Recreation Providers to Get Smaller Share, Stone Harbor Acts after Program Deficit

STONE HARBOR – Stone Harbor’s seasonal recreation program relies significantly on offerings from independent providers who contract with the borough and agree to a revenue split arrangement.
This past season, the providers received 78 percent of the revenue from the programs while the borough took 22 percent.
The borough provides space, advertising, administrative support and, as Council President Karen Lane said, “Access to the best clientele around.”
The providers, mostly independents or small businesses, provide the programs and staffing.
The split on revenue may change for next season. At its Oct. 17 work session, the council moved to approve an arrangement which would shift 8 percent points of the total revenue to the borough, resulting in a 70 percent to 30 percent arrangement.
The result of the change, if it is fully implemented for the 2018 season when calculated on the share each side receives, would mean a 10 percent decline in the revenue earned by the providers and a 36 percent increase in the revenue earned by the borough. 
Council member Ray Parzych predicted that some of the providers would probably pass the added cost to the participants in the programs, meaning higher fees.
The proposal came before council because of a deficit of $5,000 this year in that portion of the Recreation Department budget. Some on the council felt strongly that the borough is carrying all of the costs of overhead and should capture the legitimate costs associated with the program.
Those speaking in favor of the new revenue share split were Mantura Gallagher, Joselyn Rich, and Lane.
Their argument was straightforward. Costs go up every year for the elements of overhead paid by the borough. The arrangement with outside providers had not changed in several years and “a better split for the borough is justified.”
Council member Charles Krafczek argued that the amounts in question were not significant and the programs were too important to the borough to risk losing providers over a small deficit. “These programs help make Stone Harbor what it is,” he said. He also argued that providers have spent years building a clientele. 
Mayor Judith Davies Dunhour did not directly argue against an increased share for the borough, but she expressed concern that many of the providers are small businesses who work on narrow margins. She suggested some form of phase-in of any increase over a three-year period. 
Davies Dunhour also suggested that the borough could lower its administrative costs by moving from the annual contract process to a three-year contract model, eliminating the burdensome contract renewal process as an annual event.
Davies Dunhour said she saw the burdens differently. Stone Harbor has the infrastructure in place, and the providers handle so much that comes up at the last minute if someone is sick and someone else has to be found to cover a class, she offered. “The providers take away a lot of our headaches,” she said.
More than the small deficit may have motivated supporters of the change. Council briefly discussed an upcoming capital request for $152,000 for work on Recreational Department facilities.
They argued that providers who benefit from those facilities should see some of the revenue go toward offsetting such costs.
To those who argued that this is not a significant change for the providers, Krafczek argued: “It is even less significant to us.”
In the end, strict accounting for costs won out, and a motion carried to move to the proposed 70-30 split with the additional change of offering three-year contracts.
How providers will actually react to a decrease in their share of the revenue or to the need to raise prices is not yet clear.
To contact Vince Conti, email vconti@cmcherald.com.