Prospectus for the Operation of Skull Island Campground on TVA Property
Skull Island is a commercial campground comprised of approximately 32 campsites, a beach/swimming area, a launch ramp, a small bathhouse, dump station and a potable water station. TVA will entertain proposals for expanding the 32 existing sites and adding additional campsites.
The links below contain aerial maps and imagery of the operation, detailed site plans, a photo log of the site, an example payment schedule, a facility list and other information related to this prospectus:
10815 Birchwood Pike
Harrison, TN 37341
Tennessee River mile 485.2 (left bank)
35° 14’ 32”N 85° 04’ 20”W
Note: The term “grantee” may be used herein to reference the individual(s) or company whose proposal is ultimately chosen by TVA and accepts an easement from TVA.
The grantee will be required to obtain land rights in the form of a term easement from TVA to operate a commercial recreation facility on federal property. The easement term will be for 30 years and offers the operator a secure instrument by which to conduct business and make investments on the property. The easement is assignable to a third party upon prior review and approval by TVA.
It is anticipated that TVA will be ready to execute an easement grant 3 to 4 months after an applicant is selected by TVA to operate Skull Island. In the interim between the applicant’s selection and the granting of an easement, TVA plans to issue a 30-day revocable license agreement (pending executive approval) to the grantee to allow commercial recreation operations to begin.
An example template for an easement allowing commercial recreation use on TVA land for operation of a marina and campground is available on the TVA web site at https://www.tva.gov/Environment/Recreation/Recreation-Documents.
Administrative Fees & Commercial Recreation Rent Structure
All applicants will be required to submit a check in the amount of $5,000 with their proposal submission. The grantee will pay $9,000 in total administrative cost. This will be paid to TVA over 3 years. The initial $5,000 paid with the application reflects the year 1 payment. Then a payment of $2,000 will be made in each of the two remaining years as shown in the attached example payment schedule. A refund of the $5,000 will be made to those applicants not selected. These administrative fees reimburse a portion of TVA’s cost in providing the license and subsequent easement.
The grantee will choose one of two options for rent payment: (1) the fair market value (FMV) approach; or (2) the percent of gross revenue (PGR) approach. The PGR option is the default option, and the easement grant will automatically reflect this option unless the grantee requests the FMV option. If the grantee selects the FMV option, it will pay for an appraisal in addition to TVA’s administrative costs specified above. The calculation of rent due under either the FMV or PGR approach will take into account the TVA land area involved in the commercial operation and any areas within the associated harbor limits over TVA land. For either option, TVA will forego payment (minimum and true up) of rent until first quarter of CY 2021 to allow the grantee time to establish operations. Regardless of the rent approach selected, the easement will require an absolute minimum annual rent ($1,793 for 2021 escalated 2% per year). See example payment schedule attached.
The grantee is responsible for paying for an appraisal if the FMV approach is selected. The grantee can pay TVA to conduct the appraisal or choose from a list of appraisers (minimum of 3) provided by TVA. Each will be a Certified General Real Estate Appraiser. The appraisal must meet TVA standards and will be subject to TVA review and approval. The appraisal will determine the FMV of the raw land and any TVA-provided improvements based on the particular type of commercial recreation use involved on a particular portion of the land (i.e., campground). The first year’s payment will be 7.25% of the appraised value, which is TVA’s commercial recreation rate of return. The payment will be escalated each year by 2% for the term of the agreement, which reflects TVA’s commercial recreation escalation rate (view payment illustration). This rate of return and escalation rate will remain constant throughout the term of the agreement. TVA or the grantee can reappraise the property at its own expense after the fifth year of the agreement term and at intervals of not less than five years thereafter. Once a new appraisal has been approved by TVA, the annual rent payments will be adjusted accordingly If the minimum rent rate calculated based on the appraisal and TVA’s rate of return is less than the current absolute minimum rent, then the absolute minimum rent will be charged ($1,793 for 2021—TVA will forego payment of rent until first quarter of CY 2021). For more information, view payment illustration. If the minimum rent rate calculated based on the appraisal and TVA’s rate of return is less than the current absolute minimum rent, then the absolute minimum rent will be charged ($1,793 for 2021—TVA will forego payment of rent until first quarter of CY 2021). View how to request FMV payment option.
The PGR approach will be based on a percentage of all gross revenues arising from all operations on TVA land and associated water-based facilities, including any operations by lessees, sublessees, and/or licensees, except for the following exclusions: (1) electric sales that are individually metered and paid to a distributor of TVA power; (2) hunting and fishing license fees; and (3) taxes collected for direct remittance to a taxing authority.
Boat/motor and fuel sales on TVA land will be charged 1% of gross revenues. Restaurant facilities will be charged 2% of gross revenues. All other operations/sales will be charged 4% of gross revenue. The PGR approach requires a minimum rent rate based upon the number of campsites or the acreage of TVA land/harbor area being used and the respective market category (rural, micropolitan or metropolitan as determined and published by U.S. Office of Management and Budget). A minimum rent rate will be established using Table 1 below, and the grantee will be required to pay the greater of the minimum rent rate or the PGR calculation (i.e., the total of 1% of boat/motor/fuel sales, 2% of restaurant sales, and the specified percentage of all other operations/sales). The charges per site, foot and acre in Table 1 will be increased each calendar year based on TVA’s commercial recreation escalation rate. Under no circumstances will the minimum rent be lower than the absolute minimum rent ($1,723 for 2021—TVA will forego payment of rent until first quarter of CY 2021). Documentation of gross revenues from a Certified Public Accountant will be required in accordance with the Documentation section below.
2021 Annual Minimum Rent Rates
Commercial Recreation Facility
Metropolitan (Mature) Market
Percent of Gross Revenues *
Campground on TVA land (built by TVA)
* Fuel sales will be charged 1%. Restaurant sales will be charged 2%. Excluded from gross revenue are hunting/fishing licenses, directly metered electricity paid to a distributor of TVA power and remitted taxes.
TVA will not approve stand-alone restaurants on TVA recreation lands. However, TVA will consider restaurant facilities that are integral to a campground or marina.
Minimum rent rates in Table 1, the FMV, and the absolute minimum rent will be escalated 2% per year (rounded to the nearest dollar). This escalation rate is based on TVA’s estimated rate of inflation and will remain constant for the entire term of the agreement. NOTE: For billing convenience, minimum rent amounts may be averaged over 5-year periods. The exact minimum payment amounts will be shown in the easement grant.
Investments in infrastructure and their economic justification are solely the responsibility of the agreement holder. However, all infrastructure must be pre-approved by TVA in accordance with the terms of the easement grant.
Under the PGR approach, financial statements identifying gross revenues must be submitted annually to TVA. The statements must be compiled or reviewed (based upon the revenue amount as shown in Table 2) and signed by a Certified Public Accountant (CPA). As an alternative to having a CPA sign the financial statements, federal and state tax returns prepared and signed by a CPA may be submitted. However, the financial statements identifying the gross revenues must still be signed by the operator and submitted to TVA. Statements must clearly identify the various revenue sources from the operations on TVA land and associated harbor limits. The easement grant will allow TVA to conduct financial audits at any time at its discretion. If TVA conducts an audit which shows revenues underreported by 10% or more, TVA will charge the reasonable costs of the audit and a penalty to the operator. The penalty will be determined by TVA. The operator must also pay the appropriate rent due with respect to the unreported revenue. TVA will have the right to terminate the easement grant for inaccurate reporting of revenue.
Annual Gross Revenues
Requirement for Financial Statements
Less than $1 million
Compiled by Certified Public Accountant
$1 million and higher
Reviewed by Certified Public Accountant
Alternative — Provide federal and state tax returns prepared and signed by a CPA plus submit financial statement signed by the operator showing all revenues.
The successful grantee will be responsible for procuring and maintaining in effect during the full term of the license and easement a policy or policies of commercial general liability insurance in such form as TVA may approve in the minimum amount of ONE MILLION AND 00/100 DOLLARS ($1,000,000.00) per occurrence for bodily injury and property damage combined single limits, under which the United States of America, TVA and their respective agents, servants and employees shall be named as additional insureds, as their interests may appear, and insuring against any and all claims, demands, damages, actions, causes of action, costs and charges to which they or any of them may be subject resulting from or in any way connected with the condition or use of the easement area. The policy or policies must be written by an insurance company or companies which shall be rated A or better by A.M. Best Company and are licensed to do business in Tennessee, or are an accepted surplus lines carrier. The insurance carrier or carriers and form of policies are subject to TVA’s acceptance.
A certificate of insurance evidencing such policy or policies must be delivered to TVA in advance of the commencement of operations and on an annual basis thereafter.
In order to ensure that rent payment obligations are fulfilled and the easement area is maintained in a clean, orderly and sanitary condition and for the repair of any damage resulting from the removal of any improvements, structures or equipment upon termination of an agreement, and in order to compensate TVA for any administrative costs incurred by TVA staff in pursuing these items, TVA requires that licensees or easement grantees: (1) procure and maintain in effect for a term ending not less than seven (7) months after the termination date of the license or easement an irrevocable letter of credit naming TVA as the sole beneficiary in a form and with a financial institution acceptable to TVA in an amount to be determined based on creditworthiness and a site condition assessment; or (2) deliver to TVA a cash deposit in an amount determined under the method described above.
The security assurance amount is anticipated to be $10,000. The final security assurance amount will be dependent on the creditworthiness of the grantee. TVA may, in its sole discretion, at any time with thirty (30) days’ notice, increase or decrease the required amount of the letter of credit or cash deposit to take into account changes in anticipated costs of cleanup and restoration due to economic growth, additional or reduced development on the easement area, inflation or other factors such as declining site conditions. The grantee must provide documentation satisfactory to TVA as evidence that the required letter of credit or cash deposit has been procured in advance of the commencement of operations. When requested by TVA, the grantee may be required to provide complete financial statements for the preceding calendar year. In its sole and absolute discretion, TVA may waive the requirement for a letter of credit or cash deposit based on the grantee’s financial condition, and such waiver may be rescinded at any time TVA determines that grantee’s financial condition is not sufficient to justify such waiver. If the grantee provides a cash deposit to TVA to satisfy these requirements, TVA shall return the balance of a cash deposit and any accrued interest, if any, that remains following TVA’s use of such cash deposit for the purposes identified herein. For construction activities, TVA may require the grantee to procure and maintain in effect during the period of construction a performance bond or similar performance assurance secured by a third party acceptable to TVA in an amount and form determined by TVA in its sole and absolute discretion.
Length of Stay Requirements
The easement will require that the campground be closed and all campsites completely vacated for 14 consecutive days per 12-month period. Camping units can be stored onsite at a parking lot or an open field during this closure period. TVA must have the opportunity to inspect the campground for compliance during this closure period. The 14-day period cannot be December 20 through January 4 unless approved by TVA. A waiting list, lottery system, combination of both or other TVA-approved method must be utilized to allocate seasonal campsites when the campground reopens after closure.
Short-term sites (stays of 21 days or less) must be at least 5% of the total number of sites at commercial campgrounds (i.e., 5% x 80 total sites = 4; therefore, the minimum number of short-term sites is 4).
After a camping unit or individual(s) has occupied a short-term site for a maximum of 21 days and if the owner(s) or individual(s) desires to continue camping at this campground, the camping unit and individual(s) must either (1) move to an available seasonal site; or (2) move to a different short-term site.
Individuals cannot make reservations or be on a waiting list for another short-term campsite as long as they are currently occupying a short-term site. Occupying a campsite means that the individual’s camping unit is positioned on a campsite. The intent is to allow camping units on a short-term site to move to a different site if there are sites available on the 21st day rather than requiring the camper to leave the campground.
Seasonal sites (stays of up to 11½ months) shall be limited to 95% of the total number of sites at commercial campgrounds (i.e., 95% x 80 total campsites = 76 sites).
Seasonal sites shall be rented based upon a well-defined and written procedure for executing a waiting list, lottery, combination of the two or similar method approved by TVA where each member of the public has an opportunity to rent a campsite. Once all campsites are rented, a waiting list shall be kept to fill campsites when they become vacant. The procedure for renting seasonal sites shall be provided to the public by posting on a public bulletin board, on the campground website, or in a local news publication. Copies of the procedure must be provided to renters and the public on demand. If using a lottery, a lottery entry card should be used, and the camping unit identification number or description (for example, RV vehicle identification number (VIN/tag number, tent brand, size or color) and individual’s name shall be used as the basis for entry rather than only one or the other. Only one lottery card per group (all individuals planning to stay at campsite) and camping unit per lottery drawing is allowed. The operator should keep sufficient records to document compliance and prevent individuals from taking unfair advantage of the selection system. The operator should take sufficient measures to prevent abuse and to ensure all members of the camping public have an opportunity to rent campsites. Current campers cannot be placed on any waiting list until they completely vacate the campsite. Campsites are not transferrable by campers. If an individual/camping unit gives up a campsite or sells their camping unit, then the next entry on the waiting list is to be offered the subject campsite.
If a camping unit sells while at a campsite, the camping unit must be moved from that site. If there is a waiting list, then the next person on the list is eligible for the site. If there are other open sites in the campground, the sold camping unit can occupy one of those sites. The campground operator controls the use of the campsite and not the campsite user.
Residential Use Prohibited
The campground operator shall monitor use of campsites, keep records and ensure the campground use is recreational in nature and not residential. The following, without limitation, are considered evidence of residential use:
- Delivery of mail to individual campers or campsites
- Private mail boxes
- Boarding of city/county school buses
- Ownership of wooden decks and landings other than those owned by the operator
- Use of liquid propane tanks greater than 50 gallons in size and not an integral manufacture component of a camping unit
- Use of campground address for such things as driver’s license or voter registration
- Occupying the same campsite for more than 11½ months in any 12-month consecutive period (unless by exception and approved in writing by TVA)
- Similar type uses
The operator is responsible for preventing residential use. Residential use will be grounds for termination of the agreement.
The operator must develop and submit an evacuation plan to the local Emergency Management Agency and provide a copy of such plan to TVA (address provided in agreement). The evacuation plan should cover flooding, fires, inclement weather and other types of emergencies. The plan should also cover all campsites on TVA land, including those above the Flood Risk Profile or 500-Year Flood elevation.
All power installations must have a cutoff switch located above the Flood Risk Profile or 500-Year Flood elevation of 689’.
The campground operator is responsible for monitoring weather reports, the TVA website, local Emergency Management Agency information and other sources of information during potential emergency situations, including flood events.
The operator is responsible for having access to equipment and capability to remove all camping units below the Flood Risk Profile or 500-Year Flood elevation (689’) within a 24-hour period and ensuring all camping units remain truly mobile and ready for highway use. This means the camping unit is on its wheels or jacking system, is attached to the site only by quick disconnect-type utilities and security devices, and has no permanently attached additions, connections, foundations, porches or similar structures.
The operator shall not leave any camping units below the Flood Risk Profile or 500-Year Flood (689’) elevation unattended for more than 24 hours at a time from November 1 to March 31.
Roofs, Decks, Porches, Fences and Landings
Roofs over camping units of any type (wooden, metal and other) are not allowed. Concrete landings adjacent to the campsites, with maximum dimensions 14 feet x 24 feet, owned by the operator are allowable with prior written approval by TVA. Concrete landings are preferable to wooden landings or decks. TVA will also review requests for combination concrete pads (where camping unit is parked) and landing (area adjacent to unit) of any size.
Wooden decks or landings, no greater than 14 feet x 24 feet, owned by the operator are allowable with prior written approval by TVA and should be constructed for individual campsites to meet the topographical conditions. Railings shall not be more than 36-inches high. The floor height of the deck should be no higher than 24 inches on the lower end and as needed on the high end due to topography.
All pads, decks, and landings must be approved by TVA before construction. Package canopies/covers, which can be set up and taken down quickly (typically carried by hand and assembled/disassembled in 20 minutes or less), are allowed on the decks or landings as sun shields.
Equipment sheds owned by individual campers are not allowed. The operator may provide storage units or spaces at common locations if permitted in advance by TVA.
No appliances intended for indoor use are to be located outside the camping units. Satellite dishes may be attached to campers, whether free standing or temporarily attached to the deck. Satellite dishes may not be attached to trees.
Fences are not allowed.
Annual Operating Plan
By March 16 of each year, the campground operator shall submit to TVA an Annual Operating Plan. The Plan shall include:
- An accurate map of the campground identifying the campsites and associated facilities (boat ramps, playgrounds, dump stations, etc.)
- A chart listing which sites are short-term sites and which are seasonal sites
- A price list (to include all services)
- How reservoir elevation information will be monitored during flood events (TVA website, visual observation, etc.)
- A description of how camping units below the Flood Risk Profile/500-Year Flood would be removed within 24 hours during a flood event
- Name and address of local Emergency Management Agency (EMA) Director and Local Power Company and a written paragraph acknowledging date and time that the operator communicated evacuation plan to the EMA
- Names, addresses and phone numbers of principal employees/contractors and their responsibilities
- Dates of camping season and hours of operation, including any period the campground will be closed and dates power and water would be shut off and returned to service
- Available information regarding respective campsites and occupancy rates for the previous calendar year
- Signed statement indicating compliance with restrictions against residential use
- Written report of the operator’s personal compliance inspection of campground for previous calendar year
- A copy of the campground evacuation plan including any revisions
- Other items the operator desires to provide or as requested by TVA
If requested by TVA, the operator must provide copies of waiting lists, current occupants, lottery results, registration information, current and former reservation lists, and other camper occupancy and application information within 7 days.
1.) The applicant understands that the opportunity to operate Skull Island is strictly “as is.” TVA, nor the previous operator, make any guarantees as to the quality, integrity, useful life or adequacy of any facility, structure, utility (aboveground or underground) or appurtenant works. Applicants will be expected to perform their own due diligence to determine if their business plan will be feasible based on all relevant factors.
2.) TVA cannot confirm the historical revenues generated for this campground.
Launching Ramp and Associated Parking Lot
The grantee will not have any responsibility (maintenance/repairs) for the launching ramp and associated parking lot to the immediate southeast of the campground. It will be included in the easement area but neither the grantee nor campers may claim any exclusive use. TVA will maintain and repair the parking lot and ramp as needed.
Licensee will not charge parking or launch fees however TVA will consider reducing the campground rent $2,000 per year for the grantee if the grantee will assume the following responsibilities: 1) visit the parking lot once daily to pick up trash and dispose (grantee supplies garbage bags and pays trash disposal); 2) remove and cast aside any limbs/debris from parking lot; and 3) general mowing/trimming of the grass at the ramp and parking area.
If interested, include plans to assume this work in the proposal. TVA would review this work each year and determine whether to allow grantee to continue handling these responsibilities.