Grand Canyon's superintendent is confident there will be no interruption of visitor services come year's end/NPS
Dave Uberuagua could be viewed as a poker player facing the slim prospects of filling an inside straight draw.
The superintendent of Grand Canyon National Park doesn't like, or agree with, the analogy, but in less than two months concession services on the South Rim of his park will be shuttered unless he can do in that period what the National Park Service has failed to accomplish for three years: successfully negotiate a concessions contract.
For three years, while trying to reach a 15-year contract for the South Rim's lodges, restaurants, mule rides, and groceries, the Park Service has had to fall back on three successive, one-year extensions due to an inability to reach an accord with Xanterra Parks & Resorts, which long has managed the businesses, or any other concessionaire. But Congress limited the number of extensions a park can hand out to three, and now Superintendent Uberuagua must negotiate a one-year temporary agreement, while also continuing efforts to complete the longer term pact.
'I feel confident going forward that this will all work out, and that in the end we'll have a concessionaire that will have a good contract and the Park Service will have a reasonable return of profit, and the service to the visitor will be improved and very satisfactory," the superintendent said Friday during an interview.
That's a bullish statement from a superintendent who not only has had to resort to three extensions, but who also has been sued by Xanterra over the bifurcation of the South Rim's concessions operations, and who hasn't yet received any interest in the temporary contract seen as a bridge to the 15-year pact, nor in that long-term agreement. The uncertainty has led some of Xanterra's nearly 1,000 employees on the South Rim to resign and look for more certain jobs, and created the daunting possibility that lodgings from the El Tovar Hotel and Bright Angel Lodge to even Phantom Ranch will go dark on New Year's Eve.
'We want to get a temporary contract in place as soon as we can," Superintendent Uberuagua said. "What the regulation allows us to do is sit down with anybody who we think can do it and enter into a temporary contract until the final prospectus and contract is awarded.
"...Because this involves millions of dollars, it's not a matter of just saying continue with what we're doing. It's basically another contract with terms and conditions and agreements that have to be concurred upon by both parties. And so it is a negotiation for even the temporary contract.'
While the lawsuit pending over the decision to cut the South Rim's concessions operations into two pieces prevented the superintendent from discussing in great deal the predicament the Park Service is in, it can be traced to both the Concessions Management Improvement Act of 1998 and the somewhat limited number of concessionaires capable of managing operations as large as those in the Grand Canyon.
The Concessions Management Improvement Act handed the Park Service the tab for repaying concessionaires for the improvements they had made in park facilities. The goal was to create a more competitive bidding atmosphere. At the Grand Canyon, the South Rim concessions business was not opened to competition from other companies until 2002, and Xanterra retained the contract.
But to enhance future bidding opportunities, the Park Service had to place a value on the South Rim concessions facilities and prepare for the possibility that a company other than Xanterra would be awarded the contract. If that was the case, Xanterra would need to be compensated for its "leaseholder surrender interest," or LSI, by the new concessionaire. The figure, arrived at through arbitration, was $165 million in 2002. Since then it has grown to $198 million, according to park officials.
That staggering figure has been viewed as an impediment to a competitive bidding atmosphere at the Grand Canyon. What company would, or could, bid for a contract that required it to pay nearly $200 million before it could earn a dime?
With hopes of making the pending 15-year contract more appealing to other concessionaires, the Park Service decided earlier this year to buy down the LSI owed Xanterra by $100 million. It did so by borrowing $75 million from across the park system, with the Grand Canyon contributing the remaining $25 million. At the same time, park staff proposed to more than triple the concession franchise fee that the new contract holder would be required to pay on gross revenues, from 3.8 percent to 14 percent, a figure envisioned to both help Grand Canyon pay back the $75 million owed the rest of the park system and improve the government's return.
Xanterra has described the 14 percent fee as economically unfeasible, a position possibly shared by other concessionaires, as no company has come forward to bid on the contract. That led Superintendent Uberuagua last month to reduce the franchise fee to 10 percent for the first five years of the contract, and then bump it up slightly to 12.5 percent for the rest of the term. Still, no bidders have surfaced yet.
Xanterra officials last week declined to say whether that reduction made the contract more appealing, and the park superintendent has declined to say how low he would reduce the fee to get a deal done. Whether the Park Service and a concessionaire can come to see eye to eye on a specific fee, and how soon, he wouldn't speculate on.
"What my focus has been on is a great business opportunity for any concessionaire, with a reasonable return to the government for that particular opportunity," Superintendent Uberuagua said. "You're right, there may be a point where I'm not sure what happens. But I think we're creating an opportunity, and I think from my business perspective, if it's a good business opportunity, we'll have bidders. If it isn't, then we have to go back and look at our metrics again and say why wasn't it?"
He then added, "I feel confident going forward that this will all work out, and that in the end we'll have a concessionaire that will have a good contract, and the Park Service will have a reasonable return of profit. And the service to the visitor will be improved and very satisfactory.'
Comments
Overall, throughout the parks that have concessionaires, was the Concessions Improvement Act of 1998 a good thing or was it another example of Congressional interference messing things up?
I'm asking. Does anyone with more recent actual experience have an answer?
Renegotiate the LSI to a reasonable level. It was clearly set too high.
My concern is for those employees, many of whom have lived and worked at the Canyon for years. My concern is also for my son who is a manager there, my daughter-in-law who is a server there and my grandsons the oldest of whom attends school there. This isn't just about having the Grand Canyon open or closed, this is about people's lives. Get it figured out folks.
Ah. Real people - the broken pawns on the chessboard when political ideologues debate their lofty theories. I wish everyone with an opinion to voice or power to flex on this had a nephew or grandkid or beloved former school teacher or such on the sharp end of the stick.
Best wishes to your family, Starwalker.
There have been chances to get it right, by both sides.
Another real person sure to suffer due to this NPS mismanagement.
This article should note that the NPS failed to even generate a prospectus during the first one year extension, and finally produced a completely flawed prospectus in August of 2013. After no bidders, and $100 million in debt 12 months and three, one year extensions later; yet another untenable prospectus still produces no bidders!
Those of us in the private sector would lose our jobs for not meeting the deadline by the end of the last contract; not to mention failing to produce a viable prospectus during 3, one year extensions. Super Dave and his crew will likely be promoted; while I am going to lose my home. 'Merica indeed.
Dittos Rick B, it is not a level playing field out there, the horse ---- always rolls to the bottom of the pile. By the way thank you for your dedicated work in an extremely difficult field of nursing. I always think of your and others efforts when I see comments about the "great American entitlement mentality" from political junkies (myself included). I just do not see it in my fire duties, the efforts of the park employees, both in government and the private sector, in my trips be it on an airplane, a rental car agency, a wonderful old hotel in downtown Chicago recently, a Park campsite, a boat cruise to Picture Rocks, a bluegrass festival in the hometown of Bill Monroe in western Ky, well I could go and on. In a recent 21 day trip in 5 states, I really did not have a truly negative experience. I do think the issue of these concession contracts are quite complicated, particularly with the politics of them. I have worked for Mr. Uberaga, I think he will pull it off.