South Dakota Department of Game, Fish, and Parks (SDGFP)

Scope: Market Analysis, Financial Analysis, Investment Analysis, Contract Structuring Analysis

Services: Marinas

Issue: SDGFP required assistance with evaluating strategies to assist with ten (10) marina and resort concession contracts. These marinas collectively include over 1,300 slips, as well as restaurants, lodging, and marina services. Several of these contracts were expiring, and SDGFP wanted to understand whether the operations could remain as stand alone contracts or needed to be bundled together. In addition, SDGFP asked CHMGS to assess whether some contracts were infeasible, given their present operating position in relation to their possessory interest value.

Process/Outcome: Dispersed along the Missouri River and across different counties, the assets each have different demand profiles. The client’s scope of work required an understanding of the economic and demographic profile, labor, and pricing dynamics of each respective market.

The financial analysis included transforming disparate historical financial information from 10 different operators and appraisers into a cohesive model that would allow CHMGS and the SDGFP to complete a comprehensive evaluation of the baseline set of options. CHMGS benchmarked the marinas’ historical financial data against our in-house database of marina financials. CHMGS developed scenarios to test various improvements to each marina operation, as well as changes in staffing levels and rates.

CHMGS’s investment analysis included allocation of investments between real and personal property, as well as levels of investments associated with new improvements. The investment analysis included development of a dashboard that allowed SDGFP to understand the impact of State Bond funding to offset some investment costs, and also allowed the SDGFP to test the ability of the concession fees to pay the bond obligations.

CHMGS also tested various management contracts, concession contracts, and the ability for the state to possibly fund elements of necessary capital improvements.

Ultimately, CHMGS provided the client with insight into which contracts would continue to be feasible, which were infeasible, and whether bundling could potentially create a viable concession contract. CHMGS also determined which marina operations would likely need to be decommissioned, purchased by the state, and/or managed by the state.