring fees, Portsmouth is really kind of behind the times and now is shifting the tax burden to user fees.”
The town is not the only community across the state that has been forced to make adjustments to municipal finances in the aftermath of the Great Recession.
“Cuts in state aid and local decisions on pension and health care benefits for municipal employees have contributed to the fiscal distress that some municipalities were facing,” said Susanne Greschner, chief of the Division of Municipal Finance in the R.I. Department of Revenue. “With assistance from the state, efforts on the local level to address large unfunded liabilities for local pensions and post-employment benefits, such as health care, will help to ensure the fiscal stability of our municipalities.”
Once the poster child for what poor fiscal management can do to a community, Central Falls is pulling out of the fiscal hole largely created by unfunded pension liabilities.
“Four years ago, Central Falls made national news by becoming the first city in Rhode Island to enter state receivership and declare bankruptcy a year later,” Mayor James Diossa told PBN. “We faced numerous challenges that required bold action and an innovative approach to government, but we never gave up. Thanks to our team efforts and sacrifice, today Central Falls is stronger than ever.
“We have been following the state-imposed, six-year recovery plan faithfully and stabilized the city’s finances,” he said.
Portsmouth is not in danger of bankruptcy, Klimm assured Providence Business News. Moody’s Financial Service has assigned an Aa2 rating to the town, he said.
In an April letter to Town Council, Klimm praised the council for already reversing “… the long-held practices of spending down fund balances and deferring infrastructure maintenance.
“The challenge in making tough budgetary decisions not only goes to the core of our fiduciary responsibility to our citizens, but it is necessary to ensure that we do not become a community, like our distressed sister Rhode Island communities, in utter financial crisis,” Klimm wrote. Now, change is afoot.
The effort to make better use of town assets is aiming at some low-hanging fruit, said Klimm, also part of the working group.
Take the town’s 980 moorings, for instance.
“On the moorings, we currently charge residents $5 and from the research we’ve seen, we know the average resident charge by a municipality is about $146 per season,” said Lathrop.
The nonresident mooring charge in Portsmouth is $270 per season, nearly equal to the average charge of $279 for nonresidents in other Rhode Island communities.
Revenue from Portsmouth municipal moorings is $56,000 annually, with the operating cost currently subsidized by tax revenue. The cost of meeting new state and federal requirements, the cost of the harbor master and funding for future capital needs are expected to be approximately $100,000 per year, according to the Portsmouth Harbor Commission.
The New Revenue Working Group recommended that residents pay $50 and nonresidents pay $10 per foot in annual mooring fees, in order to increase revenue by $44,000 annually, to cover the cost of operating the mooring fields and end subsidizing moorings with tax revenue.
The town’s Sandy Point Beach is also caught up in the wave of change. Currently, residents do not pay a beach fee.
“It’s costing us almost $70,000 a year to provide the service and that covers the cost of lifeguards and other staff and maintenance, and we’re taking in about $6,000 in revenue annually,” said Klimm.
The recommendation from the revenue working group is to increase nonresident beach passes from $7 to $10 on weekdays and from $12 to $15 on weekends, which would add $15,000 a year to town coffers. The working group also recommends a resident season pass of $30 to generate $9,000 annually.
Other recommendations include charges for town ambulance calls, noting that Newport charges for that service. The recommendation is for billing related to auto accidents to be covered to the extent of the operator’s vehicle insurance, and exempt residents with a household income of less than 150 percent of poverty level.
The working group also recommends reducing the current $3,000 exemption on the assessment of motor vehicle taxes by $2,500, which would bring the town an increase of $368,000 annually. •

No posts to display