Grand Canyon changes budget to repay loan

FLAGSTAFF, Ariz. -- The Grand Canyon is imposing millions of dollars in cuts to make a concessions contract more attractive to bidders.

The cuts include cave monitoring, parking-lot lighting, a children's nature program and preventive search and rescue.

Grand Canyon superintendent Dave Uberuaga says the money from those projects and others will help repay a $100 million loan from the National Park Service.

Grand Canyon borrowed the money to reduce what is owned to current concessionaire Xanterra Parks & Resorts for improvements it made at the South Rim over the years.

Uberuaga said potential bidders on the contract to provide services at the South Rim had balked at paying more than $150 million upfront to Xanterra to compensate for its improvements.

By reducing that amount to $57 million, Uberuaga said he is hopeful the 15-year contract worth about $1 billion in gross revenue will become more competitive.

Uberuaga said funding for preventive search and rescue on Grand Canyon trails, patrols on the Colorado River and the children's nature program will be reduced next year. Some vacant positions won't be filled, and work to replace decades-old water pipelines that run across the canyon might be delayed.

Spending nearly $2 million set aside for new projects and concession programs will be postponed as well, he said, including work with bison at the North Rim, information-gathering on caves, additional monitoring of seeps and springs, and research on the endangered razorback sucker that is making a comeback in the lower reaches of the Colorado River.

A restroom on the North Rim won't get new fixtures as planned, a composting toilet along a mule trail won't be built, and contracts for fiber optics and pedestrian lighting in parking lots were eliminated, Uberuaga said.

David Nimkin, Southwest regional director for the National Parks Conservation Association, said it appears the Grand Canyon is doing the best it can with limited resources.

He said concessionaires are building enormous equity in national parks that somewhat restricts the ability of the National Park Service to generate competition. Xanterra and its predecessor companies have managed facilities on the South Rim since the early 1900s, namely El Tovar Hotel.

"This is a big blow, there's no question about it," he said of the cutbacks. "It's underscoring the gnawing, gaping challenge of how the park service manages and protects the resources and provides the kind of services most Americans have come to expect."

Xanterra wrote in a recent memo to employees that it assumed its investments at the park would be repaid if the contract changed hands, not earlier. A company spokeswoman declined further comment.

The authority to lend and borrow money across the National Park Service to pay down what's known as leaseholder surrender interest has been used before, although on a much smaller scale than at the Grand Canyon, said park service spokeswoman Jeffrey Olson.

The Grand Canyon scoured its budget to find $25 million to loan itself, concessionaire franchise fees from 88 park units added $50 million, and the park service headquarters chipped in as well.

Uberuaga said the decision was meant to put the Grand Canyon on better financial footing, regardless of who secures the contract. Money from an increase in franchise fees for the contract that will be awarded next year will go to repay the loan over the next several years, along with fees from other concession contracts, he said.

"This makes the most sense for the park, but in the past we have not been able to muster enough money," he said. "The debt was growing faster than our franchise fee."