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Plan for Privatizing Fall Creek Falls Hotel Held Up

TDEC adding ‘amendment’ to ongoing RFP; Attorney general says process legal

Officials in the administration of Gov. Bill Haslam have postponed the deadline for private companies to submit proposals for operating a new $22 million hotel at Fall Creek Falls State Park.

The state Department of Environment and Conservation, which supervises state parks and natural areas in Tennessee, is planning to amend the “Request for Proposals” process that it launched last year, according to Eric Ward, a spokesman for the agency.

Prior to the delay announcement, March 2 was the scheduled deadline for companies to submit first-phase operational proposals for running the future restaurant and lodging facility, which would remain owned by the state.

The construction funding for the project has already been approved by the Tennessee General Assembly. The new facility is expected to replace the existing inn, built in the early 1970s, on the banks of scenic Fall Creek Lake.

Ward said “content revisions to the RFP” are currently in the works by TDEC planners.

In an emailed response to inquiries by Center Hill Sun, Ward said that because the companies bidding are engaged in a “competitive procurement process,” the specific nature of the changes will remain under wraps until their formal public release.

“The amended language will be available soon,” Ward wrote on Thursday.

Originally, the state was scheduled to finalize an agreement by July 1. The “concessionaire” firm that wins the contract would also take over management of the state park golf course in addition to the new inn facilities, expected to be completed in 2020.

A statement issued in January from TDEC asserted that the ultimate goal of the hospitality-service privatization initiative is to “more effectively steward taxpayer dollars by better protecting the park’s assets.”

The department also predicts an economic bounce to surrounding communities as a result.

The 26,000-acre park straddles Van Buren and Bledsoe Counties, both of which are considered “economically distressed” by the state and federal government. The same is true of White County to the north and parts of Warren County to the west.

TDEC officials say the existing hotel tends to run occupancy rates below 40 percent. The average hotel occupancy-rate nationally was 65.5 percent in 2016, according to industry estimates used by the Tennessee Hospitality and Tourism Association. In the Southeastern United States, the average was 61.4 percent and in Tennessee it was 64.5 percent.

“Increased occupancy and visitation with a new Inn will provide increased tax revenues for the local government and reliable employment for local citizens once the rebuild is complete,” according to the TDEC statement from earlier this year.

Unhappy Union Employees

The plan isn’t without its critics. Government employees at the hotel and restaurant worry they won’t enjoy the same benefits and job protections under a company intent on turning a profit.

Randy Stamps, executive director of of the Tennessee State Employees Association, would rather see the existing inn renovated and repaired and remain operated by public-payroll workers.

“Or, if poor structural conditions require we demolish and rebuild the inn, we should run it with state employees for a few years to raise occupancy rates and then reassess the value of a new inn running at its peak,” Stamps wrote in a January op-ed for The Tennessean.

An effort in 2015 by the Haslam administration to entice an outside company to run the inn failed to draw any interest because of the facility’s poor condition.

One bureaucratic peculiarity involving the project didn’t go unnoticed by opponents of a private company running the hotel.

Up until last week, the Haslam administration was seeking to approve plans for designing and constructing the new hotel itself, outside the customary review-and-oversight processes for publicly owned structures. Typically, that is supervised by the State Building Commission.

However, the administration has now apparently agreed to seek consent of some form for the new hotel design from the commission.

The Building Commission is made up of high-ranking officials from various arms of state government — including the speaker of the House, the secretary of state, the comptroller, the treasurer, the Department of Finance commissioner and the governor himself.

Senate Speaker Randy McNally, R-Oak Ridge, who also serves on the Building Commission in his capacity as lieutenant governor, told reporters at the Capitol last week the RFP holdup is “somewhere between a bump in the road and a roadblock.”

“It’s not a roadblock, but it’s not as insignificant as a bump in the road,” according to McNally.

The Tennessee attorney general’s office has released an opinion declaring that, provided the State Building Commission agrees to the terms, the state may “enter into agreements concerning state-owned or state-controlled lands and facilities, such as the proposed RFP and Concession Contract for the operation of Fall Creek Falls State Park.”

(Editor’s Note: This story was updated March 7.)