- - Wednesday, September 17, 2014

ANALYSIS/OPINION:

The federal government has a long, rich history of throwing money at projects resembling holes in the ground. This time, the National Park Service might have met its match in the Grand Canyon, which is more than a mile deep and runs for 227 miles along a chasm carved by the Colorado River. More than 4 million tourists visit every year.

You might think it wouldn’t cost much to run a hole in the ground, but it does. The Grand Canyon National Park spends $21.4 million a year on service and upkeep and now will spend an additional $115 million for capital improvements. Every visitor who drives into the park pays a $25 fee, meant to make the park self-sustaining. But the canyon runs deep enough in red ink to stain the river.

A company called Xanterra Parks and Resorts has operated the lodging, gift shops and restaurants in the Grand Canyon National Park for more than a century, under contract with the Park Service. The company has poured in millions of dollars to build and renovate the facilities, to draw visitors and make them comfortable.

Those expenses include a $5 million renovation to El Tovar, the Swiss chalet-style hotel built in 1905 on the canyon’s south rim, in preparation for the hotel’s centennial. Under a schedule determined by federal law, Xanterra’s contract for managing park services is coming to an end, and that means trouble for the taxpayers.

If Xanterra doesn’t win a new 15-year contract, the company that does will have to reimburse Xanterra the $157 million in Grand Canyon-related debt. Bids must be received by Oct. 8, and so far the Park Service hasn’t been inundated with bids. Any company taking on that much debt would have a tough time breaking even, ever.

So here comes the Park Service to the rescue. Not having anyone to run food or lodging in the Grand Canyon isn’t acceptable, so the Park Service threw in millions to make a deal more appealing. The service borrowed $100 million from its regular budget to pay down Xanterra’s debt, to enable a new concessionaire to take on just $57 million in debt.

That’s certainly a better bargain for the companies, but not so great for the taxpayers. The government invited trouble. In 1998, a new parks management law required concession contracts be put out to bid every 10 years.

That took away the incentive for companies to invest for the long haul. A management company isn’t likely to invest if it knows it might not be around to get the return on its investment. Congress could learn from this and take a fresh look at how these deals are struck.

The state of Arizona is perfectly capable of operating the park in the national treasure within its borders, and in fact offered to do that when the Park Service evicted visitors during the government shutdown last year. The Grand Canyon could be the jewel of the park system, and it shouldn’t be treated as merely a convenient hole in the ground.

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