Parks and Recreation:

Problems With Fee System for Resorts Operating on Forest Service Lands

RCED-88-94: Published: May 16, 1988. Publicly Released: Jun 7, 1988.

Additional Materials:

Contact:

James Duffus, III
(202) 512-7756
contact@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

In response to a congressional request, GAO reviewed the Forest Service's Graduated Rate Fee System (GRFS) to determine whether the: (1) system reflected fair market values; and (2) Service corrected previously identified fee system problems.

GAO found that: (1) the Service's use of standardized, industry-wide ratios and factors to establish current fee systems did not necessarily result in fair-market-value fees; (2) the Service received less than fair market value for its winter resort permits; (3) although the Service changed its procedures for valuing fixed assets, it did not update its 20-year-old GRFS fee formula; (4) the Service did not implement changes to the fee formula for gross fixed assets; and (5) the Service did not determine the percentage of profit that constituted a fair market value. GAO also found that: (1) resort buyers generally paid lower permit fees than previous owners because the Service did not implement necessary changes; (2) the Service's calculation of permit fees was complicated and its GRFS formula rates were not sufficiently progressive; (3) the Service improperly scheduled permittees' fee payments and failed to verify their gross fixed assets; and (4) as of January 5, 1988, the Service was in the process of developing a new gratuity policy.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The Forest Service does not agree with this recommendation because it does not believe that it would be cost-effective to commit the necessary increase in audit and administrative time to undertake the fee system proposed by GAO.

    Recommendation: The Secretary of Agriculture should direct the Chief, Forest Service, to develop a fee system that calculates fees that more closely approximate the fair market value of resort permits. Such a system should consider the economic profile and profitability of individual resorts, as well as the percentage of their profit that would constitute a fair-market-value fee. In developing the system, the Service should consider the feasibility of including a procedure for reviewing sufficiently the financial records of individual permittees to verify their reported income, costs, and profits.

    Agency Affected: Department of Agriculture

  2. Status: Closed - Implemented

    Comments: The Forest Service will not be implementing a new fee system. However, it is changing its current minimum GRFS threshold for calculating fees every 5 years from $3,500 to $10,000.

    Recommendation: The Secretary of Agriculture should direct the Chief, Forest Service, to determine a threshold above which it would be cost-effective to use the new fee system, and implement the fee system for those permits.

    Agency Affected: Department of Agriculture

  3. Status: Closed - Implemented

    Comments: The Forest Service maintains that GRFS does obtain fair market value and it is consistent with legislation and OMB direction.

    Recommendation: The Secretary of Agriculture should direct the Chief, Forest Service, to develop and implement a new fee system. In selecting the system or systems, the Service should consider legislative and Office of Management and Budget (OMB) suggestions, the cost-effectiveness of the alternative fee systems, and the defensibility of the method used to establish the fee rates.

    Agency Affected: Department of Agriculture

  4. Status: Closed - Implemented

    Comments: FS notes that considerable progress is being made in implementing fee systems for ski areas and other winter resorts, which now account for $23.5 million of the estimated $25 million collected from resorts operating on FS lands. FS will not comply with recommendations 2 and 3. Recommendation 4 is being implemented and will be recalculated when it is reviewed under the terms of the agreement.

    Recommendation: The Secretary of Agriculture should direct the Chief, Forest Service (FS), to: (1) update fee rates and break-even points; (2) discontinue the reevaluation of a resort's fixed assets only at the time the resort is sold and either use the Department of Commerce's Construction Cost Index to annually update the valuation of resorts' gross fixed assets, or retain the fixed assets' valuation at acquisition cost when a resort is sold; (3) discontinue breaking out a resort's income by business category or allocate the resort's gross fixed assets by business category; and (4) adjust the fee rates for sales above twice the break-even point so that they are all incrementally progressive.

    Agency Affected: Department of Agriculture

 

Explore the full database of GAO's Open Recommendations »

Sep 26, 2016

Aug 15, 2016

Jul 26, 2016

Jul 21, 2016

Jul 14, 2016

Jul 7, 2016

Jun 14, 2016

Looking for more? Browse all our products here