NC Zoo Says Privatization Could Free It from Fiscal Captivity

Published November 7, 2011

A partial privatization plan being explored by the North Carolina Zoo in Asheboro could increase donations, enhance attractions, and speed up needed repairs, its operators say. Free-market advocates hail the move as a step in the right direction.

“Basically, what we’re looking at is a public-private partnership, which 75 percent of the accredited zoos and aquariums in the country now have,” said Zoo Chief of Staff Mary Joan Pugh.

The state would retain ownership of the zoo, but the more than 250 employees now on the payroll of the state Department of Environment and Natural Resources would work for the private operator, the North Carolina Zoological Society. The nonprofit society already operates gift shops, sells memberships, and does some fundraising for the zoo.

Under a private operator, the state “would cap the amount of money they are giving to the zoo, and the zoo would be freed up to generate the money for its entire operating budget,” Pugh said. “It seems to work in other situations, and what they’ve found is donors are more willing to give to a privately operated nonprofit institution rather than a government-run institution.”

‘Huge Uptick in Partnerships’

Rick Biddle, vice president of Schultz and Williams, the Philadelphia-based consulting firm conducting the feasibility study, said a report is due for completion by year-end 2011.

“There’s been a huge uptick” nationally, dating back 15 years but especially in the past five years, for accredited zoos and aquariums to enter into public-private partnerships, Biddle said.

“I think cities, counties, states that have partnered, those leaders look at it as a positive change for their respective institutions,” Biddle said. “Visitations are up, revenues are up, the number of household members are up.”

When the Houston Zoo created a public-private entity 10 years ago, visitation was about 1.2 million to 1.3 million people annually, but “this year will get very close to 3 million visitors,” Biddle said.

‘Tremendous Growth’ for Institution

“That’s a tremendous growth for a cultural institution,” he said. “We haven’t had an institution that was publicly managed, moved into a private sector [operation] and then come back to the public sector,” Biddle said. “I take that as a good indication that these are good models for institutions to look at.”

“Governments just are not very good at running businesses. Government should not be in the business of business, from the U.S. Postal Service on down to state liquor stores,” said Leonard Gilroy, director of government reform at Reason Foundation, a Los Angeles-based, free-market think tank.

North Carolina “should be commended” for exploring private operation of the zoo, Gilroy said. The muscled-up private sector involvement will protect the asset from budget cutbacks, deferred maintenance, and red tape that often put state-owned attractions in “a death spiral,” he said.

Though it’s not a pure form of privatization, “It’s a big step towards that,” Gilroy said. “In government, you rarely get the full-blown transition from public sector to purely private sector because, primarily, the public sector still wants some say in how that asset is operated or delivered, and that’s what you’re seeing here,” Gilroy said.

‘Not Necessarily a Core Function’

“Running a zoo is certainly not necessarily a core function of government. It’s an amenity,” he said.

“If you have limited funds and you’re making decisions between core functions like public safety or infrastructure, if you’re trying to allocate scarce dollars and you’re looking at things like higher education, health care, those are what policymakers would find to be more critical functions,” Gilroy said. “The public-private partnership is a way to preserve those amenities as opposed to shutting them down or curtailing activities.”

Pugh said the zoo currently attracts about 750,000 visitors a year and economic studies suggest it contributes somewhere in the neighborhood of $50 million to the state and local economy annually. The privatization study may reveal greater efficiencies, opportunities for zoo enhancement, and higher attendance under a private operator, she said.

Better Long-Term Planning

Under state ownership and operation, zoo officials cannot plan long-term projects adequately because appropriations are determined annually by the General Assembly.

Cheryl Turner, acting executive director of the Zoological Society, which is paying for the privatization study, says private operation would help solve that problem.

“I think we could let donors know a time and not have to keep moving it a year out,” regarding when new attractions will open or capital improvements will take place, Turner said. “I think they would be happier knowing that. I think that would help immensely.”

Pugh agrees. “Right now, the zoo can’t do very much on capital improvements,” she said. “We have to go through all the hoops” required by state rules and regulations.

Streamlined Process

For example, adding a new exhibit requires multiple steps, from study phase to design, purchase, and construction, each individually dependent on an act of the legislature, Pugh said. That process would be streamlined under private operation.

Currently, the zoo must come up with roughly $6 million towards its $17 million annual operating budget. If the zoo raises more revenue than anticipated, the state may reduce appropriations accordingly.

“That’s what’s happening now,” Pugh said.

In a privately run zoo, there would be no rigid funding formulas. “That gives us an incentive to raise money,” Pugh said.

Dan Way ([email protected]) is a contributor to Carolina Journal. Used with permission from Carolina Journal.