How long will it take Grand Canyon National Park to repay $75 million to other parks and the Washington office of the National Park Service?/Rebecca Latson
Eighty-eight units of the National Park System, from Acadia National Park to Yosemite National Park, provided $49.6 million in an open-ended loan to help Grand Canyon National Park buy down the interest Xanterra Parks & Resorts holds in concessions on the park's South Rim.
Two of the units -- Mount Rushmore National Memorial in South Dakota and the Statue of Liberty National Monument in New York Harbor -- combined provided $15.4 million of that total, according to records the Traveler obtained through a Freedom of Information Act request.
The funds, swept up by the National Park Service's Washington, D.C., headquarters in August, come from concession franchise fees collected by the parks. Those fees typically are spent on a wide range of items, from commercial services plans and capital projects that support concessionaire activities to visitor services and resource needs. Since some projects require hefty sums, it could take more than a year to amass the money needed. In those cases, parks "bank" their concession fees until they reach the total needed for a project.
But now those millions are being loaned to Grand Canyon National Park, along with another $25 million from the Washington office and $25 million from Grand Canyon's own accounts, to buy down $100 million in "leaseholder surrender interest," or LSI, Xanterra has accumulated over the decades for investments in South Rim concessions. By doing so, park officials hope they can make bidding for concessions contracts more competitive. Without buying down the LSI, if Xanterra lost a concessions contract to another company, that company would have to pay Xanterra the LSI it was owed before it earned a dime from its contract.
But Grand Canyon officials now find themselves in a quandry. No company has submitted a bid for the 15-year contract to run the bulk of the South Rim's lodging, dining, and retail concessions when Xanterra's current contract runs out at midnight December 31, and they also have not found a company to sign a temporary contract to run the operations while efforts continue to sign the longer term deal. On top of that, Xanterra sued the Park Service in October, charging that its concessions decisions were aribtrary and capricious, and then last month filed a motion in U.S. District Court in Colorado to force the Park Service to keep the South Rim concessions operating under Xanterra beyond year's end while talks towards a long-term agreement continue.
Officials at the affected parks were not discussing how the loss of the funding might impact their operations, instead referring all questions to Washington. There officials declined to go into specifics due to Xanterra's lawsuit over the South Rim concessions. But April Slayton, the Park Service's acting assistant director for communication, told the Traveler that "no concession franchise fee projects for FY 2015 are being delayed" due to the diversion of funds from the 88 parks to the Grand Canyon.
While Ms. Slayton would not speculate on whether impacts might arise down the road, part of the repayment plan envisioned by Grand Canyon officials seems to be unraveling. When Grand Canyon Superintendent Dave Uberagua discussed the LSI buy down with the Traveler in August, he said part of the repayment of the $75 million borrowed from across the National Park System would come from revenues generated via the 14 percent franchise fee the park was attaching to the new 15-year concessions contract. However, park officials already have lowered that fee -- to 10 percent for the first five years, and 12.5 percent for the remaining 10 years -- and with no bidding, it's impossible to say what the final fee might be.
Superintendent Uberagua did not return a call to the Traveler seeking comment on how the impasse might impact the repayment schedule. If the planned repayment schedule is stretched out, individual parks might have to delay projects until they're made whole again.
Here's a breakdown of the 88 units of the park system that had funds redirected to Grand Canyon National Park.
|
|
Park |
Total Borrowed (Rounded) |
|
|
DENALI NP & PRES |
$315,000 |
|
|
GATES OF THE ARCTIC NP & PRES |
$24,000 |
|
|
GLACIER BAY NP & PRES |
$597,000 |
|
|
KATMAI NATIONAL PARK |
$89,000 |
|
|
WESTERN ARCTIC NATIONAL PARKLANDS |
$23,000 |
|
|
WRANGELL - ST ELIAS NP & PRES |
$21,000 |
|
|
AMISTAD NRA |
$11,000 |
|
|
BANDELIER NM |
$16,000 |
|
|
BIG BEND NP |
$166,000 |
|
|
BIGHORN CANYON NRA |
$19,000 |
|
|
BRYCE CANYON NP |
$1,416,000 |
|
|
CANYON DE CHELLY NM |
$156,000 |
|
|
CANYONLANDS NP |
$27,000 |
|
|
CARLSBAD CAVERNS NP |
$1,563,000 |
|
|
CURECANTI NRA |
$62,000 |
|
|
DINOSAUR NM |
$27,000 |
|
|
GLACIER NP |
$246,000 |
|
|
GLEN CANYON NRA |
$271,000 |
|
|
GRAND TETON NP |
$2,425,000 |
|
|
INTERMOUNTAIN REGIONAL OFFICE |
$25,000 |
|
|
LITTLE BIGHORN BATTLEFIELD NM |
$13,000 |
|
|
MESA VERDE NP |
$739,000 |
|
|
PETRIFIED FOREST NP |
$870,000 |
|
|
ROCKY MOUNTAIN NP |
$62,000 |
|
|
WHITE SANDS NM |
$120,000 |
|
|
YELLOWSTONE NP |
$2,612,000 |
|
|
ZION NP |
$684,000 |
|
|
APOSTLE ISLANDS NL |
$17,000 |
|
|
BADLANDS NP |
$170,000 |
|
|
BUFFALO NR |
$44,000 |
|
|
HOT SPRINGS NP |
$248,000 |
|
|
|
|
|
|
ISLE ROYALE NP |
$98,000 |
|
|
JEFFERSON NATIONAL EXPANSION MEMORIAL |
$117,000 |
|
|
MOUNT RUSHMORE NMEM |
$5,355,000 |
|
|
OZARK NSR |
$114,000 |
|
|
PICTURED ROCKS NL |
$69,000 |
|
|
SLEEPING BEAR DUNES NL |
$54,000 |
|
|
VOYAGEURS NP |
$16,000 |
|
|
GEORGE WASHINGTON MEMORIAL PARKWAY |
$122,000 |
|
|
NATIONAL MALL AND MEMORIAL PARKS |
$207,000 |
|
|
NATIONAL CAPITAL REGIONAL OFFICES |
$1,669,000 |
|
|
PRINCE WILLIAM |
$12,000 |
|
|
ROCK CREEK PARK |
$19,000 |
|
|
ACADIA NATIONAL PARK |
$231,000 |
|
|
BOSTON NHP |
$17,000 |
|
|
CAPE COD NS |
$182,000 |
|
|
COLONIAL NHP |
$246,000 |
|
|
DELAWARE WATER GAP NRA |
$16,000 |
|
|
FORT MCHENRY NM & HISTORIC SHRINE |
$80,000 |
|
|
GATEWAY NRA |
$1,194,000 |
|
|
NE REGIONAL OFFICE |
$32,000 |
|
|
SHENANDOAH NP |
$576,000 |
|
|
STATUE OF LIBERTY NM |
$10,138,000 |
|
|
CHANNEL ISLANDS NP |
$259,000 |
|
|
CRATER LAKE NP |
$920,000 |
|
|
DEVA NP |
$727,000 |
|
|
GOGA NRA |
$909,000 |
|
|
HAWAI'I VOLCANOES NP |
$147,000 |
|
|
LAKE NRA |
$955,000 |
|
|
LAKE ROOSEVELT |
$20,000 |
|
|
LAVO NP |
$18,000 |
|
|
MINIDOKA INTERNMENT NM |
$25,000 |
|
|
|
|
|
|
MOUNT RAINER NATIONAL PARK |
$606,000 |
|
|
MUWO NM |
$1,971,000 |
|
|
OLYM NP |
$439,000 |
|
|
OREGON CAVES NM |
$18,000 |
|
|
PINN NM |
$64,000 |
|
|
POINT REYES NATIONAL SEASHORE |
$18,000 |
|
|
PW REGIONAL OFFICE |
$11,000 |
|
|
SEQUOIA AND KINGS CANYON NP |
$322,000 |
|
|
WWII VALOR IN THE PACIFIC NM |
$11,000 |
|
|
YOSEMITE NP |
$5,075,000 |
|
|
BISCAYNE NP |
$12,000 |
|
|
BLUE RIDGE PKWY |
$256,000 |
|
|
CAPE HATTERAS NATIONAL SEASHORE* |
$411,000 |
|
|
CAPE LOOKOUT NS |
$74,000 |
|
|
CASTILLO DE SAN MARCOS NM (& FT MATANZAS) |
$15,000 |
|
|
CHRISTIANSTED NHS & BUCK ISLAND REEF NM |
$75,000 |
|
|
CUMBERLAND ISLAND NS |
$73,000 |
|
|
DRY TORTUGAS NP |
$981,000 |
|
|
EVERGLADES NP |
$620,000 |
|
|
FORT SUMTER NM |
$365,000 |
|
|
GREAT SMOKY MOUNTAINS NP |
$161,000 |
|
|
GULF ISLANDS NS |
$215,000 |
|
|
MAMMOTH CAVE NP |
$21,000 |
|
|
SAN JUAN NHS |
$17,000 |
|
|
VICKSBURG NMP |
$16,000 |
|
|
VIRGIN ISLANDS NP |
$127,000 |
|
|
* Cape Hatteras National Seashore's total including funds from Wright Brothers National Memorial and Fort Raleigh National Historic Site.
Comments
I see no problem with this. If the National Park System is one system, why not tap its entire operation for a colective good? Leaving aside my belief all fees should and could be eliminated if Congress would simply increase base funding, why not use fees collected at one park to help another. After all, fewer than one-third of the parks collect an entrance fee at all. Meaning, the parks that do not collect these fees are already at a financial disatvantage. As long as Congress allows park funding to languish and sets a policy of fees as a means of revenue enhancement, it seems appropriate that the NPS apply the fees where they would do the most good.
A clarification to CJDillion: the "borrowed" funds are not from rec fees (entrance fees), but from the payment from concessionares to parks. For example, the $5M from YOSE is from the park's income from the hotels, stores, etc., not the entrance fees (I'm not sure about the status of who runs their campgrounds). I suspect the legal restrictions on rec fee funds prohibited their use for this need, and that the concession income in other parks was the closest thing to unrestricted funds that could be found.
I see a major underlying problem, of which this is an imperfect attempted workaround, not a solution. Competition is needed to improve (restore?) concessions quality of service at many parks. Competitive bidding on concession contracts requires buying down (or buying out) the physical plant owned by historic concessionares, as buy-ins of hundreds of millions are substantial barriers to entry.
The immediate problem is that GRCA South Rim had $200M concessionare property. NPS can barely scrape together $100M to buy it down by half, which does not appear to be enough to induce bids. As far as I can tell, GRCA is committing the next decade or more of income from the concessions to paying back the other parks, not to GRCA enhancements. Further, I suspect that when the next contracts expire, the physical plant with upgrades will likely have appreciated back up to close to $200M, so this is not a permanent solution for GRCA, but closer to just treading water.
The same issue will occur at most if not all of the other 87 units with concessions. When the MORA or YOSE or GRTE contracts come up for renewal, will those parks need to borrow to buy down their concession facilities in order to get competitive bids? Will the net effect be that all payments from concessionares to NPS go to paying for facilities and facility appreciation, with no net funding to park operations? I haven't seen any numbers about the summed present value of concessionare facilities across the entire NPS system, but I suspect it is $2-3B. When I'm in a pessimistic mood, I see the issue of buying out concession physical plant in parks sucking away tens to hundreds of millions of dollars each year for the next decade or more (almost all unrestricted funds), until the system collapses.
Should the goal of concessions be to provide the highest quality, reasonably-prices services & amenities to park visitors, or should the goal be to maximize net income to the parks? Or, more realistically, where along that axis is the preferred compromise? Then, how do you write contracts to ensure the desired quality of service?
Corporations own the National Parks just like the rest of the USA.
Could someone explain how the finances behind this work? Could a concessionairemake numerous or large long term capital investments, depreciate them and at the same time lock out the competition? Is that what is happening here? It’s also a little troubling to me that many of the parks loaning money are at the same time raising their entrance fees to make their own improvements. I don’t want to get off the topic but when things start to become too convoluted it is a sign to me that an organization has grown too large to be efficient. Sometime all of the money transfers and creative accounting are done purposely so you can’t follow the money, others it is with the best of intentions but it clouds the true financial picture of a given situation making good management decisions next to impossible. Neither is a good way to do business. I hope they know what they are doing....
If I recall correctly, the Xanterra situation goes back to their time as Harvey House. They built, as Harvey House, an number of buildings which are Harvey House possessions, almost like in-holdings. This was done back at the beginning of the Park's openings to Harve House. When I worked at ZIon, some of my friends with Xanterra felt the NPS was trying to pressure Xanterra to surrender those properties which they, by all rights, own.
My mistake. It is concessions fees being used. Even so, I see no problem with this for the same reasons I stated. The National Park Service should operate as a single system, not like a franchise restaurant business.