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Eighty-Eight Units Of National Park System Tapped For $49.6 Million To Help Grand Canyon National Park

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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. 


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