Xanterra sues National Park over contract
GRAND CANYON, Ariz. - National Park concessionaire Xanterra South Rim, L.L.C is suing the National Park Service over one of the park's concession contracts because the concessionaire says the contract unfairly raises franchise fees, does not provide adequate employee housing and has the potential to raise visitor entrance fees to the Canyon.
Xanterra operates lodging, restaurants, and other services at Grand Canyon.
The current contract between Xanterra and NPS expires Dec. 31.
According to Xanterra, the new contract does not give the winning bidder a "reasonable opportunity for net profit in relation to capital invested and the obligations of the contract" as required by federal law. Bids for the larger concessionaire contract were due Oct. 8.
Grand Canyon National Park Superintendent, Dave Uberuaga, said in Aug. 2013, the contracts at the park were designed to create more competition.
According to Xanterra, the park's newest concession contracts include a 14 percent franchise fee, which is triple the 3.8 percent fee the company currently pays. The contract also doesn't provide adequate housing for Xanterra employees.
Xanterra maintains the NPS decision for an increase in the franchise fee is to use $25 million in park funds and $75 million borrowed from other national parks to 'buy down' Xanterra's Leasehold Surrender Interests (LSI). The LSI must be re-paid to Xanterra for renovations to buildings and all other projects Xanterra completes to buildings while under contract.
The concessionaire believes the contract with its increased franchise fee will have a negative affect on future concessionaires.
Under their contract the NPS provides concessionaires with allocated housing. Xanterra said the housing assigned to them during the bid for the contracts in 2013 gave Xanterra, the concessionaire with more employees, inadequate housing.
Xanterra said the concessionaire with the smaller contact, has 87 extra beds during summer operations and 244 beds in the winter, resulting in Xanterra being short 84 beds in the summer and 224 beds for the winter. Xanterra also said the smaller contact is disproportionate in their housing. Xanterra said the NPS wants to move employees to dormitory style rooms that are inadequately insulated for winter conditions to resolve the housing issue.
"We have no option left bit to take legal action and request an injunction to stop the implementation of these contracts in the hope that we can prevent the eviction of 224 of our employees," Andrew N. Todd, President and CEO of Xanterra said." Xanterra has exhausted every avenue in an effort to correct this situation in an amicable and commercially reasonable manner before it became a crisis for so many families and the community."
Xanterra filed the suit Oct. 7, against the NPS seeking a declaratory judgment in future contracts.
Under the new NPS proposal, changes in the contract for the housing will go into effect Jan. 1, 2015.
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