Management of Permits, Fees, and Other Revenues

· Although the 1996 Charter required Board of Supervisors approval to charge fees, the Recreation and Park Department continues to charge a $35 facility use fee to community organizations to use Recreation and Park Department facilities that have not been approved by the Board of Supervisors. The Budget Analyst recommends that this $35 facility use fee be submitted to the Board of Supervisors for approval.

· In a review of 50 randomly-selected permit files, the Budget Analyst found that the Recreation and Park Department charged fees that were consistent with the Park Code in only 22, or 44 percent, of the 50 permits.

· The Park Code allows the Recreation and Park Commission to adopt policies and regulations authorizing the General Manager to reduce or waive fees or costs imposed under the Park Code in cases of demonstrated financial hardship. The Department waived event fees entirely in 10, or 20 percent, of the 50 permit files. In one case, the Recreation and Park Department violated the Park Code in granting a permit but not charging a fee to the Boudin Embarcadero for parking a refrigerated mini van on Justin Herman Plaza, although the Park Code has established a $500 minimum fee to encroach on park property, including parking vehicles. All fee waivers not authorized by the Park Code should be submitted to the Board of Supervisors for approval, prior to granting such waivers.

· The Department also violated the Park Code by charging fees that were less than the fees established by the Park Code, indicating a lack of management control and consistent procedures. For example, the Recreation and Park Department issues a permit to KNBR Radio for a commercial event promoting SBC and the Giants home opener, and charged KNBR Radio the non-commercial rate of $500 rather than the commercial rate of at least $5,000.

· The Department approved and issued event permits for three consecutive years to Events West, a production company, for Reggae in the Park, although the Department received no payments for the 2001 Reggae in the Park and did not receive full payment for the 2002 and 2003 Reggae in the Park events. The Department approved and issued event permits for to Events West for the 2003 A la Carte a la Park, although Events West had not paid in full for the 2002 A la Carte a la Park. Events West owes the Recreation and Park Department a minimum of $62,000 in outstanding event fees from 2001 to 2003.

· Organizations and individuals conduct classes at Recreation and Park Department facilities, charging participants to attend the classes, but do not pay rent to the Recreation and Park Department to use the facility. For example, participants pay to attend Hawaiian dance classes at the Sunset Recreation Center but the organization providing the classes and receiving the revenues does not pay rent to the Recreation and Park Department for use of the Sunset Recreation Center. These rentals should be authorized under written license agreements by the Department's Property Management Unit.

The Recreation and Park Department's Fees

The Recreation and Park Department charges fees for different activities, including fees for participating in Department programs, reserving Department property for various types of events, and admission to Department facilities. The Recreation and Park Department increased many of its existing fees and added new fees in FY 2003-2004 and FY 2005-2006. The Park Code authorizes the Controller's Office to adjust Recreation and Park Department fees each year by the Consumer Price Index. In FY 2004-2005, the Department's fee revenues were approximately $4.5 million.

Reservation and Permit Fee Revenues

The Recreation and Park Department's Permits and Reservations Unit is responsible for athletic field, picnic, special event, film, and wedding reservations or permits. The Department's permit and reservation policy was adopted by the Recreation and Park Commission in 1997.

The Department's fee schedule, included in the Park Code, is approved by Board of Supervisor ordinance. Section 7 of the Park Code requires that the Recreation and Park Department issue permits for all events conducted on Recreation and Park Department property and authorizes the General Manager to impose reasonable conditions on approval of a permit application in order to insure that public or private property is not damaged and that the comfort, convenience, safety or welfare of the public is not disturbed. Section 12 of the Park Code sets fees for permitted use of Recreation and Park Department property.

Complying with the Park Code in Charging, Reducing, or Waiving Fees

The Recreation and Park Department charges fees that are not explicitly listed in the Park Code. The Park Code authorizes the General Manager or his designee to set additional fees that are determined to be necessary to compensate the Department for an event's anticipated impact on Recreation and Park Department property.¹ The Department charges several fees, such as the "ground regeneration fee" to offset costs of restoring park grounds and plantings that may become damaged during an event. The General Manager should develop a written policy, defining the type, purpose, and amount of each additional charge to an event sponsor, to ensure that such charges are consistent with the Park Code.

Event Permit Fees

The Park Code contains a fee schedule for commercial, community, athletic, and amateur arts events. Event fees for commercial events range from $2,500 to $10,000 depending on the size of the event. Gated events charging admission pay 25 percent of gross receipts if payment of percentage fees is greater than $10,000. Community and non-profit events pay fees ranging from $500 to $5,000 depending on the event size.

The Recreation and Park Department has a long standing practice to charge a $35 facility use fee to some religious, political, or cultural events in lieu of the event fees established in the Park Code. The Department has no formal criteria for charging this $35 facility use fee nor submitted the fee to the Board of Supervisors for approval and inclusion in the Park Code.

Fee Waivers

The Park Code authorizes the Recreation and Park Commission to (a) waive fees for Federal, State, and local government agencies and (b) adopt policies and regulations authorizing the General Manager to reduce or waive fees or costs imposed under the Park Code in cases of demonstrated financial hardship when a permit applicant meets all other permit requirements. The Recreation and Park Commission's written policy states specifically that fees may be waived for nonprofit organizations in exchange for services, but the Recreation and Park Department's practice is to waive fees for youth and school groups and for media or press events.

Table 9.1 shows the fees charged for 50 randomly-selected events held in FY 2004-2005.

Table 9.1
Fees Charged to 50 Randomly Selected Events in FY 2004-2005

Source: Recreation and Park Department Reservation and Permit Files

The Recreation and Park Department does not comply with the Park Code in waiving or reducing fees or charging the $35 facility use fee. In the Budget Analyst's review of the 50 randomly-selected permit files, the Department complied with the Park Code in charging fees to 22 permits, or 44 percent. The Department failed to comply with the Park Code in charging fees to 28 permits, or 56 percent.

The Department has no consistent practice in applying the $35 facility use fee or waiving fees. The Hellenic Independence Day event, which was charged a $35 facility use fee, does not differ in character from the Mexican Independence Day event or the Hungarian Day Celebration in the Park, for which no fees were charged.

The seven events in which the $35 facility use fee was charged include:

· The Noe Valley Ministry Day of Prayer and Reflection.

· Falun Gong's silent demonstration with approximately 20 participants.

· The Hellenic Independence Day event, which included Greek dancing.

· The True Hope Church's outreach program to the homeless, which included food and amplified sound and anticipated 300 participants.

· The Coalition on Homelessness for a rally and press conference.

· The Kamehameha Schools' Alumni Association to protest a Ninth Circuit Court decision affecting Native Hawaiian rights and entitlements, with 300 expected participants.

· The Gregorian Chant Festival, with 20 expected participants.

The Department charged the World Laughter Tour a $25 fee to hold a laughter club session for 20 to 50 participants but the file contains no explanation for the charge.

In practice, the Department waives fees for performing youth groups or school field trips and for certain civic events at the request of the Mayor's Office although such waivers are not included in the Park Code or in the Recreation and Park Commission's written policy. As shown in Table 9.2, the Department waived fees in 10 of the 50 permits, or 20 percent. Nine of these fee waivers were to youth, nonprofit, or community organizations.:

· Two events for youth, including a student art display and a prayer service.

· Two press events, including an informational picket line, conducted by the Communication Workers of America, and an event supporting a fundraiser for Hurricane Katrina victims.

· A musical performance by Brown University students.

· The Mexican Independence Day celebration.

· The Hungarian Day Celebration in the Park.

· A sponsored charity walk along the Marina Green Walkway.

· One event for Park volunteers, sponsored by Levi Strauss and Company.

The permit files did not contain documentation, indicating that the Department received services in exchange for these free events except for the event sponsored by Levi Strauss and Company for Park volunteers.

The Department violated the Park Code in granting a permit but not charging a fee to the Boudin Embarcadero commercial event, which consisted of parking a refrigerated mini van on the concrete area outside the Boudin Store on Justin Herman Plaza. The Park Code has established a $500 minimum fee to encroach on park property, including parking vehicles.

Under the Park Code, the Recreation and Park Department may waive fees for Federal, State, and City agencies requesting use of Department property. City Departments sponsor events and obtain the fee waiver for non-City organizations, but comparable organizations and events that are not sponsored by a City Department pay fees in accordance with the Park Code. For example, the Department of the Environment sponsored an event and obtained a fee waiver in conjunction with California Tomorrow, a non-profit organization, to schedule an all-day event on June 2, 2005, in Civic Center Plaza, to display alternative fuel vehicles. The Department expected up to 5,000 participants for the event, which would have resulted in up to $2,400 for community or non-commercial event fees. Several commercial companies participated in the event and displayed vehicles, including Toyota, FedEx, NorCal, and the Pacific Gas and Electric Company.

In comparison, another non-profit, ScrapHouse, paid $500 in event fees to display scrap and salvage based architecture in Civic Center Plaza on June 6, 2005. Additionally, Ford Motor Company paid $5,000 in event fees to promote the new low-emission vehicle, Ford Fusion, in an event on Justin Herman Plaza on September 6, 2005.

Reduced Fees

In several instances, the Department reduced fees to community organizations, allowing the applicant to pay less than the Park Code requires, but did not document if the reduction complied with the Park Code or Recreation and Park Commission policy. For example:

· Youth Philanthropy Worldwide was charged a service fee of $300 rather than the minimum fee of $500 to hold a festival and concert in Civic Center Plaza on May 14, 2005. Youth Philanthropy Worldwide was also charged a concession fee of $100, but the Department has no documentation for the basis of such fee.

· Pakistan Association of SF Bay Area was charged a service fee of $400 for Pakistan's Independence Day, which included free cultural events and expected up to 5,000 participants. The Department should have charged a minimum of $500 and possibly up to $2,400 under the Park Code fee schedule.

· The SF Safari Disc Golf Tournament was charged $100, rather than the minimum fee of $250, to hold a tournament on the Frisbee Golf Course for a two-day tournament.

In addition, KNBR Radio was charged at non-commercial rates for a commercial event promoting SBC and the Giants home opener. KNBR Radio paid a $500 service fee rather than the commercial rate of at least $5,000, in violation of the Park Code.

Monitoring Fee Receipts and Deposits

Applicants must pay all reservation and permit charges prior to the issuance of the facility use permit. However, for large events, total facility use charges are based upon total attendance or receipts. These accounts need to be settled and paid up after the event.

The Department has no system to document and monitor fee payments or to collect past due payments. Most of the files in the review lacked documentation about whether some or all of the permit fees had been paid. There was no mechanism to check if payments had been received if the file lacked documentation. For example, the 2005 Bay to Breaker event sponsor paid a deposit of $30,000, which was recorded in the file, but owed $1 for every event participant exceeding 30,000. The file reviewed had no documentation on the total Bay to Breaker attendance, the amount of additional fees that were owed to the Department, or if additional fees were paid. Although the Permits and Reservations Unit deposits receipts regularly to the Accounting Unit in McLaren Lodge and records the deposits on the daily cash report, the Permits and Reservations Unit has no method to match permit and event files with the daily cash report or deposited receipts. The Permits and Reservations Unit was finally able to provide additional documentation on the Bay to Breaker fee payments. The Director of Administration and Finance and the Director of Partnerships and Property should jointly establish procedures for (a) maintaining reservation and permit files, (b) reconciling reservations and permits with daily deposits, (c) recording deposits, and (d) maintaining deposit records that cross reference reservation and permit files.

Collecting Unpaid and Past Due Accounts

The Recreation and Park Department has no procedure for recording and collecting on past due accounts. The Department approved and issued event permits for three consecutive years to Events West, a production company, for Reggae in the Park, although the Department received no payments for the 2001 Reggae in the Park and did not receive full payment for the 2002 and 2003 Reggae in the Park events. The Department approved and issued event permits to Events West for the 2003 A la Carte a la Park, although Events West had not paid in full for the 2002 A la Carte a la Park. Events West owes the Recreation and Park Department a minimum of $62,000 in outstanding event fees from 2001 to 2003.

The Recreation and Park Department should not issue any future permits to Events West until all past due amounts payable to the City are paid in full by Events West. The Budget Analyst further recommends that the Park Code be amended to prohibit permit issuance when the permit applicant owes the Department for prior events.

The Director of Administration and Finance and the Director of Partnerships and Property should develop joint procedures to record, report, and collect unpaid and past due accounts, including developing reports that identify accounts that are 30 or more days past due and procedures to transfer delinquent accounts to the Office of the Treasurer and Tax Collector for collection.

Marketing Recreation and Park Department Properties and Promoting Revenues

The Recreation and Park Department needs to promote its properties and enhance its revenues to offset reductions in General Fund support. The Department needs to review its fees, especially fees for private or commercial activities, marketing and rents for use of its facilities, and new fees or admission charges to enhance facilities. The Department has approximately 442 different fees, plus a policy that allows the Department to reduce or waive fees. Although the large number of fees is due in part to the many different activities for which the Department charges fees, the Recreation and Park Department should review and simplify its fee structure when possible. Also, the Department should assess its fees for private use of facilities, such as weddings and private parties, to price them competitively and increase revenues.

Film and Photography Fees

The Permits and Reservations Unit is responsible for film and photography permits for Recreation and Park Department properties. The Property Management Unit is responsible for managing larger film productions on Recreation and Park Department properties. The Recreation and Park Department's film, photography, and video fees were most recently updated in FY 2003-2004.

Many of the Department's film, photography and video permits are issued to television, commercial and other for-profit productions. Under the Recreation and Department's policies, the General Manager can increase fees for large productions requiring special accommodations, or reduce or waive fees for public, student, non-profit, government, or local independent filmmakers.

The Department should evaluate its fee structure for film and photography permits. As shown in Table 9.2, the Recreation and Park Department's fees, although not fully comparable to the Golden Gate National Recreation Area, are generally less. Also, the Recreation and Park Department should consider establishing fees in a manner similar to the Golden Gate National Recreation Area, which bases its fees upon the expected use of the recreation area's resources and impact on the recreation are and the public.

Table 9.2

Comparison of Golden Gate National Recreation Area and San Francisco Recreation and Park Department Film, Photography, and Video Fees

Marketing and Use of Recreation and Park Properties

The Recreation and Park Department does minimal marketing of its facilities. Several facilities are available for events, and are either underutilized, or used at no cost by the San Francisco Unified School District, youth groups, and various non-profit organizations that support the Department's programs.

Over the past two fiscal years, the Recreation and Park Department's revenues from property and facility short-term rentals has increased by approximately 9 percent per year.

Table 9.3

Average Annual Increase in Recreation and Park Department Revenues from Property and Facility Short Term Rentals

FY 2002-2003 through FY 2004-2005

Source: Recreation and Park Department

The Recreation and Park Department does not have an overall plan to market its facilities. The Department has a minimal budget for marketing activities and no staff person with assigned responsibility. The Department's web site is the major source of information for Department properties and facilities. For the most part, individual staff members are responsible for arranging property rentals. Stern Grove Meadow, athletic fields, and special events are reserved through the Permits and Reservations Unit. Kezar and Boxer Stadiums and Kezar Pavilion are reserved through a Citywide Services staff person, located in Kezar Pavilion. The County Fair Building is reserved through a San Francisco Botanical Gardens staff person. Monster Park Stadium is marketed jointly by Monster Park Stadium and Property Management Unit staff.

The Recreation and Park Department should make the hiring of the new Director of Partnerships and Property a priority. One of the job tasks should be to assess the marketing potential and status of Recreation and Park Department properties and develop a marketing plan. Any budget requests for marketing should be accompanied with a cost analysis and business plan for marketing Recreation and Park Department properties.

The new Director of Partnerships and Property should look at several issues that impact the Department's ability to market its properties, including priority scheduling or free use given to the San Francisco Unified School District, the San Francisco Botanical Garden Society, and other organizations for various Recreation and Park Department properties. Without necessarily changing the intent of these agreements, the new Director of Partnerships and Property should look at more efficient scheduling practices, cancellation policies and other procedures that impact the availability of Recreation and Park Department properties and recommend policies for more efficient property use. The new Director of Partnerships and Property should also review informal arrangements, such as arrangements with San Francisco City College, to identify opportunities for more formal agreements, efficient scheduling practices, and sharing of resources.

Charging for Short Term Rental of Recreation and Park Department Properties

License Agreements to Provide Classes for Fees

Currently, the Recreation and Park Department has a license agreement with only one organization, Rhythm and Motion, to provide classes at the Department's recreation centers which charge a fee to participants. The Department's revenues from the Rhythm and Motion classes is approximately $11,000 per year. However, other community groups or individuals provide classes for a charge at various recreation centers without formal agreements with the Department. For example, Tuesday evening Hawaiian dance classes are provided at the Sunset Recreation Center, and several different classes are provided at the Harvey Milk Recreational Arts Center for a charge but with no formal agreement with the Department. The Director of Operations and the new Director of Partnerships and Property need to work jointly to identify all fee-generating classes, implement license agreements which include a charge for offering the classes at Recreation and Park Department facilities, and implement a procedure to receive and record receipts from the license agreements.

Pushcart Permits

The Permits and Reservations Unit issues temporary permits to pushcart vendors to operate on Recreation and Park Department properties. The Recreation and Park Department has no formal criteria for establishing temporary permit fees, which are not covered by the Park Code, but charges the pushcart vendors a percentage of gross receipts. Although the Permits and Reservations Unit issues the temporary permits, the Department's Property Management Unit monitors the permits. The Department does not have a clearly established system to monitor temporary permits, including monitoring gross receipts and permit payments. The General Manager should transfer responsibility for issuing temporary permits to pushcart vendors to the Department's Property Management Unit.

The Director of Administration and Finance and the Director of Partnerships and Property should jointly develop formal procedures for (a) maintaining temporary permit files, (b) recording and reporting temporary permit fee receipts, (c) reconciling temporary permit fee deposits for each vendor with actual receipts, and (d) maintaining deposit records that cross reference reservation and permit files.

Conclusions

The Recreation and Park Department lacks authorization or criteria for charging certain fees, such as the $35 facility use fee, or for reducing and waiving fees, resulting in seemingly arbitrary application, reduction, or waiver of fees to different Department customers. To ensure equal treatment of all Department customers, the Recreation and Park Commission needs to establish clear criteria in applying, reducing, or waiving fees and ensure that all fees charged by the Department comply with the Park Code. The Recreation and Park Department also needs to develop its systems to ensure that fee revenues are properly recorded and that past due accounts are collected.

The Recreation and Park Department simplify its fee structure and increasing fees whenever possible, such as film permit fees. The Department also needs a centralized marketing plan for all Recreation and Park Department properties to maximize use of its properties.

Recommendations

The Recreation and Park Department General Manager should:

9.1 Submit the $35 facility use fee to the Board of Supervisors for approval.

9.2 Develop a written policy, defining the type, purpose, and amount of each additional charge to an event sponsor, to ensure that such charges are consistent with Park Code Sections 12.22, 12.24, and 12.25.

9.3 Establish formal criteria for waiving fees for events conducted by Federal, State, or City agencies, including establishing fees for non-profit or commercial events sponsored by Federal, State, or City agencies and present the criteria to the Recreation and Park Commission for approval.

9.4 Submit all fee waivers not authorized by the Park Code to the Board of Supervisors for approval.

9.5 Assign responsibility and oversight of temporary permits for pushcart vendors and license agreements to the Director of Partnerships and Property.

9.6 Identify and implement license agreements for all revenue-generating classes conducted by outside individuals and organizations, and implement a procedure to receive and record receipts from the license agreements.

9.7 Direct the Director of Administration and Finance and the Director of Partnerships and Property to jointly develop formal procedures for (a) maintaining temporary permit files, (b) recording and reporting temporary permit fee receipts, (c) reconciling temporary permit fee deposits for each vendor with actual receipts, and (d) maintaining deposit records that cross reference reservation and permit files.

9.8 Direct the Director of Administration and Finance and the Director of Partnerships and Property to jointly establish procedures for (a) maintaining reservation and permit files, (b) reconciling reservations and permits with daily deposits, (c) recording deposits, and (d) maintaining deposit records that cross reference reservation and permit files.

9.9 Submit an ordinance to amend the Park Code to the Recreation and Park Commission and the Board of Supervisors to prohibit permit issuance when the permit applicant owes the Department for prior events.

9.10 Not issue any future permits to Events West until all past due amounts payable to the City are paid in full by Events West.

9.11 Direct the Director of Administration and Finance and the Director of Partnerships and Property to jointly develop procedures to record, report, and collect unpaid and past due accounts, including developing reports that identify accounts that are 30 or more days past due and procedures to transfer delinquent accounts to the Office of the Treasurer and Tax Collector for collection.

9.12 Review and simplify the Recreation and Park Department's fee structure, consolidating fees and reducing from the approximately 442 different fees now in use.

9.13 Assess the Recreation and Park Department's fees for private use of facilities, such as weddings and private parties, to price them competitively and increase revenues.

9.14 Evaluate the Recreation and Park Department's fee structure for film and photography permits, including simplifying the fee structure in a manner similar to the Golden Gate National Recreation Area's fee structure and increasing fees to the level charged by the Golden Gate National Recreation Area.

9.15 Direct the Director of Partnerships and Property to assess the marketing potential and status of Recreation and Park Department properties and develop a marketing plan, including developing a cost analysis and business plan for marketing Recreation and Park Department property to support any budget requests for marketing.

9.16 Direct the Director of Partnerships and Property to evaluate the priority scheduling or free use provided to the San Francisco Unified School District, the San Francisco Botanical Garden Society, and other organizations for various Recreation and Park Department properties, including identifying more efficient scheduling practices, cancellation policies and other procedures that impact the availability of Recreation and Park Department properties, and recommend policies for more efficient property use.

9.17 Direct the Director of Partnerships and Property to evaluate informal arrangements, such as arrangements with San Francisco City College, to identify opportunities for more formal agreements, efficient scheduling practices, and sharing of resources.

9.18 Direct the Director of Operations and the Director of Partnerships and Property to work jointly to identify all fee-generating classes, implement license agreements which include a charge for offering the classes at Recreation and Park Department facilities, and implement a procedure to receive and record receipts from the license agreements.

Costs and Benefits

If the Recreation and Park Department increased permit and fee revenues by approximately 2 percent annually through rigorous application and collection of fees and charges, selected fee increases, and centralized marketing of Department properties, the Department would receive approximately $100,000 per year in additional operating revenues.

¹ Park Code Section 12.22, which sets fees for events on Recreation and Park Department property, provides that the Department may charge any "additional fees determined by the General Manager, or a designee, to be necessary to compensate the Department for the anticipated impact on park property and/or services, the disruption of normal park usage and the inconvenience to the public, because of the type of event, the location, the number of expected participants and other similar factors" . Park Code Section 12.24, which sets fees for film, photography and video events on Recreation and Park Department property, provides that the Department may charge any "additional fees determined by the General Manager, or a designee, to be necessary to compensate the Department for the anticipated impact on park property and/or services, the disruption of normal park usage and the inconvenience to the public, because of the type of event, the location, the number of expected participants and other similar factors" . Park Code Section 12.25, which sets fees for encroachment on Recreation and Park Department property, provides that the Department may charge "any additional fees and/or costs that the General Manager, or a designee, determines appropriate based on the anticipated impact on park property and/or services, because of the type of activity, number of workers, type and amount of equipment to be placed or transported over park property, and other similar factors".