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Yosemite scam.

The good news is that summer, and summer vacation, are just a few weeks away. The not-so-good news is that, if you're like most Americans, you're going to have to find something to do with that time off. At $1,000 a person just for the airfare, Europe's out. The local beach, you've been warned, has more sludge than Prince William Sound. Another vacation with Mickey and Minnie in Orlando and you may just strangle the both of them. So, you figure, for the same price as a handful of tickets to see the Yankees, you could pack the kids into the Volvo and head to one of our national parks. After all, aren't Uncle Sam's parks the ultimate in safe, all-American fun?

All-American, perhaps, but safe? The General Accounting Office has calculated that America's parks are in need of at least $2 billion worth of backlogged repairs on rutted roads, collapsing buildings, eroded trails, and other park maintenance. Yosemite, for instance, is dotted with deteriorating restrooms and dilapidated supply warehouses, and desperately lacks employee housing. (Some Yosemite employees have resorted to sleeping in their cars.) Buildings in the nearby Kings Canyon National Park date back to the thirties. At the Golden Gate National Recreation Area, cracked and buckling walkways contributed to 29 visitor injuries in a recent year. At the Grand Canyon National Park, only 38 of the park's 438 trails are maintained; and at Yellowstone, the condition of 90 percent of the park's trails is considered "unsatisfactory" by the park service.

The Clinton administration may have requested an increase in spending for America's playgrounds, but the need far exceeds the plan. As head ranger Bruce Babbitt learned in April, the money needed to repair the parks isn't likely to come, as he had once hoped, from raising fees for grazing livestock on public rangeland and charging royalties on gold, silver, and other metals mined from federal land by private corporations. (Clinton backed off the plan, at least temporarily, after a cadre of powerful Western senators who opposed it threatened to torpedo the president's economic package if Babbitt didn't cave.)

There is, however, one way to get a fair start on raising some of the funds without dipping into federal coffers or taxing the general public. Turn to the hundreds of vendors doing business in our national parks who have long been on the sweet end of a lopsided financial arrangement. The 600 or so park concessionaires who hold contracts distributed by the federal government raked in gross revenues of about $564 million in 1990 through their exclusive right to hawk hamburgers, trinkets, hotel rooms, gasoline, film, tours, and more. In return, however, the federal government took only about $14 million in franchise fees. This amounts to less than 3 cents out of every dollar. "The taxpayer always gets it in the pocketbook. Nobody's thinking about them here," said James Richards, former inspector general of the Interior Department. In Yosemite, for example, the Yosemite Park and Curry Co. took in an estimated $85.7 million in 1990, but paid only about $643,000 to the government. This amounts to 75 cents out of every $100. In its own defense, Curry Co. says it has its hands full handling the 3 million-plus visitors that flock to the park every year. Perhaps. Even so, park service spokesman George Berklacy says, "the contract is the worst in the national park system. The return to the government would give an IRS agent a retinal hemorrhage."

While making concessionaires pay their fair share won't raise the full $2 billion needed to patch up the parks, it'll make a nice start. Simply charging appropriate fees for the 14 largest park concessionaires between 1984 and 1988 would have raised $83 million, Richards' auditors concluded. And between 1989 and 1993, low fees will have cost the government another $109 million.

Franchise fees are just the start. The government has all but given away use of public buildings and allowed concessionaires a bargain on utility rates. In parks like Yosemite and Sequoia, government auditors found that the park service has given up on at least $73 million in utility fees that should have been assessed. And in 1990, the General Accounting Office found that park concessionaires paid only $1.2 million for use of the approximately 1,400 publicly owned facilities used nationwide. Just down from the Capitol, on the shady George Washington Memorial Parkway, for instance, a concessionaire operating the publicly owned Mount Vernon Inn claimed gross revenues of $4.3 million in 1990. How much did the keepers of the Founding Father's trinket shop and restaurant pay the government in rent? Less than $115 a month.

But that's a mint compared with what California's Sequoia National Park's concessionaire Guest Services Inc. paid for use of 391 public facilities: Nothing. And that in a year when the company grossed $10.9 million at the park. A little farther north in the Sierra Nevada mountains, owners of the Ansel Adams Gallery in Yosemite enjoyed gross revenues of $1.97 million in 1990, but paid the government only $265 for use of a half-dozen publicly owned buildings. "Two hundred sixty-five dollars a year--that's got to be wrong," said Rep. Mike Synar (D-OK) during recent congressional hearings. "I'm in the wrong line of business, I've got to tell you. These are amazing figures."

Park concessionaires retort that they've earned their good fortune by providing quality service. The annual park service's concessions evaluations for 12 popular parks for the years 1985 to 1989 do show strong performance scores across the board. (The numerical scores for specific services typically run between 4.1 and 5, on a scale of 1 through 5, and narratives are filled with praise.) But while service may be top notch, it's also worth noting that the park officials who provide the evaluations work closely with the concessionaires whom they are charged with rating.

Parking fees

The concessionaires have other answers as well. What critics see as lack of competition--28 of 29 contracts reviewed by Interior Department auditors had only one bidder--the concessionaires seeas praiseworthy continuity. And what critics see as K-Mart-low fees, the concessionaires see as a proper priority placed on customer service. Keeping fees low, they say, helps keep prices down for valid customers. Of course, they may have some points, but, not enough points to make up for the hundreds of millions of dollars worth of freebies they're walking off with.

Anyway, even the concessionaires who don't provide quality service get a sweet deal. In the event a concessionaire loses his contract--even for poor service--the park service must pay him off to move him out. In one 1978 case, the service had to dole out $20 million to a concessionaire it didn't like just to evict him from Yellowstone.

Most concessionaires, however, have no trouble staying put, and no wonder--they did, after all, essentially dictate the 1965 law that's ensured a generation of long-term, low-fee, noncompetitive contracts for the businesses lucky enough to be located in premier tourist destinations. One provision, for example, gives incumbent operators a "possessory interest" in their park investments, which means that would-be competitors have to buy out the incumbents' investments--an all-but-impossible hurdle to cross in order to compete for the slot. "This bill is totally destructive of any competition in the awarding of concession contracts," thundered Rep. Jack Brooks (D-TX) during a floor debate on concession reform. "The whole purpose of this bill is to remove competition from park concession contracts and to enact into law perpetual monopolies in our national parks."

But maintaining the cushy arrangement has also required some upkeep. Concessionaires have, over the years, not only funnelled thousands of dollars in campaign contributions to lawmakers on all the right committees (since 1984, the 100-plus members of the Conference of National Park Concessionaires--recently named the National Park Hospitality Association--have contributed more than $71,000 to members on committees with jurisdiction over parks issues), but, for the more personal touch, have regularly treated leading members of Congress to free excursions at some of America's most beautiful parks. Yosemite Park and Curry Co., for example, has hosted Rep. Richard Lehman, who represents Yosemite's district, California Rep. George Miller, and three members of the House Appropriations Committee on excursions, all gratis, of course. "It's a real good way to get people into the park," Lehman said after one of his trips a few years back. "Just familiarizing people with the park is very helpful."

"The concessionaires have done the smart thing," says Richards, "which is to ingratiate themselves with the local congressmen. I don't want to make that sound illegitimate--every other special interest does the same thing...but for their size, the concessionaires have controlled an awful lot of the politics of this for a long time."

Meanwhile, in the executive branch, a regular revolving door spins top park service officials back into private business as park concession executives. Some of the luminaries have included:

* Manus "Jack" Fish, formerly the Washington, D.C., regional director of the park service, who left the government and joined the board of directors of Guest Services Inc., which handles concessions in the nation's capital.

* Russ Dickenson, formerly director of the park service, who also joined the Guest Services board.

* George Hartzog, a feisty former park service director during the Nixon administration, who now occasionally represents concessionaires as an attorney.

* Lee Davis, the park service's current concessions chief, who previously worked for 10 years for a major park concessionaire.

* A former park service concessions chief, Imogene Lacovey, who left the government to join the Conference of National Park Concessionaires.

* Allan Howe, a former Utah congressman who served on the House Interior and Insular Affairs Committee, who now serves as the Washington lobbyist for the concessionaires.

All of which helps explain why reform has been virtually nonexistent. But, says former National Park Service Director James Ridenour, "We believe it's time now that concessionaires' successes be shared more equitably with the taxpayer." Fortunately, Interior Secretary Babbitt agrees. Following up on work begun by his predecessor, Manuel Lujan, Babbitt is pushing a set of changes that would shorten concession contracts from the current 30 years to 10 or 15 years, demand higher franchise fees, and require periodic reviews for possible fee adjustments. In addition, there are other changes Babbitt should consider--such as amortizing the possessory interest to zero (in other words, no cost to government or competitors) over the course of the contract--to even things out.

Coming up with a plan, however, is the easy part. Turning it into law is not. Whether Babbitt and his fellow reformers--notably Senator Dale Bumpers (D-AR)--can succeed in making the concessionaires contribute their fair share will, of course, test the political muscle of the national park concessionaires. But it will also provide a test for Clinton and his administration: While the administration's backpedaling in April on its plans to raise grazing fees and charge royalties for precious metals may have been a good faith gesture to ensure support for the larger economic plan, failing to confront the concessionaires will show little more than timidity in taking on special interests.
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Title Annotation:concessionaires reap profits at national parks
Author:Doyle, Michael
Publication:Washington Monthly
Date:Jun 1, 1993
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