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Commission authorizes prospectus for Custer resort lease; consultants propose 19.6% minimum franchise fee
Summary
The commission authorized advertising a prospectus to solicit operators for resort concessions at Custer State Park; consultant CHM recommended a minimum franchise-fee floor of 19.6% and proposed component renewal and personal property reserves (5.5% and 3.4%). The RFP timeline targets a March 10 release and a Feb. 1, 2027 contract start.
Sean Blanchett, business administrator for state parks, and consultants from CHM Government Services told the commission they have completed the appraisal and condition assessment necessary to advertise a prospectus for resort concession operations at Custer State Park.
Alex Lipton of CHM summarized underwriting results: "Based on our research we have recommended a minimum franchise fee of 19.6% of revenue," and CHM also recommended a component renewal reserve of about 5.5% and a personal property reserve of about 3.4% to sustain facility condition over the next contract term.
Context: the current concession contract has run for 20 years with an incumbent operator; franchise fees historically rose from 9.4% at contract inception to 14.4% after prior reviews. Consultants said a higher floor (19.6%) is on the higher side of market peers but is supported by the concession’s strong facilities, visitor demand and the underwriting assumptions.
Commission action: after questions about the promotion fee (statutory maximum 3%; the draft advertises a 2% minimum), the commission authorized staff to advertise the prospectus and related draft lease terms and timeline (target prospectus release by March 10, 2026; proposal deadline June 5, 2026), with formal award and contract-start milestones to follow. The motion passed by voice vote (moved by Commissioner Nyberg, seconded by Commissioner Bartling).
What’s next: CHM will host a site visit on April 14 for potential bidders, receive and evaluate proposals through June, and return recommendations to the commission in September for award and in October for final contract approval; the new contract would begin Feb. 1, 2027.
