[Federal Register Volume 75, Number 20 (Monday, February 1, 2010)]
[Notices]
[Pages 5113-5114]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-1864]


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DEPARTMENT OF THE INTERIOR

National Park Service


National Park Service Concession Contracts; Implementation of 
Alternative Valuation for Leasehold Surrender Interest in the Signal 
Mountain Lodge and Leeks Marina Proposed Concession Contract, Grand 
Teton National Park

AGENCY: National Park Service, Interior.

ACTION: Notice.

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SUMMARY: The National Park Service (NPS) is proposing, subject to 
consideration of public comments, to utilize an alternative formula for 
the valuation of leasehold surrender interest under its proposed 
concession contract GRTE003-11 for operation of the Signal Mountain 
Lodge and Leeks Marina at Grand Teton National Park (``new contract'').

DATES: Public comments will be accepted on or before March 3, 2010.

ADDRESSES: Send comments to Ms. Jo A. Pendry, Chief, Commercial 
Services Program, National Park Service, 1201 Eye Street, NW., 11th 
Floor, Washington, DC 20005 or via e-mail at [email protected] or via 
fax at 202/371-2090.

FOR FURTHER INFORMATION CONTACT: Jo Pendry, Chief Commercial Services 
Program, 202-513-7156.

SUPPLEMENTARY INFORMATION: The standard formula for leasehold surrender 
interest (``LSI'') value for applicable improvements provided by a 
concessioner under a National Park Service concession contract as 
defined in 36 CFR part 51 (``standard formula'') is as follows:
    (1) The initial construction cost of the related capital 
improvement,
    (2) Adjusted by (increased or decreased) the same percentage 
increase or decrease as the percentage increase or decrease in the 
Consumer Price Index from the date the Director approves the 
substantial completion of the construction of the related capital 
improvement to the date of payment of the leasehold surrender interest 
value;
    (3) Less depreciation of the related capital improvement on the 
basis of its condition as of the date of termination or expiration of 
the applicable leasehold sulTender interest concession contract, or, if 
applicable, the date on which a concessioner ceases to utilize a 
related capital improvement (e.g., where the related capital 
improvement is taken out of service by the Director pursuant to the 
terms of a concession contract).
    However, Section 405(a)(4) of Public Law 105-391 authorizes the 
inclusion of alternative LSI value formulas in concession contracts 
(such as the new contract) estimated to have an LSI value in excess of 
$10 million. One acceptable alternative methodology identified in 
Public Law 105 391 calls for the depreciation of LSI value on the basis 
of Internal Revenue Code requirements as they existed in 1998.
    However, NPS is proposing an alternative LSI formula that avoids 
Internal Revenue Code complexities in LSI valuation. The proposed 
alternative formula has two components: One for initial LSI value (as 
of the commencement of the contract) and a second for new LSI value, 
e.g., that credited during the term of the contract, as described 
below:
    (1) Initial LSI Value. The reduction of the initial LSI value under 
the new contract on a monthly straight-line depreciation basis, 
applying a 40-year recovery period regardless of asset class. There is 
no adjustment of the initial LSI value as a result of the installation 
(including replacement) of fixtures in the related capital improvements 
during the term of the proposed contract; and
    (2) New LSI Value. The reduction of the leasehold surrender 
interest value in any new structures or major rehabilitations 
constructed during the term of the new contract to be based on 
straight-line depreciation and also apply a 40-year recovery period (on 
a monthly basis) with no asset class distinctions. The construction 
cost of new capital improvements will include the costs of installed 
fixtures. Any installation (or replacement) of fixtures after the 
initial construction would not alter the established LSI value in the 
improvements.
    In summary, the proposed alternative formula: (1) Depreciates all 
asset classes composing LSI value over a 40-year recovery period; and 
(2) Eliminates adjustments of the initial LSI value as a result of the 
installation (or replacement) of fixtures during the contract term.
    The NPS has determined, subject to consideration of public comment 
and after scrutiny of the financial and other circumstances involved in 
the proposed contract, that utilization of the proposed alternative 
formula, as compared to the Standard Formula set forth above, is 
necessary in order to: (1) Provide a fair return to the Government from 
the revenues of the proposed contract; and (2) Further competition for 
the proposed contract by providing a reasonable opportunity for the 
concessioner to make a profit under the new contract.
    The NPS has also taken into consideration the fact that the 
proposed alternative formula provides a recovery period (40 years) for 
LSI improvements, which exceeds that which would have been provided by 
the Internal Revenue Code in 1998. This is because the recovery period 
of the proposed alternative formula would apply to all LSI 
improvements, regardless of their Internal Revenue Code asset class and 
applicable recovery period.
    We consider that adoption of the proposed alternative formula will 
not impact the projected rate of return of the new concessioner under 
the terms of the new contract (as opposed to inclusion of the standard 
formula). This is because, in developing the minimum franchise fee to 
be included in the new contract,

[[Page 5114]]

we will assess the projected revenues and expense of the business 
activities we will authorize and estimate a fair return to the new 
concessioner taking into account applicable industry norms. As part of 
this assessment, we will calculate the cost to the new concessioner of 
acquiring the existing LSI (and any required new LSI improvements). The 
minimum franchise fee, accordingly, will reflect the financial 
consequences of the proposed alternative formula such that the 
estimated reasonable opportunity for profit to the new concessioner 
would be projected to be the same whether the new contract included the 
standard formula or the proposed alternative formula. The proposed 
alternative formula will not lower the projected returns to the new 
concessioner but will reduce the speculative nature of LSI value under 
the standard formula.
    Please note that, in the interest of time, the NPS may issue a 
prospectus for the new contract in the near future that incorporates 
the proposed alternative formula. If consideration of public comments 
in response to this notice causes us to alter the proposed alternative 
formula, we will amend the prospectus accordingly before the deadline 
for submission of proposals.
    Before including your address, phone number, e-mail address, or 
other identifying information in your comment, you should be aware that 
your entire comment--including your personal identifying information--
may be made publicly available at any time. While you can ask us in 
your comment to withhold your personal identifying information from 
public review, we cannot guarantee that we will be able to do so.

Daniel N. Wenk,
Deputy Director, Operations.
[FR Doc. 2010-1864 Filed 1-29-10; 8:45 am]
BILLING CODE 4312-53-M