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[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]

 
HISTORIC LEASING IN THE NATIONAL PARK SYSTEM: ASSESSING CHALLENGES AND 
                         BUILDING ON SUCCESSES

=======================================================================

                        OVERSIGHT FIELD HEARING

                               before the

                     COMMITTEE ON NATURAL RESOURCES
                     U.S. HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             SECOND SESSION

                               __________

   Monday, September 17, 2018, in Hot Springs National Park, Arkansas

                               __________

                           Serial No. 115-54

                               __________

       Printed for the use of the Committee on Natural Resources
       
       
       
       
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]       

       

        Available via the World Wide Web: http://www.govinfo.gov
                                   or
          Committee address: http://naturalresources.house.gov
          
          
          
                      _________ 

            U.S. GOVERNMENT PUBLISHING OFFICE
                   
31-588 PDF          WASHINGTON : 2018               
          
          
          
          
          
          
                     COMMITTEE ON NATURAL RESOURCES

                        ROB BISHOP, UT, Chairman
            RAUL M. GRIJALVA, AZ, Ranking Democratic Member

Don Young, AK                        Grace F. Napolitano, CA
  Chairman Emeritus                  Madeleine Z. Bordallo, GU
Louie Gohmert, TX                    Jim Costa, CA
  Vice Chairman                      Gregorio Kilili Camacho Sablan, 
Doug Lamborn, CO                         CNMI
Robert J. Wittman, VA                Niki Tsongas, MA
Tom McClintock, CA                   Jared Huffman, CA
Stevan Pearce, NM                      Vice Ranking Member
Glenn Thompson, PA                   Alan S. Lowenthal, CA
Paul A. Gosar, AZ                    Donald S. Beyer, Jr., VA
Raul R. Labrador, ID                 Ruben Gallego, AZ
Scott R. Tipton, CO                  Colleen Hanabusa, HI
Doug LaMalfa, CA                     Nanette Diaz Barragan, CA
Jeff Denham, CA                      Darren Soto, FL
Paul Cook, CA                        A. Donald McEachin, VA
Bruce Westerman, AR                  Anthony G. Brown, MD
Garret Graves, LA                    Wm. Lacy Clay, MO
Jody B. Hice, GA                     Jimmy Gomez, CA
Aumua Amata Coleman Radewagen, AS    Nydia M. Velazquez, NY
Daniel Webster, FL
Jack Bergman, MI
Liz Cheney, WY
Mike Johnson, LA
Jenniffer Gonzalez-Colon, PR
Greg Gianforte, MT
John R. Curtis, UT

                      Cody Stewart, Chief of Staff
                      Lisa Pittman, Chief Counsel
                David Watkins, Democratic Staff Director
                                 ------                                

                                CONTENTS

                              ----------                              
                                                                   Page

Hearing held on Monday, September 17, 2018.......................     1

Statement of Members:
    Bishop, Hon. Rob, a Representative in Congress from the State 
      of Utah....................................................     1
        Prepared statement of....................................     2
    Westerman, Hon. Bruce, a Representative in Congress from the 
      State of Arkansas..........................................     3
        Prepared statement of....................................     5

Statement of Witnesses:
    Cassidy, Tom, Vice President, Government Relations and 
      Policy, National Trust for Historic Preservation, 
      Washington, DC.............................................    19
        Prepared statement of....................................    21
        Questions submitted for the record.......................    29
    Kempkes, Bob, Owner, Quapaw Bathhouse and Spa, Hot Springs 
      National Park, Arkansas....................................    33
        Prepared statement of....................................    35
    McCabe, Hon. Pat, Mayor, City of Hot Springs, Hot Springs 
      National Park, Arkansas....................................     6
        Prepared statement of....................................     8
    McCaskill, Cole, Vice President, Hot Springs Chamber of 
      Commerce, Hot Springs National Park, Arkansas..............    16
        Prepared statement of....................................    17
    Simmons, Tracy, Chief of Commercial Services, Midwest Region, 
      National Park Service, U.S. Department of the Interior, 
      Omaha, Nebraska............................................    10
        Prepared statement of....................................    12
        Questions submitted for the record.......................    14

Additional Materials Submitted for the Record:

    Submission for the Record by Chairman Bishop

        Pew Charitable Trusts, Testimony for the Record..........    47

    Submissions for the Record by Rep. Westerman

        Boozman, John, Senator from Arkansas, Letter to Chairman 
          Bishop dated September 12, 2018........................    48
        Burrough, Bill, Deputy City Manager, City of Hot Springs, 
          Letter to Chairman Bishop dated September 17, 2018.....    49
        Ferriter, Olivia B., Deputy Assistant Secretary, U.S. 
          Department of the Interior, Letter to Senator Lisa 
          Murkowski dated March 29, 2018.........................    49
        Hot Springs Sentinel Record, Article titled ``Hot 
          Springs: A wonderful story to tell,'' dated September 
          16, 2018...............................................    51
        Schweikhart, Rose, owner of Superior Bathhouse Brewery, 
          Letter to Congressman Westerman dated September 15, 
          2018...................................................    53
                                     

   OVERSIGHT FIELD HEARING ON HISTORIC LEASING IN THE NATIONAL PARK 
         SYSTEM: ASSESSING CHALLENGES AND BUILDING ON SUCCESSES

                              ----------                              

                       Monday, September 17, 2018

                     U.S. House of Representatives

                     Committee on Natural Resources

                  Hot Springs National Park, Arkansas

                              ----------                              

    The Committee met, pursuant to call, at 2:00 p.m., Hot 
Springs City Hall, 133 Convention Boulevard, Hot Springs 
National Park, Arkansas, Hon. Rob Bishop [Chairman of the 
Committee] presiding.
    Present: Representatives Bishop, Westerman, Radewagen, and 
Hill.

    The  Chairman. This Committee is meeting today to hear 
testimony on historic leasing in national parks, assessing the 
challenges and building on success. I am happy that we have 
three of our Committee members here. Amata Radewagen from 
American Samoa is here, and Bruce Westerman, who you all know 
from this particular area. I am the Chairman from Utah, and I 
am going to ask you to now consent that Mr. French Hill be 
added and allowed to sit with the Committee and participate in 
today's hearing.
    Having no objections, so ordered. We will begin with that.

    I want to start off with just a simple and very quick 
opening statement to you as we outline the rest of this. Let me 
go through a couple of procedural things, first of all. Opening 
statements will go between myself and Mr. Westerman. Any other 
Members, since this is a formal hearing, can add statements if 
they submit it to the record today. I want to start off with 
the original statement, though, on why I am excited to be here.

STATEMENT OF THE HON. ROB BISHOP, A REPRESENTATIVE IN CONGRESS 
                     FROM THE STATE OF UTAH

    The  Chairman. As you all know, we have a Park Service that 
has a maintenance backlog. That is not unusual because we have 
a BLM that has a huge maintenance backlog as well as the Fish 
and Wildlife system with a huge maintenance backlog. One of the 
things we talked about just before we broke last Thursday was 
that pieces of legislation can actually help provide a 
mechanism to go forward on how we can reach that backlog, but 
one of the things we did not talk about in that process is this 
idea of leasing and lease management. I am excited about this 
for the simple reason that, in my home district, I am trying to 
establish another historic park where the rails met at the 
Golden Spike, which is about 30 miles from my home. I am 
interesting in seeing how this historic park is actually going 
to be managed.
    And if you actually do a lease process, not only can you 
get additional revenues coming into the process, but I think 
you are going to be involved in the community more in the 
process, and that is one of the things of which I am truly 
interested of how we can get local communities more involved in 
our public lands, including the ability of getting them to 
start becoming the ones we go to to find out the mechanisms of 
how lands are going to be managed and how the parks will be 
managed into the future. But far too often, it seems like we 
import somebody from some other part of the country in here 
when we have local people who care about this area, who know 
this area, who should be empowered to make more decisions on 
how these areas run. I think in the future that will bring a 
better way of managing the lands, it will bring a better way of 
attracting visitors, so tourism can develop in those particular 
areas, and hopefully we can move this entire process further.

    [The prepared statement of Chairman Bishop follows:]
   Prepared Statement of the Hon. Rob Bishop, Chairman, Committee on 
                           Natural Resources
    Good Afternoon. Before we get started with opening statements, I 
want to thank the city of Hot Springs for hosting us today and for all 
of your help in making this hearing possible. I would like to thank our 
witness for joining us and sharing their experiences with us. Thank you 
for giving us your time.
    I would also like to thank Representative Westerman for bringing 
attention to this important program and encouraging us to look at Hot 
Springs as a model of success.
    Today, the House Committee on Natural Resources meets to examine 
the Historic Leasing Program of the National Park Service. The public-
private partnership of leasing in the NPS is truly a win-win. It saves 
historic buildings and saves taxpayers money. It reduces the 
maintenance backlog in our national parks and creates jobs. And 
importantly, it is thinking outside of the box.
    Innovative programs like leases between the NPS and private 
business are the future of how we will manage our parks.
    You may have heard that the National Park Service is facing an 
$11.6 billion backlog of maintenance needs, and $37.6 million of that 
total is right here in Arkansas. It is going to take a wide variety of 
approaches to fix our parks. Historic leasing is one important tool.
    When a business leases a building from the National Park Service, 
they take on the cost of repairs. That not only saves the NPS money, 
but also frees up park maintenance staff to perform other priority 
projects. Putting buildings back into use ensures they get the 
attention they need. Hard-working tenants perform repairs and catch 
problems before they become insurmountable. The historic character of 
buildings is restored using the established standards for the treatment 
of historic properties.
    Leasing also means that boarded-up storefronts become thriving 
business districts again. The transformation that has occurred here in 
Hot Springs is remarkable. Your historic downtown is a point of pride 
once more and an economic driver of this community. We want to see more 
successes like this all across the country.
    We are also here today to see what can be done better. How can we 
grow the leasing program? How can we make it more user-friendly? Let's 
get rid of the red tape and bring in more support to fix our national 
parks.
    I'm looking forward to hearing about the Historic Leasing Program 
here in Hot Springs, what is going well, and where there have been 
bumps in the road. We can all learn a lot from Hot Springs National 
Park and the wonderful city of Hot Springs.
    Again, I want to thank everyone for being here today.

                                 ______
                                 

    The  Chairman. With that, I appreciate the fact that we are 
in a formal hearing. I am now going to do something that is 
different and actually going to turn the management of this 
hearing over to Congressmen Westerman, who is not just on the 
Committee, he is also the chairman of one of our subcommittees 
and does a great job. But I would remind the audience, once 
again, this is still a formal hearing, which means the rules of 
procedure that we have in the House will also have to be 
followed here. This is not a town hall. This is actually a 
Committee hearing. We will let Mr. Westerman explain how the 
timers will be working for you, but for the introduction of our 
guests and the actual calling of that testimony, I would like 
to turn the remainder of this meeting over to Mr. Westerman, 
whether he wants to or not.

  STATEMENT OF THE HON. BRUCE WESTERMAN, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF ARKANSAS

    Mr.  Westerman. Thank you, Chairman Bishop. It is an honor 
to have you here with us today, and I appreciate your service, 
not only to the Members in your district in Utah, but to the 
country, and the work that you do on the Natural Resources 
Committee. I was especially glad to see us mark up the bill 
last week that looked at addressing the maintenance backlog.
    I also want to welcome my fellow Committee member, Amata 
Radewagen, from American Samoa. I visited her district before. 
It is a beautiful place if you can ever get a chance to get out 
there. And also welcome my colleague from Little Rock, 
Representative French Hill, who is joining the Committee today. 
Thank you for being here. And welcome everyone to Hot Springs, 
which is also my hometown. I am honored that you visited this 
wonderful part of the country. The Natural State has a lot to 
offer both to residents and tourists, and Hot Springs is no 
exception to that rule. Just to be official here, I am 
recognizing myself for a 5-minute opening.
    Today, we are focusing on one particular success story here 
in Hot Springs and that is Bathhouse Row, and specifically, we 
are looking at the National Park Service Historic Leasing 
Program that has allowed Hot Springs to grow economically while 
also saving the American taxpayer millions of dollars. It is a 
program I am eager to explore, to improve, and to potentially 
provide to other Americans across Arkansas and across the 
country.
    If you walk up Central Avenue, as we will do shortly after 
the conclusion of this meeting, you will see a magnolia-lined 
street bustling with economic activity and growth. There is a 
new boutique hotel going in on one side, with restaurants, 
small businesses, and more going up on the other. You would 
never guess that Central Avenue is the dividing line between a 
national park and a small town. Hot Springs National Park and 
the bathhouses preserved within are a crucial component to our 
town. Without the innovation provided by the Historic Leasing 
Program, our town would not be as successful as it is today.
    Hot Springs National Park is our Nation's oldest protected 
land, predating the Park Service, Yellowstone National Park, 
and the state of Arkansas itself. Set aside as a national 
reserve in the early 1800s, for generations people have flocked 
here for the healing thermal waters and public bathhouses. Hot 
Springs is the home to baseball spring training, and this is 
our resident Cubs' expert here to my right, the Chairman. We 
are going to also get to take a tour of the historic baseball 
trail.
    The  Chairman. And if I can interrupt for just a second, I 
was met by a couple of Cardinals fans out there. If any of you 
are Cardinals fans, you are dismissed now.
    Mr.  Westerman. We don't have a professional team here in 
the state, but I believe still 60 percent of the people who are 
in the baseball Hall of Fame participated in spring training 
right here in Hot Springs and a big part of that was because of 
the bathhouses, which we will fill you in on during the tour.
    However, as time passed and the interest in the thermal 
waters waned, attendance to the bathhouses dropped. By the 
1980s, nearly all the bathhouses had closed their doors, 
draining jobs from Hot Springs, killing tourism, and saddling 
the National Park Service with millions of dollars in 
restoration and maintenance work. Without innovation, these 
bathhouses, and perhaps the prosperity in Hot Springs as a 
whole, were headed in the wrong direction.
    Now enter the Historic Leasing Program. By law, the 
National Park Service has the authority to rent out unused 
buildings to entrepreneurs and local businesses. These 
businesses, in exchange for use of the space, must pay rent to 
the Park Service. More importantly, they must take on the 
maintenance cost of the buildings.
    For Hot Springs, this meant two things: (1) it breathed new 
life into a faltering downtown. The private businesses that 
began to inhabit the bathhouses anchored us through a 
catastrophic fire in 2014 and have continued to drive tourism 
and investment downtown; and (2) it saved the American taxpayer 
millions of dollars. It took the cost of refurbishment and 
yearly maintenance off the Park Service books, freeing up 
dollars for other investment around the park and around the 
system.
    The focus of this field hearing is simple. We are here not 
only to highlight the success of Hot Springs National Park, but 
we are here to examine the challenges facing the Historic 
Leasing Program. Nationally, the Park Service is facing nearly 
a $12 billion maintenance backlog. While the Historic Leasing 
Program is not a silver bullet, it is a valuable tool in the 
toolbox we need to consider when addressing the backlog. This 
hearing is, in part, to help identify the challenges with the 
program, and I am eager to hear from today's witnesses about 
how best we can improve the process and how to best distribute 
the program to other parts around the country.
    As we sit here right now, the Park Service has two things 
going on: (1) it has a $12 billion maintenance backlog, and (2) 
it has thousands of unused buildings and spaces that are 
contributing to that debt. As we are about to discuss, Hot 
Springs National Park figured out a way to put the unused 
buildings to work, while helping the local economy. I am eager 
to hear from our witnesses about the good work they have done 
promoting this program. I want to, again, thank everyone for 
traveling to my hometown, and I cannot wait to get this program 
implemented more nationally.

    [The prepared statement of Mr. Westerman follows:]
  Prepared Statement of the Hon. Bruce Westerman, a Representative in 
                  Congress from the State of Arkansas
    Mr. Chairman, members of the Committee, thank you for holding this 
hearing today, and welcome to my hometown of Hot Springs. I am honored 
that you have visited my wonderful part of the world. The Natural State 
has a lot to offer both residents and tourists, and Hot Springs is no 
exception to that rule.
    Today, we are focusing on one particular success story here in Hot 
Springs. Bathhouse Row, and specifically, the National Park Service 
Historic Leasing Program, has allowed my hometown to grow economically, 
while also saving the American taxpayer millions of dollars. It is a 
program I am eager to explore, improve, and potentially provide to 
other Americans across Arkansas and across the country.
    If you walk up Central Avenue, as we will do shortly after the 
conclusion of this meeting, you will see a magnolia-lined street, 
bustling with economic activity and growth. There is a new boutique 
hotel going in on one side, with restaurants, small businesses, and 
more going up on the other. You would never guess that Central Avenue 
is the dividing line between a National Park and a small town. Hot 
Springs National Park, and the Bathhouses preserved within, are a 
crucial component to our town. Without the innovation provided by the 
Historic Leasing Program, our town would not be as successful as it is 
today.
    Hot Springs National Park is our Nation's oldest protected lands, 
predating the Park Service, Yellowstone National Park, and the state of 
Arkansas itself. Set aside as a National Reserve in the early 1800s, 
for generations people have flocked here for the healing thermal waters 
and public bathhouses. Hot Springs is the home to baseball's spring 
training, as our resident Cubs' expert to my left mentioned, and over 
the years this town has hosted everyone from celebrities to gangsters.
    However, as time passed and interest in the thermal waters waned, 
attendance to the Bathhouses dropped. By the 1980s, nearly all the 
bathhouses had closed their doors, draining jobs from Hot Springs, 
killing tourism, and saddling the National Park Service with millions 
of dollars in restoration and maintenance work. Without innovation, 
these bathhouses, and perhaps the prosperity of Hot Springs as a whole, 
were headed for the gutter.
    Enter the Historic Leasing Program. By law, the National Park 
Service has the authority to rent out unused buildings to entrepreneurs 
and local businesses. These businesses, in exchange for use of the 
space, must pay rent to the Park Service. More importantly, they must 
take on the maintenance cost of the buildings.
    For Hot Springs, this meant two things: (1) it breathed new life 
into a faltering downtown. The private businesses that began to inhabit 
the bathhouses anchored us through a catastrophic fire in 2014 and have 
continued to drive tourism and investment downtown. (2) it saved the 
American taxpayer millions of dollars. It took the cost of 
refurbishment and yearly maintenance off the Park Service books, 
freeing up dollars for other investment around the Park, and around the 
system.
    The focus of this field hearing is simple--we are here not only to 
highlight the success of Hot Springs National Park, but we are here to 
examine the challenges facing the Historic Leasing Program. Nationally, 
the National Park Service is facing nearly a $12 billion maintenance 
backlog. While the Historic Leasing Program is not a silver bullet, it 
is a valuable tool in the toolbox we need to consider when addressing 
the backlog. This hearing is in part to help identify the challenges 
with the program, and I am eager to hear from today's witnesses about 
how we can best improve the process, and how to best distribute the 
program to other parks around the country.
    As we sit right now, the Park Service has two things going on: (1) 
it has a $12 billion maintenance backlog, and (2) it has thousands of 
unused buildings and spaces that are contributing to that debt. As we 
are about to discuss, Hot Springs National Park figured out a way to 
put the unused buildings to work, while helping the local economy. I am 
eager to hear from our witnesses about the good work they have done 
promoting this program. I want to again thank everyone for traveling to 
my hometown, and cannot wait to get this program implemented 
nationally.

                                 ______
                                 

    Mr.  Westerman. Now I will introduce our witnesses. Our 
first witness is the Honorable Pat McCabe, the Mayor of Hot 
Springs, who has a unique interest in the bathhouses that he 
will share later. We have Ms. Tracy Simmons, the Chief of 
Commercial Services for the Midwest Region of the National Park 
Service, out of Omaha, Nebraska. We have Mr. Cole McCaskill, 
the Vice President of the Hot Springs Chamber of Commerce, who 
has worked very closely not only with the bathhouse projects 
but all the redevelopment downtown.
    Cole, I was telling somebody earlier that this past summer, 
Senator Boozman and I were able to meet with the Chamber of 
Commerce for the opening of the 100th new business since the 
fire in 2014. We appreciate your leadership on that.
    We have Mr. Tom Cassidy, the Vice President of Government 
Relations and Policy with the National Trust for Historic 
Preservation, out of Washington, DC. And we also have Mr. Bob 
Kempkes, the owner of the Quapaw Bathhouse and Spa. He is also 
an architect and has done a lot of work on not only the 
bathhouse side of Central Avenue but also many of the other 
businesses along Central Avenue.
    I want to remind everyone about the sound system we have. 
The microphones are hot at all times, so you can see the green 
light here. If you need to mute your microphone at any point, 
just press and hold the button down, but as soon as you release 
the button, your microphone is hot again.
    Just a few pieces of housekeeping here. You will see the 
timers situated around. When you begin your testimony, the 
lights on the timers will turn green. After 4 minutes, the 
yellow light will come on. I know in Arkansas when we see a 
yellow light, a lot of times that means we speed up before the 
red light, and you probably want to speed up because when the 
red light comes on, your time is over. And to keep us on track, 
we will have to follow those time limits pretty strictly.
    Again, I would also like to remind our audience that this 
is a congressional hearing, not a town hall, and unfortunately, 
there will be no time for public comment during the meeting.
    We will now hear testimony from our witnesses, and to start 
off, the Chair recognizes Mayor Pat McCabe for 5 minutes.

   STATEMENT OF THE HONORABLE PAT McCABE, MAYOR, CITY OF HOT 
          SPRINGS, HOT SPRINGS NATIONAL PARK, ARKANSAS

    Mr.  McCabe. Thank you very much.
    As mayor of Hot Springs, let me welcome you to our 
community. We are very pleased that the House Committee on 
Natural Resources has elected to hold a meeting here to explore 
the feasibility of expanding the leasing programs to other 
national parks across the country. The vibrancy of any 
community can be measured with a stroll through their downtown. 
The heart of downtowns across America have not been without 
challenge.
    The city of Hot Springs has had similar challenges over the 
years. Bathhouse Row had been very vibrant up to the 1970s, but 
from that point forward until recent years, not so much so. The 
Buckstaff Bathhouse for years was the only facility on 
Bathhouse Row that was operational. Today, the only structure 
which is vacant is the Maurice Bathhouse. When visitors and 
locals alike now stroll Bathhouse Row, they are able to avail 
themselves to the very bathhouses that have now been 
refurbished.
    Without the leasing program of the National Park Service, 
the bathhouses would remain vacant. We thank the National Park 
Service for their assistance in the revitalization of our 
downtown. I would like to personally thank former Hot Springs 
National Park Superintendent Josie Fernandez for her efforts in 
this regard. We also look forward to working in partnership 
with Superintendent Laura Miller as we strengthen ties and 
complete the build-out of Bathhouse Row and the business side 
of Central Avenue.
    On a personal note, my wife, Ellen, and I were interested 
in implementing a business in downtown Hot Springs. We inquired 
of our architect friends, Bob Kempkes and Anthony Taylor, as to 
structures that might be available on the business side of 
Central Avenue. Upon entering the Hale Bathhouse, we were 
greatly surprised and pleased that the National Park Service 
years before had removed the lead-based paint and asbestos 
thereby leaving the structure bare of interior finish. The 
ability of the National Park Service to ready any facility in 
this manner makes it very desirable for leasing since the 
abatement process can be time-consuming and expensive.
    Following the walk-through, we completed the application of 
the National Park Service for a lease. A letter of intent was 
issued in June of 2014. After working 18 months with a local 
bank and another entity, the local bank elected not to finance 
the project. We were without wind in our sails. One of the 
challenges in securing financing, in part, was the fact that my 
wife and I would not be owners of the building. Therefore, the 
bank, to get comfortable with their ability to be made whole 
should we fail was a challenge for them because the building 
could not be used as collateral, nor could the physical 
improvements to the building. The National Park Service needs 
to be sensitive that collateralizing projects of this size can 
be a challenge for the banks.
    The lease that was proposed by the National Park Service 
was a lease that the lending institution felt was overweighted 
in favor of the National Park Service in providing great 
exposure to the lending institution. A significant area of 
concern was the distribution, or lack thereof, of insurance 
proceeds if the structure was significantly destroyed or 
destroyed in total during our occupancy. The original agreement 
allowed the National Park Service to retain all the insurance 
proceeds and elect not to rebuild, leaving my wife and I with 
no ability to satisfy the loan except through personal funds. 
The financing entity was able to negotiate a provision within 
the lease that would insulate them as well as ourselves should 
the Park Service elect not to have a structure rebuilt if the 
historic nature of the facility was compromised.
    A loan must be guaranteed by the Small Business 
Administration, and they have their issues as well and need to 
have their agreements modified specifically pertaining to the 
collateral agreements so that the Federal Government would be 
protected and exposure would be minimized. However, some of the 
concern should not have been that great given that the funds 
being expended on this project were going into a Federal 
building and into a structure owned by Ellen and Pat McCabe. If 
we were to fail, the taxpayers would not really be out 
anything.
    Developing the plan for reuse can be a challenge even as we 
receive more input from others. I would encourage that the 
decision making on the build-out of bathhouses be left at the 
regional office level. Superintendent Fernandez and I agreed 
early on to remove ourselves from that process and allow the 
professionals to take the lead. The regional office has the 
expertise to work with our local project architect to make 
those decisions that need to be made.
    There are a lot of great things going on within the lease. 
There are about four factors that I did mention that are very, 
very strong and very, very positive. The areas that I mentioned 
were only those that I felt could be addressed.
    In closing, this quasi public-private partnership in the 
restoration of Bathhouse Row has been a win for the National 
Park Service, a win for the taxpayers, a win for the Hot 
Springs community, and a win for the leaseholders. The ability 
to establish a program that allows others to develop creative 
ideas within these fine structures ensures that they will be 
safeguarded and available for years to come without any holding 
costs to the Federal Government.
    Thank you very much.

    [The prepared statement of Mr. McCabe follows:]
 Prepared Statement of Pat McCabe, Mayor, City of Hot Springs, Arkansas
    As Mayor of Hot Springs, let me welcome you to our community. We 
are very pleased that the House Committee on Natural Resources has 
elected to hold a meeting here to explore the feasibility of expanding 
the Leasing Program to other National Parks across the country. The 
vibrancy of any community can be measured with a stroll through their 
downtown area. The heart of downtowns across America have not been 
without challenge. Many have seen businesses move to fancy centers out 
of the heart of the city, leaving vacant buildings and storefronts. The 
city of Hot Springs has not been without similar style challenges over 
the years. Hot Springs differs from other communities in that a large 
footprint within the downtown area is the Hot Springs National Park. 
Bathhouse Row had been very vibrant up to the 1970s, but from that 
point forward until recent years not so much so. The Buckstaff 
Bathhouse for years was the only facility on Bathhouse Row that was 
operational. Today, the only structure which is vacant is the Maurice 
Bathhouse. When visitors and locals alike now stroll Bathhouse Row, 
they are able to avail themselves to the very bathhouses that have been 
repurposed.
    Without the Leasing Program of the National Park Service, the 
vacant Bathhouses would have remained vacant. We thank the National 
Park Service for their assistance in the revitalization of our 
downtown. I would like to thank former Hot Springs National Park 
Superintendent, Josie Fernandez, for her efforts in this regard. We 
also look forward to working in partnership with Superintendent Laura 
Miller as we strengthen ties and complete the build-out of Bathhouse 
Row and the business side of Central Avenue.
    The business side of downtown Central Avenue has also undergone a 
renaissance of sorts. This occurred, in part, with the creation of the 
Thermal Basin Fire District in November of 2013. The Thermal Basin Fire 
District required structures within its boundaries to provide a fire 
suppression system if the structure was three floors or greater. This 
resulted in a number of property owners selling their structures in 
lieu of meeting the new standard. New buyers of these buildings did so 
with creative ideas for new business opportunities. Recently, we 
celebrated the hundredth new business in downtown since February of 
2014. Now, both sides of downtown Central Avenue are very robust and 
provide an economic engine to the community.
    On a personal note, in September of 2013, my wife, Ellen, and I 
were interested in implementing a business in downtown Hot Springs. I 
inquired of our architect friends, Bob Kempkes and Anthony Taylor of 
Taylor Kempkes Architects, as to structures that may be available on 
the business side of Central Avenue. They indicated that, while there 
were no buildings available for lease/purchase on the business side of 
downtown Central Avenue, there were a couple of bathhouses available 
within the National Park. We immediately scheduled a day and time to 
walk through the Ozark Bathhouse and the Hale Bathhouse. My wife and I 
had a concept of establishing a boutique hotel with dining area within 
a downtown structure. While the Ozark Bathhouse appeared to be in 
exceptional condition for immediate use, the configuration of the rooms 
would require substantial demolition prior to repurposing as a boutique 
hotel with a restaurant. Upon entering into the Hale Bathhouse, we were 
greatly surprised and pleased that the demolition had already occurred, 
and we would be in a position to begin a restoration process with 
minimal additional demolition. The National Park Service years before 
had moved forward with the abatement of lead-based paint and asbestos, 
thereby, essentially leaving the structure bare of interior finish. The 
ability of the National Park Service to ready any facility in this 
manner makes it very desirable for leasing since the abatement process 
can be time consuming and expensive.
    Following the walk-through, we contacted the Hot Springs National 
Park Administrative office to determine the next steps. We received the 
Request for Proposal and set out to complete and provide the same. We 
did so in late February of 2014 in advance of the deadline of February 
27, 2014. Toward the end of June 2014, the National Park Service issued 
a Letter of Intent which we executed and began the process of securing 
financing following receipt of cost estimates from the architect. After 
working 18 months with a local bank and another entity, the local bank 
elected not to finance the project. Therefore, we were caught without 
any wind in our sails. However, the other entity was still onboard, but 
needed to have a bank partner which we then sought. One of the 
challenges in securing financing, in part, was the fact that my wife 
and I would not be owners of the building. Therefore, for the bank to 
get comfortable with their ability to be made ``whole'' should we fail 
was a challenge for them since the building could not be used as 
collateral nor could the physical improvements to the building be held 
as collateral, as the bank would not be able to remove the physical 
modifications to the facility, such as electrical, plumbing and heating 
and air. This would leave the financing entities with only items such 
as beds, mattresses, tables and chairs, refrigeration units, stove, 
etc. as collateral. The National Park Service needs to be sensitive 
that collateralizing projects of this size can be a challenge for the 
banks.
    The Lease that was proposed by the National Park Service was a 
Lease that the lending institution felt was overweighted in favor of 
the National Park Service and provided greater exposure to the lending 
institution. A significant area of concern was the distribution, or 
lack thereof, of insurance proceeds if the structure was significantly 
destroyed or destroyed in total during our occupancy. The original 
Agreement allowed the National Park Service to retain all the insurance 
proceeds, elect not to rebuild, leaving my wife and I with no ability 
to satisfy the loan balance except through personal funds. The 
financing entity was able to negotiate a provision within the Lease 
that would insulate them, as well as ourselves, should the Park Service 
elect not to have the structure rebuilt if the historic nature of the 
facility was compromised. As such, it took no less than 9 months for 
the financial entity and the National Park Service to negotiate an 
appropriate Lease.
    Our loan was to be guaranteed by the Small Business Administration, 
and they had their issues as well and needed to have agreements 
modified, specifically pertaining to the Collateral Agreement so that 
the Federal Government would be protected, and the exposure would be 
minimalized to the greatest extent possible. This too required some 
time and energy, though it was significantly less than that of the 
Lease negotiation. However, some of these concerns should not have been 
as great given that the funds being expended on this project were going 
into a Federal building and not into a structure owned by Pat and Ellen 
McCabe. If we were to fail, the taxpayers would not really be out 
anything, as the McCabe's would not have profited since the funds 
expended would have gone into a Federal building. Perhaps there can be 
some recognition of this fact and the ability for the SBA to gain 
comfort could be reviewed. In speaking with our leading financial 
institution, it appeared that the goals of the Park Service and the SBA 
were polar opposites in this regard.
    Developing the plan for the reuse can be challenging, and even more 
so when a number of varied players inject themselves into the design 
process. Superintendent Fernandez and I agreed early on to remove 
ourselves from the process and allow the professionals; the Project 
Architect, the Historic Architect of the Midwest Region, Health 
Inspector and the Life Safety Codes Officer to be responsible for 
decisions relating to how the varied codes would be met. The Regional 
Office has the capability of working directly with the Project 
Architect. While we all desire to have the National Park Superintendent 
accept an ownership role within their respective parks, the repurposing 
of this bathhouse would result in looking at varied ways in which to 
meet the required standards which would not necessarily be contained 
within the skill sets of a Superintendent. I would recommend that the 
National Park Service focus on being an advocate for repurposing these 
styled structures with decision making at the Regional Office level.
    The National Park Service was very thoughtful in the development of 
the Lease in many ways. The National Park Service allowed the Lease to 
be $1.00 a year for the first 3 years prior to elevating to the full 
Lease price. In this manner, the holder of the Lease would be able to 
build out the project and become operational with essentially zero 
Lease expense for the first 3 years. We anticipate being operational 
before year end which will allow us approximately 20 months of 
operations at $1.00 per year Lease expense. After which, we will 
increase to the stated amount in the Lease document. We will be well on 
our way to stabilizing business operations.
    Furthermore, the National Park Service provided credit in the Lease 
for the renovation costs of the facility. Here again this becomes 
favorable to the tenant, as the renovation costs are prorated over the 
term of the Lease reducing the effective monthly Lease expense. Without 
this credit for renovation costs, the Bathhouses may not have been 
renovated.
    The Lease requires that 2 percent of all gross sales be placed in a 
Capital Improvement Fund. Access to these funds can be used to repair 
and replace major plant and equipment. This better ensures that the 
tenant will always have funds to make major repairs and capital 
improvements should the need arise.
    The National Park Service provides for up to a 60 year lease. Ellen 
and I secured a 55 year Lease. While we certainly do not anticipate 
operating the project through the 55 years, we wanted to ensure that 
those that would come behind us would not be concerned that the Lease 
was about to expire. We felt that the project could change hands a 
number of times in advance of the expiration of the Lease. 
Consequently, those who would assume the project will know that they 
had the ability to purchase the operations and not have the Lease 
expire from underneath them.
    In closing, the Quasi-Public Private Partnership in the restoration 
of Bathhouse Row has been a win for the National Park Service, a win 
for the taxpayers, a win for the Hot Springs community and a win for 
the Lease Holders. The ability to establish a program that allows 
others to develop creative ideas within these fine structures ensures 
that they will be safeguarded and available for years to come without 
any holding costs to the Federal Government.

    Thank you for the opportunity to address the Committee today.

                                 ______
                                 

    Mr.  Westerman. Thank you, Mayor.
    Just a reminder, if you can't cover everything in your 
testimony, the written testimony will be part of the record, so 
if there were some areas you didn't get a chance to cover, we 
will have all those in the written record.
    And then a little more housekeeping details. After all the 
witnesses, we will have time where we will have questions, so 
we can pose any questions to you at that point.
    Next, the Chair recognizes Ms. Tracy Simmons to testify for 
5 minutes.

   STATEMENT OF TRACY SIMMONS, CHIEF OF COMMERCIAL SERVICES, 
 MIDWEST REGION, NATIONAL PARK SERVICE, U.S. DEPARTMENT OF THE 
                   INTERIOR, OMAHA, NEBRASKA

    Ms.  Simmons. Mr. Chairman and members of the Committee, I 
appreciate the opportunity to appear before you today. We thank 
the Committee for approving H.R. 6510, the Restore Our Parks 
and Public Lands Act, on September 13. This initiative, which 
would direct up to $6.5 billion toward reducing the deferred 
maintenance backlog at our national parks and other public 
lands, is Secretary Zinke's Number one priority, and we 
appreciate the Committee's support.
    In addition to supporting the direct investment of Federal 
dollars through H.R. 6510, the National Park Service is 
committed to using every tool at its disposal to tackle the 
deferred maintenance backlog. One of these tools is to enlist 
willing lessees in assuming the maintenance responsibilities of 
our historical assets through the effective use of leasing 
authorities.
    The National Park Service has authority to lease historic 
buildings and other structures under two laws: the Historic 
Preservation Act of 1966 and the National Parks Omnibus 
Management Act of 1998. This authority allows us to enter into 
public and private partnerships to use properties that are not 
needed for park purposes. In some cases, it has enabled major 
rehabilitation projects that would have otherwise not been 
possible. One key provision in the statute is the authority to 
adjust the fair market value rent to take into account the cost 
of restoring and maintaining structures.
    Nationwide, the National Park Service currently has 
approximately 160 leases that cover over 340 structures. In 
Fiscal Year 2017, these leases generated over $9 million, money 
that was retained by the National Park Service.
    The National Park Service leasing program provides support 
to parks and regions of all aspects of the leasing process, 
including assisting with drafting requests for proposals, 
drafting lease documents, determining regulatory compliance, 
and increasing awareness of opportunities that are available 
through the leasing authority. The leasing program continues to 
develop formal training for staff to expand capacity across the 
National Park System.
    The historic bathhouses in Hot Springs National Park have 
often been cited as an example of success of the National Park 
Service's leasing program. Several facilities on Bathhouse Row 
have been rehabilitated and repurposed through leases and in 
combination with the historic tax credit program. The Quapaw 
was opened in 2008 as a bathhouse and spa under a 55-year 
lease. This was followed by the Ozark in 2009. The Ozark lease 
was eventually terminated but was later repurposed as an art 
museum operated by the Friends of Hot Springs National Park. 
The Superior Bathhouse, which reopened as a brewery in 2013, 
continues to successfully operate under a long-term lease. The 
Hale Bathhouse is being converted to a boutique hotel and is 
expected to open in the coming year.
    Elsewhere, three of our most notable projects are the 
Cavallo Point Lodge north of San Francisco, the Argonaut Hotel 
in San Francisco, and Williams Transco Facility in New York 
City. All three have resulted in large amounts of deferred 
maintenance costs being eliminated.
    While these examples demonstrate how the National Park 
Service leasing authority can be used to redevelop, repurpose, 
and revitalize park structures, this authority has not always 
resulted in a valuable lease. Despite the National Park 
Service's investment of millions of dollars to stabilize the 
bathhouse structures in Hot Springs over the years, numerous 
attempts to find operators for the last two bathhouses, the 
Maurice and the Libby, have been unsuccessful.
    In general, market conditions and market demand pose the 
greatest challenges to expanding the current leasing program. 
The majority of successful National Park Service leases have 
been located around large metropolitan areas, in particular New 
York, San Francisco, and Philadelphia, where there is greater 
demand to lease facilities.
    Challenges have also been encountered when working to lease 
parties to other government entities. While an authority called 
Service First allows the Departments of the Interior and 
Agriculture to enter into agreements to share resources, other 
fellow agencies do not have an authority to enter into a lease 
with the National Park Service. Instead, they must use the 
services provided by the General Services Administration, which 
entails a much more lengthy and complex process than the 
process available through Service First.
    The National Park Service leasing program continues to 
learn from the market and develop best practices, while 
expanding the portfolio of the lease properties across the 
system.
    Mr. Chairman, this concludes my statement, and I would be 
pleased to answer any questions you or other members of the 
Committee may have.

    [The prepared statement of Ms. Simmons follows:]
  Prepared Statement of Tracy Simmons, Chief of Commercial Services, 
   Midwest Region, National Park Service, Department of the Interior
    Mr. Chairman and members of the Committee, I appreciate the 
opportunity to appear before you today at this oversight field hearing 
on ``Historic Leasing in the National Park System: Assessing Challenges 
and Building on Successes.''

    We thank the Committee for approving H.R. 6510, the Restore Our 
Parks and Public Lands Act, on September 13. This initiative, which 
would direct up to $6.5 billion toward reducing the deferred 
maintenance backlog in our national parks and other public lands, is 
Secretary Zinke's Number one legislative priority and we appreciate the 
Committee's support.

    In addition to supporting the direct investment of Federal dollars 
through H.R. 6510, the National Park Service is committed to using 
every tool at its disposal to tackle the deferred maintenance backlog. 
One of those tools is to enlist willing lessees in assuming the 
maintenance responsibilities of our historical assets through the 
effective use of leasing authorities.
                        leasing program overview
    The National Park Service (NPS) has general authority to lease 
historic buildings and other structures, including associated property, 
under the Historic Preservation Act of 1966 (54 U.S.C. 306121) and the 
National Parks Omnibus Management Act of 1998 (54 U.S.C. 102102). These 
authorities allows the NPS to enter into public-private partnerships 
through leases that allow the lessee to use properties that are not 
needed for park purposes. In some cases, it has enabled major 
rehabilitation projects that would have otherwise not been fiscally 
possible.

    The NPS's leasing authority under the Historic Preservation Act of 
1966 and the National Parks Omnibus Management Act of 1998 are 
implemented by Part 18 of Title 36 of the Code of Federal Regulations. 
These regulations require parks to make the determinations that the 
lease: will not result in the degradation of the purposes and values of 
the park; will not deprive the park of property necessary for 
appropriate park protection, interpretation, visitor enjoyment, or 
administration; will contain terms and conditions that will assure the 
leased property will be used for activity and in a manner that are 
consistent with the purposes established by law for the park; is 
compatible with the programs of the NPS; is for rent at least equal to 
the fair market value rent of the leased property; will adequately 
insure the preservation of historic property; and is of a term length 
of 60 years or less. These regulations also require parks to make the 
determination that the proposed activities under the lease are not 
subject to authorization through a concession contract, commercial use 
authorization, or similar instrument.

    The NPS is also authorized by statute to adjust the fair market 
value rent to take into account the costs to the lessee for 
preservation, maintenance, restoration, improvement, or repair and 
related expenses. This flexibility has been a valuable tool for the NPS 
to require the lessee to address deferred maintenance and continue to 
maintain and improve the facility during the lease term. It is often 
the case for facilities with a large amount of deferred maintenance 
that the lessee pays little or no rent during the lease term, because 
lessee's rent is reduced by these costs.

    Nationwide, the NPS currently has approximately 160 leases that 
cover over 340 structures. These leases generated $9,371,006 in total 
revenues in FY 2017 that were retained by the NPS. A few of the NPS's 
recent leases include a master residential lease at First State 
National Historical Park; a lease with Navajo Nation Hospitality 
Enterprises, a wholly owned subsidiary of the Navajo Nation, at Canyon 
De Chelly National Monument; and a lease with the U.S. Forest Service 
of two buildings at Fort Vancouver National Historic Site. Efforts to 
increase the portfolio of leased properties continue by identifying 
properties eligible for leases.

    The NPS leasing program provides support to parks and regions on 
all aspects of the leasing process, including assisting with drafting 
requests for proposals (RFPs), drafting lease documents, determining 
regulatory compliance, and increasing awareness of opportunities that 
are available through the NPS's leasing authority. The leasing program 
continues to develop formal training for staff to expand capacity 
across the NPS to initiate and manage park-level leasing programs.
                         nps leasing successes
    The historic bathhouses in Hot Springs National Park have often 
been cited as an example of the success of the NPS leasing program. 
Several facilities on Bathhouse Row have been rehabilitated and 
repurposed through leases and in combination with the Historic Tax 
Credit program.

    The first bathhouse to be renovated and repurposed through a lease 
was the Quapaw in 2008. The Quapaw was opened as a bathhouse and spa 
under a 55-year lease. This was followed by the Ozark in 2009, which 
was repurposed as an art museum. The Ozark operated until 2013 when the 
lessee was unable to generate enough revenue to continue operations and 
asked to terminate the lease. The Ozark is currently operated by the 
park's non-profit supporting organization, the Friends of Hot Springs 
National Park, through an agreement with the park. It currently houses 
the Hot Springs National Park Cultural Center and displays artwork from 
the park's Artist-In-Residence Program. The Friends make the Ozark 
available for private events for a fee.

    The Superior bathhouse, which reopened as a brewery in 2013, 
continues to successfully operate under a long-term lease. The Hale 
bathhouse is expected to open as a boutique 10-room hotel in 2019.

    While these examples demonstrate how the NPS's leasing authority 
can be used to redevelop, repurpose, and revitalize park structures, 
there are instances where this authority has not resulted in an active 
lease. Despite the NPS's investment of millions to stabilize the 
bathhouse structures over the years, numerous attempts to find 
operators for the last two bathhouses, the Maurice and the Libby, have 
been unsuccessful. The most recent RFPs for the Maurice, issued last 
year, did not attract any offers.

    The NPS has had success with major leasing projects elsewhere in 
the National Park System. Three of our most notable projects are the 
Cavallo Point Lodge in Golden Gate National Recreation Area, the 
Argonaut Hotel in San Francisco Maritime National Historical Park, and 
the Williams Transco facility in Gateway National Recreation Area. All 
three have resulted in large amounts of deferred maintenance being 
eliminated as a result of multi-million dollar investment from the 
private sector in projects involving renovation of historic assets. In 
all three cases, special park-specific leasing authorities were used in 
conjunction with system-wide general leasing authorities.
        federal rehabilitation tax credit (historic tax credits)
    Some lessees have been able to take advantage of the benefits 
offered by the Federal Historic Preservation Tax Incentives program, 
which is administered by the NPS in conjunction with the Internal 
Revenue Service and State Historic Preservation Offices. This program 
encourages private sector investment in the rehabilitation and re-use 
of historic buildings through tax credits on income-producing 
(commercial) properties. Examples include the Cavallo Point Lodge, the 
Argonaut Hotel, the Quapaw Bathhouse, and the Fort Mason Center for 
Arts and Culture in Golden Gate National Recreation Area.

    Navigating the multiple steps involved in obtaining historic 
preservation certification from the NPS is a complex process. Also, 
historic rehabilitation tax credits and other forms of third-party 
financing often require long-term leases. The NPS takes this into 
consideration when negotiating the final lease terms with a potential 
lessee and is always looking for ways to further partner with the 
private sector in the most seamless and appropriate manner.
                           leasing challenges
    While the examples given above highlight successes that have been 
achieved under the current leasing authority, the NPS has also faced a 
number of challenges in trying to utilize leases to reuse, 
rehabilitate, and revitalize our aging infrastructure. Some of the RFPs 
that have been issued by parks have received limited responses, or none 
at all. That was the case for a number of residential houses at Natchez 
Trace Parkway in Mississippi and for The Inn at Sleeping Bear Dunes 
within Sleeping Bear Dunes National Lakeshore in Michigan.

    Nowhere are the challenges more evident than at Fort Hancock within 
the Sandy Hook unit of Gateway National Recreation Area, where there 
are over 30 vacant structures. The park is making steady progress and 
has now entered into seven letters of intent that cover 13 separate 
buildings. However, the NPS has put a lot of effort into finding 
potential lessees and working with them to develop restoration plans 
that will fit the lessees' desired design and use. Given the historic 
nature of these structures, it is often difficult to negotiate terms 
that allow for the preservation of the historic fabric of the structure 
while at the same time providing the lessee flexibility to renovate the 
structure to meet their needs. Depending on the complexity of the 
restoration requirements, negotiations have sometimes taken years to 
complete.

    In general, market conditions and demand pose the greatest 
challenge to expanding the current leasing program. In intensely urban 
areas, there appears to be a greater demand from the public to lease 
facilities in parks for residential use, office space, or other 
commercial activity. The majority of successful NPS leases have been 
located around large metropolitan areas, in particular New York, San 
Francisco, and Philadelphia.

    In addition, developers and investors are often more interested in 
purchasing outright fee title to property, rather than investing in the 
rehabilitation of a property that is owned by, and possession of which 
will eventually be returned to, the Federal Government. Also, the lease 
opportunities available within parks may not provide a viable business 
opportunity given the higher costs associated with the restoration or 
rehabilitation of the structures compared to the lower rents that may 
be available, especially in rural and sparsely populated areas.

    Finally, NPS sometimes has difficulty executing leases with other 
government entities. The NPS has been able to enter into leases with 
other agencies within the Department of the Interior and the Department 
of Agriculture utilizing the Service First authority (43 U.S.C. 
Sec. 1703) which allows the two departments to enter into agreements to 
share resources. However, with respect to other Federal agencies, while 
the NPS has authority to enter into leasing agreements, the other 
agencies generally do not have a reciprocal authority to enter into a 
lease with the NPS. Instead, they use the services provided by the 
General Services Administration, which entails a much more lengthy and 
complex process than the process available through Service First.

    Mr. Chairman, the NPS greatly appreciates the Committee's interest 
in the leasing issue and looks forward to continuing to work with you 
on ways to further utilize public-private partnerships to help preserve 
and maintain the NPS's historic assets for future generations to use 
and enjoy. The Secretary remains committed to improving how this 
process works to make it more feasible and stable for historic leasing 
to occur. We look forward to working with you and your colleagues 
toward that end. This concludes my prepared statement and I am happy to 
answer any questions.

                                 ______
                                 

  Questions Submitted for the Record by Chairman Bishop to Ms. Tracy 
 Simmons, Chief of Commercial Services, Midwest Region, National Park 
                Service, U.S. Department of the Interior

Ms. Simmons did not submit responses to the Committee by the 
appropriate deadline for inclusion in the printed record.

    Question 1. The focal point of NPS historic leasing appears to be 
on the use of NPS buildings for commercial or business purposes. In 
addition to this use, it is clear that historic leases can be issued 
also for other purposes, such as residential and agricultural use. Has 
NPS issued historic leases for these purposes and do you agree that NPS 
favors broad and flexible use of historic leasing for a wide range of 
purposes--not just to run businesses?

    Question 2. NPS has testified that historic leasing is appropriate 
for buildings that are not used for ``park purposes.'' This is a very 
broad concept that could preclude almost any use of properties for 
historic leasing. We assume that ``park purposes'' would have a narrow 
definition for this limitation and would apply only to those instances 
where NPS itself intends to use and occupy a building for 
administration, management, public health and safety, or other similar 
purposes. For example, lessees can perform interpretation as well as 
NPS in many cases and we assume that interpretation of a historic site 
would NOT be considered the kind of ``park purpose'' that prohibits its 
use for historic leasing. Please confirm that our understanding is 
correct and provide any additional insight on the meaning of this 
phrase as applied to historic leasing.

    Question 3. It is commonly understood that one of the impediments 
to the use of historic leasing has been resistance at the local level, 
and from within individual parks, to adopt this innovative tool. Some 
superintendents are reluctant to yield their total control over 
buildings and historic properties to outside parties. Despite this 
well-known fact, it appears that NPS has continued to look to local 
park managers for a list of appropriate buildings for historic leasing. 
What is NPS doing from the HQ and regional office level to ensure that 
a broad and inclusive list of appropriate facilities is developed for 
historic leasing? Also, will NPS establish a process where third 
parties and potential lessees can identify those properties that would 
be the subject for historic leasing and, in doing so, activate a 
meaningful review process that is not subject solely to the whims of 
local officials?

    Question 4. Given the vast number of buildings that are available 
for historic leasing, we are surprised that only 47 properties have 
been identified by NPS as priority targets. What is NPS doing to look 
at the longer list of 9,000 or so buildings from which candidates for 
historic leasing can be drawn.

    Question 5. Much of the focus in the hearing has been on the use of 
historic leasing for buildings already in the maintenance backlog. It 
is clear that historic leasing can also be used as a strong tool to 
prevent structures from even being placed on the backlog. Does NPS 
agree that historic leasing should be used in a proactive manner to 
avoid the need to even put properties into the backlog? What steps has 
NPS taken to encourage the use of historic leasing to avoid a problem 
rather than just eliminate a problem that has already arisen.

    Question 6. On November 21, 2013, the NTHP responded to an NPS 
request by submitting a list of 12 NPS units that are prime candidates 
for historic leasing. A copy of that letter is attached. Did the NPS 
act upon the NTHP recommendations? Are most of those properties now 
under active leases?

    Question 7. One of the parks on the NTHP list of priority locations 
for historic leasing is the Apostle Islands National Lakeshore. Is 
there any prohibition that would prevent the use of historic leasing in 
this park?

    Question 8. The General Services Administration (GSA) is the 
commercial real estate expert for the Federal Government. Does the NPS 
reach out to GSA for subject matter expertise? Has the Park Service 
considered adapting GSA job aides or training curriculum for use in the 
NPS? What is the NPS doing to ensure staff have the resources and 
training they need?

    Question 9. What recommendations did the NPS implement after the 
completion of the 2010 ``Leasing Program Assessment''--a report that 
was completed by the Center for Park Management at the request of your 
agency?

    Question 10. The Northeast Region of the NPS has a high number of 
leases in place. Has the NPS implemented any Northeast Region practices 
service-wide to promote the success and expansion of historic leasing?

    Question 11. Many leases require lessees to deposit a percentage of 
their gross revenues into a maintenance reserve fund. While ensuring 
that funds are available for major repairs is important, a significant 
amount of capital can accumulate in those funds, as businesses grow and 
repairs are checked off. Would the Park Service consider establishing a 
cap on the total funds that need to be deposited into the maintenance 
reserve fund?

                                 ______
                                 

    Mr.  Westerman. Thank you, Ms. Simmons.
    The Chair now recognizes Mr. Cole McCaskill to testify for 
5 minutes.

   STATEMENT OF COLE McCASKILL, VICE PRESIDENT, HOT SPRINGS 
    CHAMBER OF COMMERCE, HOT SPRINGS NATIONAL PARK, ARKANSAS

    Mr.  McCaskill. Thank you very much, Mr. Chairman. I 
appreciate the opportunity to be here today to represent the 
business community of Hot Springs. The bathhouse leasing 
program has had an intensely positive impact on Hot Springs. I 
am going to share three observations that help to illustrate 
this point.
    Prior to the leasing program, the majority of the 
bathhouses sat empty, dark, and vacant. Since the program was 
created and filled these new bathhouses with new businesses, 
the national park side of the street appears to be open for 
business.
    So, it is a common principal in economic development that 
private investment follows public investment, so economic 
developers are always mindful to steer capital in a fashion 
that will catalyze further investment in an area. What is great 
about this scenario is that instead of shouldering the burden 
of capital outlay to open these bathhouses to the public, the 
national park leveraged the private sector's creativity to put 
this real estate back into productive use in financing the 
final property improvements privately, all the while retaining 
oversight of the land, real estate, and business.
    This reactivation of public space due to the leasing 
program will serve as a catalyst for private investment and 
business growth in our downtown historic district. As you have 
heard now, we have had over 100 new businesses open in the 
downtown area and over $80 million has been reinvested just in 
the past few years. I truly don't believe that would have been 
possible if the national park side of the street appeared to be 
closed for business.
    A second observation is that the businesses that are now 
occupying these bathhouses get an extraordinary amount of 
national and international attention, which pays dividends for 
our community when it comes to tourism. Due to the unique 
nature of these businesses and the uniqueness of the lease with 
the national park, the press loves these businesses.
    Just one example, the Superior Bathhouse Brewery operates 
the business on Bathhouse Row that is most fundamentally 
different from the original bathing experience. They sell beer 
that is brewed with thermal water. This is a very unique 
practice. In fact, it is the only business in the world that is 
doing this, and because of that, and because the beer is good, 
they get a tremendous amount of national exposure. In just 1 
year, they were covered by the Chicago Tribune and featured on 
the CBS Sunday Morning show with the rest of the national park. 
Our local tourism agency, Visit Hot Springs, estimates that 
just those two pieces of coverage reached nearly 3 million 
people and was worth over $120,000 in retail advertising value. 
That is exposure that we didn't have to pay for.
    This type of international coverage is very impactful on 
our local economy because it generates tourism interest from 
very credible editorial sources, and as you know, tourism is 
the Number one sector in our economy, employing over 22 percent 
of the workforce.
    My third observation is that the leasing program has a 
general reputation for being complicated, which may deter 
applicants. The average citizen of Hot Springs doesn't know the 
exact specifics of the leasing program. However, there is a 
perception that it is an extremely complicated and lengthy 
process. This perception is fueled by the drawn-out timeline of 
the process. Oftentimes, there is an announcement of a new 
business and then months and years can go by before the public 
sees any activity.
    The difficulty of this process is magnified when compared 
to the process of leasing historic space just a few dozen feet 
across the street in a privately-owned building, which a simple 
lease agreement and a few days is all you might need to move 
your business in, and a business oftentimes cannot take that 
long of a time period between announcing the business and 
actually moving in without revenue coming back in.
    This issue is also reflected in the fact that the few folks 
that do hold these leases are highly regarded in our community 
as having an extraordinary aptitude for success. These are not 
ordinary citizens. Pat McCabe is the mayor of Hot Springs and 
he has been the CEO of the hospital for nearly two decades. 
Anthony Taylor and Bob Kempkes are both successful architects 
and own multiple businesses under real estate developers. So, 
the fact that only the most exceptional people are holding 
these leases to the bathhouses makes me question the ability of 
the average businessperson to see this process through.
    In closing, the leasing program has an extremely positive 
impact on our community, especially the downtown area. I think 
it has set a foundation for the tremendous wave of investment 
we have seen over the past 2 years, and I am sure that none of 
this would have happened if the national park side of the 
street would have appeared to be closed for business.

    Thank you.

    [The prepared statement of Mr. McCaskill follows:]
   Prepared Statement of Cole McCaskill, Vice President of Economic 
               Development, Hot Springs Metro Partnership
                              introduction
    Hot Springs National Park's Bathhouse Leasing Program has had an 
incredible impact on the community and economy of Hot Springs, 
Arkansas. In this testimony, I will illustrate some of the most 
important factors related to the benefits to the community of this 
leasing program.
                               number one
    It's a common principle in economic development that private 
investment follows public investment. Economic developers are always 
mindful to steer capital in a fashion that will catalyze further 
investment from the private sector. Hot Springs National Park's 
Bathhouse Row along the eastern side of Central Avenue, is a 
significant public institution that is uniquely intertwined with the 
city of Hot Springs' historic downtown district on the western side of 
Central Ave., where the vast majority of the land and improved property 
is privately owned.
    Prior to the bathhouse leasing program, the majority of the eight 
bathhouses along Bathhouse Row sat empty, dark and vacant. Since the 
leasing program has filled these bathhouses with new businesses, the 
eastern national park side of the street has come alive with activity.
    Instead of shouldering the burden of the full capital outlay to 
open these structures to the public, Hot Springs National Park 
solicited business ideas from the private sector that would put this 
real estate back into productive use, reactivate the square footage, 
and finance the final property improvements privately. The only 
compromise that the national park has had to make, is to allow 
businesses to fill these spaces that sell a product or service that is 
not identical to the thermal bathing of 100 years ago for which these 
structures were built.
    When these bathhouses were built 100 years ago, before the 
invention of penicillin, thermal bathing was a popular treatment for 
many illnesses. The demand for bathing has decreased significantly 
since that day and caused most of the bathing businesses in the 
bathhouses to close by the 1980s.
    The bathhouse leasing arrangement has allowed the public 
institution to offload the ideation and capital investment needed to 
put this property back to work to the private sector while still 
retaining oversight of the land, real estate and business.
    It's also important to consider the genesis of the Bathhouse 
structures themselves. They were built by the private sector on Federal 
land for the purpose of operating as private businesses, so in Hot 
Springs this concessioner concept is over 100 years old.
    This reactivation of public space due to the bathhouse leasing 
program has served as a catalyst for private investment and business 
growth in the City of Hot Springs' downtown historic district, where 
these two areas are so uniquely intertwined. Where nearly all of the 
bathhouses on the eastern side of the street appeared closed and dark, 
they are now open for business. The new businesses that have occupied 
the bathhouses have proved some interesting new markets in Hot Springs 
and set the foundation for a tremendous wave of investment in recent 
years. In downtown over the past 4 years, over 100 new businesses have 
opened, over 80 historic commercial properties have been bought and 
sold, and over $80 million of private capital has been invested. I'm 
sure none of this would have been possible if the Hot Springs National 
Park side of downtown remained ``closed for business.''
    And even better for Hot Springs National Park, instead of a sizable 
public investment, private capital has been used to improve, preserve 
and maintain the bathhouse properties. That capital was attracted by 
the opportunity of the bathhouse leasing program and the unique markets 
that exist in Hot Springs.
                               number two
    The businesses that occupy these bathhouses get an extraordinary 
amount of national and international attention, which pays dividends 
for our community. Due to the unique nature of their business and to a 
certain degree, the uniqueness of the lease with the national park, the 
press loves these businesses.
    The Superior Bathhouse Brewery operates the business on Bathhouse 
Row that is most fundamentally different than the original bathing 
experience; they sell beer that's made with the thermal water from Hot 
Springs National Park. This is a very unique practice. In fact, this is 
the only business making beer with naturally thermal water in the 
world. Because of this unique quality, and because the beer is good, 
Superior gets a remarkable amount media exposure nationwide.
    Just two examples of this type of national coverage in 2016 are 
that Superior was featured on the CBS Sunday Morning Program and in the 
Chicago Tribune. Visit Hot Springs, our city's tourism agency, 
estimates the reach of these two pieces alone at nearly 3 million 
people with a retail advertising value of just over $120,000.
    Additionally, owners of The Quapaw Baths & Spa attended an 
international summit on thermal bathing in Japan representing Hot 
Springs, Arkansas, where they were the only attendees from the United 
States of America.
    This type of national and international coverage is very impactful 
on our local economy, because not only does it promote exciting new 
businesses, the news coverage always introduces Hot Springs as the 
setting for this interesting activity. This equates to great exposure 
from very credible editorial sources that generates tourism for Hot 
Springs.
    Tourism is very important to Hot Springs. It is the largest sector 
in the Hot Springs economy, supporting 7,592 jobs or roughly 22 percent 
of the workforce in our area. Visitors spent $799 million in Hot 
Springs last year.
                              number three
    The Bathhouse Leasing program has a general reputation for being 
onerous and the business owners who have completed the process are 
regarded as exceptionally capable people.
    The average citizen in our community does not know the exact 
specifics and particulars related to completing the bathhouse leasing 
process. But there is a perception among the general population of Hot 
Springs that it is an extremely complicated and lengthy process which 
may deter potential applicants.
    This perception is fueled by the elongated timeline of the process. 
Many of these prospective lessees make very highly visible 
announcements announcing their intent to lease a bathhouse. In many 
cases, years pass by before any tangible progress is seen, either 
through construction or occupation of the real estate. A multiyear 
timeline to open a business is not feasible for most businesses and 
most cannot sustain a business through this period without revenue 
coming in. Other factors are involved in extending the timeline for 
opening with financing being central among them, but the leasing 
process is always the most visible public obstacle.
    The difficulty of this process is magnified when compared to the 
process for leasing a private commercial space just a few dozen feet 
across Central Avenue in the City of Hot Springs' downtown historic 
district. A simple lease agreement between two parties is usually all 
that's needed and in a best-case scenario where the property is ready 
to be occupied, a tenant business could have the opportunity to move in 
within days. This scenario looks more favorable to most businesses, but 
the bathhouses offer the unique benefit of access to the thermal water 
which is important enough for most of the businesses who have leased 
bathhouses to opt for this more difficult lease route.
    This issue is also reflected in the fact that many of the bathhouse 
lessees are highly regarded in our community as having an exceptional 
aptitude for success. These people show extraordinary tenacity in their 
everyday lives and the management and execution of their businesses and 
they exhibit characteristics of extremely competent and successful 
people. Pat McCabe is the Mayor of Hot Springs and has been the CEO of 
Levi Hospital for nearly two decades. Anthony Taylor and Bob Kempkes 
are both accomplished architects, business owners, and real estate 
developers. Rose Schweikhart is an accomplished musician, business 
owner and beer brewer. The fact that only the most exceptional business 
people are holding leases to the bathhouses makes me question the 
ability of the average business owner to see this process through to 
completion.
                               conclusion
    The Bathhouse Leasing Program has had an extremely positive impact 
on Hot Springs and especially the downtown area. What was once an 
entire half of downtown that appeared closed and dark is now open for 
business. The new businesses that have occupied the bathhouses have set 
the foundation for a tremendous wave of investment in recent years. In 
downtown over the past 4 years, over 100 new businesses have opened, 
over 80 historic commercial properties have been bought and sold, and 
over $80 million of private capital has been invested. Many other 
factors were involved in the development of downtown Hot Springs over 
the years, but I'm sure none of this would have been possible if the 
Hot Springs National Park side of downtown remained to appear ``closed 
for business.''

                                 ______
                                 

    Mr.  Westerman. Thank you, Cole.
    The Chair now recognizes Mr. Tom Cassidy for 5 minutes.

STATEMENT OF TOM CASSIDY, VICE PRESIDENT, GOVERNMENT RELATIONS 
     AND POLICY, NATIONAL TRUST FOR HISTORIC PRESERVATION, 
                         WASHINGTON, DC

    Mr.  Cassidy. Chairman Bishop, members of the Committee, 
Mayor McCabe, and other distinguished guests, I appreciate the 
opportunity to present the National Trust testimony on the 
challenges and successes of historic leasing as a strategy to 
abate the maintenance backlog. But first, Chairman Bishop, on 
behalf of the hundreds of organizations, some of which are here 
today, who support your bipartisan Restore Our Parks and Public 
Lands Act, thank you for successful markup of the legislation 
last Thursday. We look forward to continuing to work with you 
on getting that across the finish line by the end of the year.
    We appreciate the attention you are focusing on historic 
leasing. While leasing is not a magic or silver bullet that 
will solve the backlog, leasing is not the solution to ensure 
that national icons such as the Statue of Liberty, Independence 
Hall are maintained for the American public. And under current 
concessional law, numerous public services that are necessary 
and appropriate to visitation in parks, such as Yosemite and 
Canyonlands, are the appropriate subjects of concession 
contracts. The leasing of historic buildings is an important 
improvement but still an underutilized strategy to rehabilitate 
and bring back to economic life and public enjoyment abandoned 
or underutilized historic resources.
    Hot Springs demonstrates the successes and the continued 
future opportunities. The Trust published a major report on 
historic leasing 5 years ago. It provided an overview of policy 
concerns, legal authorities, recommendations, and case studies 
from parks throughout the country, including Hot Springs. Since 
then, we have visited numerous parks to evaluate existing and 
potential leases and we continue to meet with National Park 
Service leadership to encourage expanded leases. I would note 
that long-term leases of 55 to 60 years enable lessees to 
utilize the Federal historic tax credit, by far the most 
significant investment in historic preservation. But the tax 
credit has been used in only a small number of Park Service 
leases, including the Quapaw Bathhouse, and we hope soon Hale 
and Superior bathhouses.
    So, what are the barriers and how can they be overcome? We 
are impressed and humbled by the remarkable staff of our 
National Park Service. There are few finer interpreters of our 
shared national stories. But little girls and boys who dream of 
being a park ranger, dream of being a ranger in Yosemite or 
Denali, or the smart ones, perhaps Zion, Golden Spike, and Hot 
Springs, And I would venture that very few imagine becoming a 
commercial real estate specialist.
    The fact is there is very little practical experience with 
commercial leasing within the Service either at the park, 
region, or headquarters level. There are a number of 
outstanding real estate professionals, but they are often 
concentrated in individual parks over few regions. They are not 
well distributed throughout the agency.
    And related to this fact is that Park Service practice and 
culture precludes experts in one region from assisting park 
officials in another region, and national staff are reluctant 
to offer advice to parks unless there is a request from the 
region. Our recommendation--and this actually emerged in a 
conversation we had with Acting Director Danny Smith--is that 
the Park Service should commit to catalyze historic leasing by 
creating a ``tiger team'' of real estate specialists 
knowledgeable in park regulations and policies and perhaps, 
most importantly, commercial real estate, to assist individual 
parks and regions in advancing specific projects and innovative 
adaptive reuse partnerships. The Park Service also has to 
provide the financial support to fund the necessary staff 
training.
    We also have opaque guidance from headquarters. In April 
2016, the Park Service issued a memorandum to the regional 
directors that explicitly addressed a bias against leasing, and 
that was an important first step. It included a decision guide 
to choosing a lease or a concession contract, but the 
underlying policies and interpretations remain confusing.
    Speaking personally, I have suffered brain damage trying to 
understand the distinction between necessary and appropriate 
and how that implicates a lease or a concession contract and to 
still find its practical application. One simple recommendation 
is that the Park Service should develop a set of more specific 
examples to describe how existing leases are consistent with 
policy or what would be examples of leases that might violate 
policy, and particular care is needed to ensure there are clear 
standards to determine when a concession agreement is required 
and leasing is appropriate.
    The red light indicates I am done. I would be happy to 
answer any questions, especially on other successful examples 
besides the great ones here in Hot Springs.

    [The prepared statement of Mr. Cassidy follows:]
    Prepared Statement of Thomas J. Cassidy, Jr., Vice President of 
     Government Relations and Policy, National Trust for Historic 
                              Preservation
    Chairman Bishop, Ranking Member Grijalva and members of the 
Committee, I appreciate the opportunity to present the National Trust 
for Historic Preservation's testimony on the challenges and successes 
of historic leasing as a strategy to bring abandoned and underutilized 
buildings back to public enjoyment and use, while also abating the 
$11.6 billion maintenance backlog of our national parks. My name is 
Thomas J. Cassidy, Jr. and I am the Vice President of Government 
Relations and Policy.
    The National Trust for Historic Preservation is a privately-funded 
charitable, educational and non-profit organization chartered by 
Congress in 1949 in order to ``facilitate public participation in 
historic preservation'' and to further the purposes of Federal historic 
preservation laws.\1\ The intent of Congress was for the National Trust 
``to mobilize and coordinate public interest, participation and 
resources in the preservation and interpretation of sites and 
buildings.'' \2\ The National Trust has more than 1 million members and 
supporters. With headquarters in Washington, DC, 9 field offices, 28 
historic sites, and a national network of partners in states, 
territories, and the District of Columbia, the National Trust takes 
direct, on-the-ground action when historic sites are threatened, 
advocates to save America's heritage, and strives to create a cultural 
legacy that is as diverse as the Nation itself, so all can take pride 
in the American story.
---------------------------------------------------------------------------
    \1\ 54 U.S.C. Sec. Sec. 312102(a), 320101.
    \2\ S. Rep. No. 1110, 81st Cong., 1st Sess. 4 (1949).
---------------------------------------------------------------------------
    The National Trust has worked closely with many stakeholders on a 
legislative solution that would provide dedicated funding to address 
the maintenance backlog. We strongly endorse the bipartisan Restore Our 
Parks and Public Lands Act (H.R. 6510) introduced by Chairman Rob 
Bishop and Ranking Member Grijalva which enjoys the support of nearly 
160 co-sponsors. Thank you again, Mr. Chairman, for your successful 
markup of this legislation last Thursday.
    We also support the Restore Our Parks Act (S. 3172) introduced by 
Senators Portman, Warner, Alexander, and King that to-date has secured 
support from over a quarter of the U.S. Senate. We believe these bills 
can make a substantial and meaningful investment in our national parks. 
We are also pleased the legislation provides dedicated funding financed 
by unobligated Federal mineral revenues in such a way that allocations 
to the Land and Water Conservation Fund and Historic Preservation Fund 
are not impacted. The National Trust is a strong supporter of both 
these programs and believes that both should receive the dedicated 
funding they have long been promised.
    Thank you for the attention the Committee is focusing on historic 
leasing, an underutilized tool to abate the NPS maintenance backlog. 
Historic leasing is not a magic bullet that will solve the maintenance 
backlog. Leasing to a third party is not the solution to ensure that 
national icons such as the Statue of Liberty, Independence Hall, or the 
Jefferson Memorial are maintained for the American public. And, under 
current concession law, numerous public services that are ``necessary 
and appropriate'' to visitation in many of our large rural parks such 
as the Grand Canyon, Yosemite, Great Smoky Mountains, and Yellowstone 
are the appropriate subjects of concession contracts. But, leasing of 
historic buildings in national parks is an important and proven, but 
still underutilized strategy, to rehabilitate and bring back to 
economic life and public enjoyment abandoned or underutilized historic 
resources.
                                the need
    The National Park System is an astonishing national treasure. It is 
absolutely one of our Nation's best ideas--a network of 417 parks and 
sites that protect spectacular historic, cultural, and natural 
resources and tell the stories of remarkable people and events in our 
country's history. Three-quarters of national park units were 
established to protect our country's most important historic and 
cultural resources. These places include such national treasures as 
Ellis Island National Monument, Gettysburg National Battlefield, Chaco 
Cultural National Historic Park, and the Washington Monument. Over the 
past two decades, the NPS has added over 30 new park units that are 
predominantly historical and cultural. These new parks that help tell 
the stories of all Americans include Rosie the Riveter World War II 
Home Front National Historical Park, Cesar E. Chavez National Monument, 
Tuskegee Airmen National Historic Site, Reconstruction Era National 
Monument, and the Birmingham Civil Rights National Monument.
    The National Park System includes more than 84 million acres across 
all 50 states, the District of Columbia, and many U.S. territories. NPS 
protects and interprets an estimated 2 million archaeological sites, 
4,200 historic statues and monuments and more than 27,000 properties 
listed on or eligible for the National Register of Historic Places, 
including 9,600 buildings.
    National parks, and the historic and cultural sites they protect, 
are some of our Nation's most popular attractions and were visited by 
over 331 million people last year. In 2017 alone, these visits 
generated visitor spending of an estimated $18.2 billion in nearby 
communities--spending that supported 306,000 jobs and provided a $35.8 
billion boost to the national economy.
    I will address two issues in this testimony. First, the need for 
direct Federal investments through annual appropriations and the 
proposed ``National Park Service and Public Lands Legacy Restoration 
Fund.'' Second, the challenges and opportunities available to 
rehabilitate and maintain historic properties through historic leasing.
                       direct federal investments
    The NPS maintenance backlog of $11.6 billion demonstrates that 
additional investments and new strategies are necessary if NPS is to 
meet its stewardship responsibilities. We are encouraged, Mr. Chairman, 
by your successful markup last Thursday of H.R. 6510. We are impressed 
by the many statements of support by numerous Senators, Secretary of 
the Interior Ryan Zinke, and hundreds of organizations nationwide for 
reducing the maintenance backlog and prioritizing this issue as part of 
policy proposals to invest in our Nation's infrastructure.
    For several years the National Trust has focused on increased 
funding for the NPS line items for Repair and Rehabilitation and Cyclic 
Maintenance to alleviate the maintenance backlog and ensure adequate 
preservation and protection of resources in our parks. Both the House 
and Senate-passed versions of the FY19 Interior Appropriations bills 
would increase funding for these two accounts. The Senate bill adds $15 
million while the House bill increases those accounts by $40 million 
compared with FY18. Notably, the FY18 total for these accounts was 
already about $100 million more than it was just 3 years prior--a 
roughly 55 percent increase. We support continued increases in 
appropriations for these accounts.
    But the scale of the backlog demonstrates the need for a reliable, 
dedicated Federal funding source distinct from annual appropriations to 
address the deferred maintenance backlog. And, if we are successful in 
securing enactment of the Restore Our Parks and Public Lands Act, we 
will also need to be mindful of the need to provide sufficient staffing 
to preserve properly historic sites, maintain buildings and 
infrastructure in safe condition, and keep our parks open and 
accessible to the public.
                            historic leasing
    The National Trust published a major report in September 2013: 
``Historic Leasing in the National Park System: Preserving History 
Through Effective Partnerships.'' \3\ Our study provided an overview of 
policy concerns, legal authorities, policy recommendations, and a set 
of 17 case studies from throughout the country. Since then, we have 
visited numerous parks to evaluate successful leases and opportunities 
to expand leasing. We have updated 4 of our case studies and expect to 
complete 4 more in the near future, a number of which are summarized 
below. We have also continued to meet with National Park Service 
leadership and Congressional staff to encourage additional use of 
historic leasing.
---------------------------------------------------------------------------
    \3\ Historic Leasing in the National Park System: Preserving 
History Through Effective Partnerships; http://forum.savingplaces.org/
viewdocument/historic-leasing-in-the-national-pa?; September 2013.
---------------------------------------------------------------------------
    Leasing of historic buildings in the National Park System to non-
NPS entities is an effective and proven public-private partnership that 
can be used as part of a suite of options to abate the deferred 
maintenance backlog in our national parks. Historic leases alleviate 
the burden on the National Park Service to maintain historic buildings. 
Long-term commercial leases of 55-60 years also enable lessees to 
utilize the Federal 20 percent historic tax credit for qualified 
rehabilitation expenses. We were very pleased that Congress chose to 
maintain the historic tax credit (HTC), championed by President Ronald 
Reagan, in the Tax Cuts and Jobs Act of 2017. The HTC has proven to be 
the most significant Federal investment in historic preservation. Since 
1982, it has rehabilitated more than 43,000 buildings, creating 2.4 
million jobs and leveraging $131 billion in private investment. As 
described below, the HTC has been used in only a small number of NPS 
leases, including at the Quapaw Bath House here in Hot Springs. We know 
that it can and should be used more extensively than it is now.

    Congressional support for leasing has long existed, as evidenced by 
grants of authority to enter into leases and historic leases,\4\ which 
Congress has extended to the NPS over the years. In addition, there has 
been consistent direction from the Interior Appropriations Subcommittee 
and Full Committee encouraging historic leases to abate the maintenance 
backlog. For example, the Interior FY12 House Interior Appropriations 
Report stated:
---------------------------------------------------------------------------
    \4\ See 54 U.S.C., section 102102 and section 306121.

        The Committee encourages the Park Service to pursue the use of 
        cost-effective, innovative solutions like historic leases when 
        practical and when the arrangement comports with a park unit's 
        enabling legislation. These solutions can help mitigate a 
        growing backlog of historic structures in need of 
        preservation.\5\
---------------------------------------------------------------------------
    \5\ House Report 112-51, H.R. 2584.

---------------------------------------------------------------------------
    In FY16, the Full Committee stated:

        Leasing of Historic Buildings. Leasing of historic park 
        buildings has proven to be an effective public-private 
        partnership that has brought private investment to the repair 
        and maintenance of historic park resources. In previous years, 
        the Committee has encouraged the Service to make expanded use 
        of leasing authority. The Committee commends the Service for 
        recent steps it has taken to increase the utilization of this 
        tool, including establishing a leasing manager to oversee and 
        expand the historic leasing program. The Committee directs the 
        Service to provide a report, within 6 months of enactment of 
        this Act, detailing its progress toward expanding use of this 
        authority. Included in this report should be (1) an assessment 
        of how many historic structures are leasable, (2) the cost of 
        undertaking a leasing program, and (3) any statutory or 
        regulatory impediments that now inhibit the enhanced use of 
        leasing of historic structures.\6\
---------------------------------------------------------------------------
    \6\ FY16, H. Report 114-170, H.R. 2822.

---------------------------------------------------------------------------
    And, in FY17, the Full Committee stated:

        Leasing of Historic Buildings. Leasing of historic park 
        buildings has proven to be an effective public-private 
        partnership that has brought private investment to the repair 
        and maintenance of historic park resources. In previous 
        Committee reports, the Committee has encouraged the Service to 
        make expanded use of leasing authority. The Committee commends 
        the Service for recent steps it has taken to increase the 
        utilization of this tool, including establishing a leasing 
        manager to oversee and expand the historic leasing program. The 
        Committee renews its previous request that directs the Service 
        to provide a report, within 6 months of enactment of this Act, 
        detailing its progress toward expanding use of this authority. 
        Included in this report should be (1) a list of structures the 
        Service considers high-priority candidates for leasing, (2) a 
        list of structures currently under a lease arrangement, (3) an 
        estimate of the number of leases that have enabled private 
        sector investments using the Service-administered historic tax 
        credit, and (4) any statutory or regulatory impediments that 
        now inhibit the enhanced use of leasing of historic 
        structures.\7\
---------------------------------------------------------------------------
    \7\ FY17, H. Report 114-632, H.R.

    The Department of the Interior, responding to the FY17 report 
language, reported to Chairman Calvert on January 18, 2017,\8\ that 
among the 27,000 assets on the List of Classified Structures (LCS), 
potentially 9,000 structures could be evaluated for re-use through 
leasing. And in a letter to Chairman Murkowski of March 29, 2018, the 
Department identified 47 high-priority candidates for leasing, about 
350 structures currently subject to a lease, and 3 leases that utilize 
the historic tax credit.\9\
---------------------------------------------------------------------------
    \8\ The letter is date stamped ``Jan 18 2016'' but we believe it is 
a 2017 letter.
    \9\ We understand there are at least five current historic tax 
credit projects including within the following parks: Hot Springs, Fort 
Hancock, San Francisco Maritime, Fort Baker (GGNRA) and Fort Mason 
(GGNRA).
---------------------------------------------------------------------------
Barriers to Leasing and Policy Recommendations:
    Historic leasing can enhance opportunities for the private and non-
profit sector to assist in the preservation, maintenance and use of 
historic buildings. Even with the availability of leasing authority 
included in the National Historic Preservation Act and the Concessions 
Management Act, and congressional encouragement, the NPS has struggled 
to fully use its authority to preserve historic structures and cultural 
resources. Barriers to full use of this authority--including unduly 
restrictive policy interpretations or statutory and regulatory hurdles, 
as well as staff capacity and expertise--have often stood in the way. 
If implemented, the following recommendations would help address these 
barriers and make historic leasing an even more effective tool.

     Lack of capacity and experience in the field: After many 
            years of studying the use of historic leasing in the parks 
            and meeting with park staff on the ground, in regional 
            offices and in DC, we are impressed and humbled by the 
            remarkable staff of the National Park Service. There are 
            few finer interpreters of our shared national stories. But, 
            there is very little practical experience with commercial 
            leasing within the Service, either at the park, region or 
            headquarters level. There are a number of examples of 
            outstanding real estate professionals, but they are often 
            concentrated in individual parks or a few regions--they are 
            not well-distributed throughout the agency.

          --  Recommendation: NPS should commit to significantly 
        catalyze historic leasing by creating a ``tiger team'' of real 
        estate specialists, knowledgeable in park service regulations 
        and policies and perhaps most importantly, commercial real 
        estate, to assist individual parks and regions in advancing 
        specific projects and innovative adaptive reuse partnerships.

     Internal Culture and Policy: Existing park service policy 
            and culture precludes experts in one region from assisting 
            park officials in another region. In addition, national 
            staff is reluctant to offer advice to parks unless there is 
            a request from the region. And, park service leadership has 
            not yet broken through these barriers to make clear that 
            expanded use of historic leasing is a National Park Service 
            priority that will be supported by policy clarifications, 
            small but necessary budget reforms and spotlighting 
            successful models of innovation.

          --  Recommendation: NPS should provide financial support to 
        fund staff training and administration of a larger leasing 
        program. Subsequent to our 2013 report, the NPS did add its 
        first leasing program specialist in the Washington office, and 
        we understand that additional capacity is being considered. In 
        many parks, more technical skills are needed before a more 
        robust leasing program can be implemented. The ``tiger team'' 
        identified above would also address this.

     Opaque Guidance: On April 18, 2016, the NPS Chief 
            Financial Officer issued a Memorandum to the Regional 
            Directors on ``Guidance on Authorizing Commercial Services 
            under Concession Contracts or Leases.'' It explicitly 
            addressed a bias against leasing based upon a policy 
            interpretation, which is an important policy statement. And 
            it does include a ``Decision Guide--Choosing a Lease or a 
            Concession Contract.'' However, the underlying policies and 
            interpretations remain opaque. Speaking personally, I have 
            invested significant time trying to understand the 
            ``necessary and appropriate'' requirement for a concession 
            contract rather than a lease and still find its practical 
            application, and guidance, to be a challenge.

          --  Recommendation: NPS should develop a set of more specific 
        examples to describe how existing leases are consistent with 
        policy or what would be examples of leases that would violate 
        policy. The NPS should undertake a thorough review of the laws, 
        regulations, policies, and procedures for historic leasing and 
        address inconsistencies and areas of confusion. Particular care 
        is needed to insure that there are clear standards to determine 
        when a concession agreement is required and when leasing is 
        appropriate.

     The costs of preparing properties for leasing, including 
            appraisals, is often cited as a barrier.

          --  Recommendation: A fund should be available to prepare 
        buildings for lease, including necessary historic building 
        surveys, costs of appraisals and, in some cases, funds to 
        stabilize and complete basic improvements to structures. The 
        NPS should define the need for such funding and include it in 
        the FY20 budget request.

     Administrative Costs: The authority for ``leasing'' 
            permits rental payments to be deposited in a special 
            account for various uses, but not for the costs of 
            administration. The proceeds of a ``historic lease,'' 
            however, are deposited in a fund and may be used for the 
            costs of administration, but the fund is only 2 year money.

          --  Recommendation: Harmonize these sections and permit lease 
        funds to be used for administration without a 2 year limitation 
        on expenditures.

    Despite these obstacles, there are numerous examples where historic 
leasing and public-private partnership agreements have been used to 
authorize non-Federal entities to operate businesses, provide services 
and housing, and manage event spaces in historic structures within the 
National Park System. In many cases, the involvement of non-Federal 
entities has meant the difference between preservation and reuse or 
deterioration and neglect of irreplaceable historic resources. The 
American public has directly benefited from these private investments 
through increased opportunities to enjoy historic properties that 
otherwise would have been unavailable. However, despite successful 
examples of historic leasing being used to rehabilitate historic 
structures in almost every NPS region, some Superintendents have not 
used the NPS's leasing authorities to their full extent.
                      examples of historic leasing
Hot Springs National Park, Arkansas
    Every year 1.5 million people visit ``The American Spa'' in Hot 
Springs, Arkansas. In the late 19th century, developers turned this 
area and its 47 geothermal springs into a resort town complete with 
hotels and bathhouses. The bathhouses fell into disuse as public 
interest in therapeutic baths declined. In order to restore the eight 
remaining bathhouses to make them both usable and important for 
interpretation, the park explored historic leasing opportunities. An 
initial Federal investment of $18 million in the early 2000s made the 
bathhouses ``tenant-ready'' and attractive to lessees. Today, only one 
bathhouse remains to be leased. Since becoming a unit of the National 
Park System in 1921, the park has remained a major economic driver to 
the city of Hot Springs and draws more than $99 million in tourist 
dollars to local communities.
Quapaw Bathhouse
    The Quapaw--one of the largest bathhouses--had been vacant since 
the 1980s until Taylor Kempkes Architects stepped in. An initial $2.5 
million investment, aided by the historic tax credit, and a year of 
rehabilitation work, led to the reopening of the Quapaw as a luxury spa 
in 2008, and it remains popular a decade later. As part of the 55-year 
lease, the NPS is no longer responsible for monthly utility bills or 
maintenance costs and 2 percent of annual gross revenue must be put 
into a restricted fund for maintenance work. Quapaw Bath and Spa 
handles the daily maintenance operations of the building, yet the park 
remains an active partner by ensuring that any work is consistent with 
National Park Service standards.
Superior Bathhouse
    Aspiring brewer and entrepreneur Rose Schweikhart discovered the 
natural temperature and pH of the thermal springs were ideal for beer 
making. She subsequently turned the Superior Bathhouse into a beer-
making facility, improving the floors and electric conduits to 
accommodate thousands of pounds of equipment, pumps, and food 
facilities. She added features--like a glass wall so visitors could see 
the beer-making process--without harming the historic fabric. Using the 
same lease structure as the Quapaw, Schweikhart maintains the integrity 
of the building while staying economically viable. The Superior 
Bathhouse Brewery opened in 2014 and designs for a German-style beer 
garden are in the works.
Valley Forge National Historical Park, Pennsylvania
    After a harsh winter in Valley Forge, the Continental Army emerged 
from their encampment in June 1778 a more united and disciplined 
fighting force. This defining moment in the American Revolution 
motivated civic groups to host rallies and lead preservation efforts 
until Valley Forge became Pennsylvania's first state park in 1893. When 
suburban development pressures and funding concerns at the state level 
threatened the integrity of the park, the commonwealth transferred the 
management of the park to the National Park Service (NPS) in time for 
the bicentennial in 1976. Each year more than 2.4 million visitors come 
to the park and spend approximately $30 million in local communities. 
To meet increased visitors' demands and to help compensate for 
insufficient Federal appropriations, the NPS has pursued historic 
leasing opportunities. The park utilizes both long- and short-term 
leases, and a multi-year plan enables the NPS to identify future 
leasing projects that benefit the park through additional revenue 
streams, capital improvements, and maintenance savings.
Philander Chase Knox Estate
    The late 18th-century Philander Chase Knox Estate sits 
picturesquely amidst the rolling hills of Valley Forge. The mansion was 
used as a library and storage facility until a 10-year lease was signed 
in 2015 with Valley Forge Park Events, LLC--a partnership between The 
Party Center and Robert Ryan Catering--to create an event space. The 
company preserved the historic integrity of the house and landscape 
while completing necessary updates and restorations. The park receives 
a percentage of the revenue from fees and catering sales at the more 
than 50 annual events, far exceeding initial forecasts. In this 
partnership, the park uses half of the house as a library while the 
event company maintains the indoor and outdoor spaces it leases. The 
beautifully restored mansion is now accessible to the public and guests 
can enjoy scenic views that will inspire them to return to the park.
The Montessori Children's House of Valley Forge
    The Montessori Children's House was seeking a permanent home when 
they learned the park was interested in leasing several historic 
buildings. Following a capital campaign, archaeological and historic 
surveys, and architectural planning, the Montessori Children's House 
signed a 40-year lease in 2009 and began rehabilitating the structures. 
The large house, two-story barn, and cottage were in serious disrepair 
from water damage, unchecked ivy, wood decay, mold, and asbestos. The 
school's repair work preserved the historic integrity of key structures 
and maintained the basic footprint of the site. The park and the school 
forged a symbiotic relationship wherein the park benefits from annual 
rent, mortgage, and maintenance payments while the school enjoys use of 
a beautiful property in a historic setting, with access to park rangers 
for educational programming.
Golden Gate National Recreation Area, California
    One of the largest urban parks in the world, Golden Gate National 
Recreation Area protects significant historic, cultural, natural, 
scenic, and recreational resources. In addition to rich natural 
ecosystems and habitats, the park interprets thousands of years of 
human history from Native American cultures, to the frontiers of the 
Spanish Empire, to American maritime and military heritage, to the 
development of modern-day San Francisco. Established in 1972, the park 
manages more than 366 historic structures, 5 National Historic Landmark 
districts, and 13 National Register of Historic Places properties. 
Every year, more than 15.6 million visitors are drawn to the diverse 
experiences offered at the park and spend approximately $392.1 million 
in local communities. To better steward the historic buildings, the 
park began to enter into formal historic lease agreements in the early 
2000s. Now the park has approximately 30 leasing partners who help to 
maintain and fund the park while creating new opportunities for 
visitors.
Fort Mason Center for Arts & Culture
    Intermittently over the past 200 years, Spanish, Mexican, and 
American forces have fortified this hilltop promontory overlooking the 
San Francisco Bay. Renamed Fort Mason in 1882, the post became 
incorporated into the park when it was established in 1972. After 40 
years of partnering with a local non-profit, the park signed a 60-year 
lease in 2006 with the Fort Mason Center for Arts & Culture (FMCAC). 
The lessee pays an annual rent to the park and also contributes to a 
maintenance reserve fund, where they far exceed their minimum 
requirement every year. As part of the lease, the park is financially 
responsible for shoring up the substructure of the piers and FMCAC 
develops the superstructure. After identifying a for-profit investor, 
FMCAC used the historic tax credit to tack Pier 2 and is now looking to 
rehabilitate Pier 3. FMCAC has subleased many of its buildings to other 
non-profits and for-profit entities to create a thriving campus for the 
arts. The campus--which includes five buildings on land and two pier 
buildings--now hosts five theaters, two art schools, an art supply 
shop, a bookstore, a cafe, and two restaurants.
Golden Gate NRA Residential Master Lease
    To build on this success, the NPS entered the Golden Gate National 
Recreation Area Residential Master Lease with Gaetani Real Estate in 
2013. The 10-year master lease includes buildings at Fort Mason 
(including Officer's Row), Fort Barry, and Point Bonita totaling more 
than 110,00 square feet. Gaetani has currently rehabilitated and leased 
out 30 housing units. As part of the lease, the NPS makes 71.5 percent 
of the gross revenue and an additional 20 percent of revenue is added 
to a repair and maintenance reserve that is nearly expended annually. 
In less than 5 years, more than $10 million was paid to NPS in rent and 
an additional $3.25 million was used to repair, maintain, and preserve 
the historic properties.
Cavallo Point Lodge at Fort Baker
    Built in 1905 as a U.S. Army post, Fort Baker was the largest 
military post added to the park in 2002. When the park became 
interested in leasing the space, the Fort Baker Retreat Group--an 
ambitious partnership between Passport Resorts, Equity Community 
Buildings, and Ajax Capital Group--signed a 60-year lease in 2006 with 
a goal of preserving the fort and rehabilitating it into a hotel and 
retreat center. The scale of the restoration and the length of the 
lease allowed the lessee to use the historic tax credit, which was a 
critical investment component of the project. The Fort Baker Retreat 
Group preserved 29 historic buildings and built 14 new ones in a green 
fashion, making the hotel at Golden Gate the first national park lodge 
with a LEED Gold certification. In addition to paying an amortized base 
rent, the lessee also spends around $1 million annually to maintain the 
premises, which includes 198,000 square feet of buildings within a 30-
acre historic landscape. Now a destination spot, the Cavallo Point 
Lodge offers historic accommodations, cooking classes, a luxury spa, 
and event spaces.
San Francisco Maritime National Historic Park, California
    The Argonaut Hotel is another exemplary leasing example in the 
Pacific West Region. The hotel is located in the century-old Haslett 
Warehouse within the San Francisco Maritime National Historic Park. 
Under a 60-year lease, this one-time fish cannery is now open to the 
public as a hotel. The rehabilitated historic building includes the 
park's Visitor Center on site. The length of the lease term allowed the 
hotel operators to qualify for Federal historic tax credits that made 
the building's rehabilitation financially feasible. Without the 
investment of private funds, and the utilization of the Federal 
historic tax credit, it is likely that these beautifully restored 
buildings would be sitting unused.
Gateway National Recreation Area, New York/New Jersey
    For centuries, the safest way to sail into New York Harbor was by 
hugging the shore of Sandy Hook. From the colonial period to the cold 
war, Sandy Hook lighted the paths of seafarers and protected the city 
from potential attack and invasion. In 1895, the U.S. Army renamed the 
fortifications Fort Hancock and developed an installation that grew to 
7,000 people by the 1940s. Decommissioned in 1974, Fort Hancock became 
part of the Sandy Hook unit of Gateway National Recreation Area. Today, 
Gateway interprets America's largest port, its oldest surviving 
lighthouse, and its first municipal airport. Time and harsh coastal 
conditions have caused severe deferred maintenance. With 110 historic 
military buildings at Fort Hancock alone, the park has looked to 
leasing opportunities. The first lease rehabilitated a deteriorating 
property and signaled the adaptive re-use potential of some 35 nearby 
buildings at the Sandy Hook unit, which receives roughly 2.2 million 
visitors annually.
Sandy Hook Chapel
    Among the officers' homes, army barracks, and mess halls, the Sandy 
Hook Chapel--built in 1941--is a relatively new addition to the main 
post at Fort Hancock. Occupying a unique location at the end of the 
Sandy Hook Bay, the church had fallen into serious disrepair by the 
late 1990s. At that point, the NPS made an ongoing commitment to 
preserve and protect the structure, and it was one of the very few 
buildings successfully rehabilitated during the 1990's-era leasing 
program. Now rehabilitated as an event space, the historic Sandy Hook 
Chapel is available for short-term rentals for weddings, meetings, 
family gathers, memorials, and other occasions. The park maintains the 
structure and grounds and manages the books, while the lessee is 
responsible for other event costs. This investment realizes 
substantial, ongoing revenue for the NPS. Now fully booked, the park is 
accepting reservations for dates in 2020.
Duplex Family Housing Quarters/Building #21
    The iconic yellow brick buildings comprising Officer's Row at Fort 
Hancock were constructed largely between 1898-1910. Originally built to 
house officers and their families, today many of these buildings are 
abandoned and face serious maintenance challenges. About 5 years ago, 
the park created the Fort Hancock 21st Century Federal Advisory 
Committee, dedicated to preserving these deteriorating buildings. In 
2016, the park entered its first lease. The 60-year agreement enabled 
the investors to use the historic tax credit, and the duplex is now 
available for short-term rentals year-round. The park benefits by 
saving a deteriorating historic structure that will now be maintained 
and returned to productive public use. Since then, the park has 
executed formal Letters of Intent for 13 buildings at Fort Hancock with 
individuals and organizations with plans to rehabilitate those 
buildings.
Cuyahoga Valley National Park, Ohio
    Originally designated as a National Recreation Area in 1974, 
Cuyahoga Valley National Park protects a restored landscape with deep 
cultural roots. Surrounded by cities like Cleveland and Akron, Ohio, 
scenic Cuyahoga Valley provides historical, educational, natural, and 
recreational opportunities for its neighbors as well as its more far-
flung visitors. The park includes hundreds of cultural assets including 
part of the Ohio & Erie Canal, railways, historic communities and 
districts, and old farms. Recognizing the importance of preserving 
these historic sites but limited by staffing and funding, the park 
turned to historic leasing and developed two programs: the 
``Countryside Initiative,'' which focuses on leasing historic farms, 
and; the ``Historic Property Leasing Program,'' which repurposes 
historic buildings for events, accommodations, and other uses. Farm 
leases in particular allow for the preservation of important rural 
historic resources, put farmlands back into production, create 
opportunities for entrepreneurial farmers, and teach visitors about 
where their food comes from. Today, the park holds 15 leases--including 
11 for farms--and is exploring opportunities to encourage more leasing. 
In 2017, more than 2.2 million visitors explored Cuyahoga Valley and 
spent more than $78.1 million in local gateway communities.
Martin Luther King, Jr. National Historical Park, Georgia
    To preserve the historic character of Auburn Avenue, and the block 
of historic houses that includes the Birth Home of Dr. Martin Luther 
King, Jr., the NPS established the Martin Luther King, Jr. National 
Historic Site in 1980. The park encompasses 38 acres in the Old Fourth 
Ward neighborhood of Atlanta, Georgia. Dr. King's Birth Home is open to 
visitors. The NPS funds the maintenance for all of the federally-owned 
houses within the park unit with revenue generated by leasing 29 of the 
federally-owned historic buildings for private residential purposes. 
These structures include apartments, duplexes and single family homes. 
The leasing program has been very popular, leading to the establishment 
of a waiting list for potential tenants.
    In addition to the private residential leases, another federally-
owned building is operated as a commercial barber shop, and the 
remaining homes are used for park employee housing or by park partner 
organizations under cooperative agreements, including the Martin Luther 
King Jr. Center for Nonviolent Social Change and the historic Ebenezer 
Baptist Church. The nearly $200,000 in annual rental revenue collected 
through these rental agreements is used to perform major maintenance 
and restoration in the historic district while the lessees are 
individually responsible for funding routine maintenance.
    We have made two site visits to this park. We believe that the 
existing leasing arrangement might be modified to include a master 
lease, as has been done for multiple properties at First State National 
Historical Park and GGNRA. This would free NPS staff to focus on other 
visitor centered activities. In addition, we think that there are very 
real possibilities for utilization of long-term leases that could 
utilize the historic tax credit to create modest bed and breakfast 
lodgings.
                               conclusion
    The American people love their national parks. Our national 
character and heritage are defined in many of the places entrusted to 
the care of the NPS, one of the nation's finest institutions.
    As the Committee knows from its work on the maintenance backlog, 
there is a significant need and a set of complex financial, 
institutional, and political challenges that must be overcome if the 
aspirational charge of the National Park Service's Organic Act, enacted 
nearly a century ago, is to be fulfilled.
    Thank you again for the opportunity to present the National Trust's 
perspectives on these issues, and we look forward to working with the 
Committee and other stakeholders as you consider policy proposals to 
address the deferred maintenance backlog. We hope that this hearing 
will encourage the National Park Service to catalyze greater 
utilization of historic leasing throughout our park system. We are 
confident that the leasing of more underutilized historic buildings 
will sustain our Nation's rich heritage of cultural and historic 
resources and generate economic vitality for communities throughout the 
Nation.

                                 ______
                                 

   Questions Submitted for the Record by Chairman Bishop to Mr. Tom 
  Cassidy, Vice President, Government Relations and Policy, National 
                    Trust for Historic Preservation
    Question 1. Do you continue to believe that all of the 12 priority 
parks you mentioned in the November 13, 2013 letter to the NPS should 
remain in the priority category? In your oral testimony you indicated 
that the NTHP has visited many parks that appropriate for historic 
leasing. Can you identify which parks the NTHP has investigated further 
and what the results of those visits has been? Have you visited any of 
the parks on the November 13, 2013 list?

    Answer. We do believe that many of the parks mentioned in our 
November 21, 2013 letter should continue to be identified as 
priorities. As identified below, there are several parks for which we 
have no updates. The parks that we have visited since our November 21, 
2013 letter include:
a. Delaware Water Gap National Recreation Area
    I do not presently recall if my visit there was before or after our 
letter, but under any circumstance there are a significant number of 
historic buildings that await rehabilitation. A significant challenge 
here--and elsewhere--is to identify a particular adaptive such as a B&B 
or agricultural use that is economically viable.
b. Harpers Ferry National Historical Park
    I visited this park earlier this year and visited both the Murphy's 
Farm site and a large stabilized barn near Bolivar Heights and the 
``Nash-Randolph Wildlife Sanctuary.'' Both buildings would appear to be 
obvious sites for adaptive reuse, including potentially as a B&B or 
event site. There are also vacant buildings formerly part of Storer 
College and other buildings in the park that could be leased.
c. Valley Forge National Historical Park
    We have visited this park. The Philander Knox House has been 
productively leased as an event space since our letter. There are 
numerous potential opportunities here that park staff have identified. 
We are optimistic that this is a park where continued successes will be 
found.
d. Cumberland Island National Seashore
    We have not visited this park. But, we continue to believe that 
there are several buildings in the Dungeness Historic District that 
could be leased. The reluctance to enter into a lease agreement with a 
former life-tenant may have foreclosed a real opportunity for an 
effective public-private partnership for adaptive reuse.
e. Chesapeake & Ohio Canal National Historical Park
    We have visited portions of this very linear park. We understand 
that unreasonably long negotiations for a historic lease with the 
Washington Canoe Club may soon be completed. We understand there 
continue to be effective short-term cooperative agreements for the use 
of particular lock houses. We know of interest to enter into longer 
term leases on at least one potential commercial venue.
f. Sandy Hook Unit of Gateway National Recreation Area
    We have visited this park and will soon publish an updated case 
study.

        Sandy Hook Chapel

        Among the officers' homes, army barracks, and mess halls, the 
        Sandy Hook Chapel--built in 1941--is a relatively new addition 
        to the main post at Fort Hancock. It was one of the very few 
        buildings successfully rehabilitated during the 1990s-era 
        leasing program. Now rehabilitated as an event space, the 
        historic Sandy Hook Chapel is available for short-term rentals 
        for weddings, meetings, family gathers, memorials, and other 
        occasions. Now fully booked, the park is accepting reservations 
        for dates in 2020.

        Duplex Family Housing Quarters/Building #21

        The iconic yellow brick buildings comprising Officer's Row at 
        Fort Hancock were constructed largely between 1898-1910. About 
        5 years ago, the park created the Fort Hancock 21st Century 
        Federal Advisory Committee, dedicated to preserving these 
        deteriorating buildings. In 2016, the park entered into a 60-
        year lease that has enabled investors to use the historic tax 
        credit to restore the building and successfully use it for 
        short-term rentals year-round. The park benefits by saving a 
        deteriorating historic structure that will now be maintained 
        and returned to productive public use. Since then, we 
        understand the park has executed formal Letters of Intent with 
        individuals and organizations with plans to rehabilitate an 
        additional 13 buildings.
g. Apostle Islands National Lakeshore
    We visited the Lakeshore last August and visited several of the 
historically significant properties. We also met with local 
organizations interested in historic preservation and partnership 
opportunities. Among the National Register buildings now eligible for 
historic leasing are the West Bay Club on Sand Island and the Hadland 
and Benson Cabins in the Rocky Island Historic District. These 
properties have already been the subject of community-based volunteer 
restoration efforts or proposals, that were, or are proposed to be, 
undertaken without Federal funding. Some of the lighthouses also might 
be opportunities for historic leasing. Many of the historic buildings 
that are under retained rights through life estates are currently well-
maintained by the historic use families. Future historic leases or 
similar arrangements could be important tools to ensure these 
properties are maintained after the expiration of the use and occupancy 
rights and before they become part of the maintenance backlog.
h. Cuyahoga Valley National Park
    We have not visited this park, but we have interviewed NPS staff 
and are preparing to publish a case study.
    Originally designated as a National Recreation Area in 1974, 
Cuyahoga Valley National Park protects a restored landscape with deep 
cultural roots. The park includes hundreds of cultural assets including 
part of the Ohio & Erie Canal, railways, historic communities and 
districts, and old farms. Recognizing the importance of preserving 
these historic sites but limited by staffing and funding, the park 
turned to historic leasing and developed two programs: the 
``Countryside Initiative,'' which focuses on leasing historic farms, 
and the ``Historic Property Leasing Program,'' which repurposes 
historic buildings for events, accommodations, and other uses. Farm 
leases in particular allow for the preservation of important rural 
historic resources, put farmlands back into production, create 
opportunities for entrepreneurial farmers, and teach visitors about 
where their food comes from. Today, the park holds 15 leases--including 
11 for farms --and is exploring opportunities to encourage more 
leasing.
i. New River Gorge National River
    We have no updates.
j. Glacier National Park
    We understand that a number of the potential lease properties near 
Lake McDonald were damaged or destroyed by the most recent fire.
k. Grand Canyon National Park
    We have no updates.
l. North Cascades National Park
    We have no updates.

Other parks we have visited to evaluate leasing opportunities include:

Hot Springs National Park
    Those of us who participated in the Committee's September 17 field 
hearing in Hot Springs were able to experience firsthand the enormous 
impact that historic leasing--and the Federal historic tax credit--have 
had in the park and the surrounding community.
    We were able to directly see firsthand the community and economic 
impacts of leasing in restoring the Quapaw and Superior bathhouses and 
the ongoing work at the Hale Bathhouse. We also saw the need for a 
successful leading project to revitalize the Maurice Bathhouse.
    In addition to bringing abandoned properties to life, the existing 
leases of the Quapaw and Superior result in private lessees assuming 
the financial responsibility of rehabilitating and maintaining the 
buildings, paying utility bills and returning revenues to the park.
First State National Historical Park
    This park provides an outstanding example of creative regional and 
park staff entering into a master lease of at least 14 buildings that 
enabled existing residential and agricultural uses to continue. The 
small staff of this new park would never have had the capacity to 
administer these properties without the use of a master lease. The 
master lease provides centralized property management by a 3rd party 
while also addressing responsibilities for deferred maintenance and 
lease revenue to the park.
Golden Gate National Recreation Area (GGNRA)
    The San Francisco Bay area continues to benefit from historic 
leasing. Our 2013 report highlighted the use of the historic tax credit 
to revitalize the Inn at Cavallo Point/Fort Baker and the Argonaut 
Hotel/San Francisco Maritime National Historical Park.

        Fort Mason

        Historic leasing has continued at Fort Mason within GGNRA. 
        After 40 years of partnering with a local non-profit, the park 
        signed a 60-year lease in 2006 with the Fort Mason Center for 
        Arts & Culture (FMCAC). The lessee pays an annual rent to the 
        park and also contributes to a maintenance reserve fund, where 
        they far exceed their minimum requirement every year. As part 
        of the lease, the park is financially responsible for shoring 
        up the substructure of the piers and FMCAC develops the 
        superstructure. After identifying a for-profit investor, FMCAC 
        used the historic tax credit to address issues at Pier 2 and is 
        now looking to rehabilitate Pier 3. FMCAC has subleased many of 
        its buildings to other non-profits and for-profit entities to 
        create a thriving campus for the arts. The campus--which 
        includes five buildings on land and two pier buildings--now 
        hosts five theaters, two art schools, an art supply shop, a 
        bookstore, a cafe, and two restaurants.

        Golden Gate NRA Residential Master Lease

        The NPS entered the Golden Gate National Recreation Area 
        Residential Master Lease with Gaetani Real Estate in 2013. The 
        10-year master lease includes buildings at Fort Mason 
        (including Officer's Row), Fort Barry, and Point Bonita 
        totaling more than 110,00 square feet. Gaetani has currently 
        rehabilitated and leased out 30 housing units. As part of the 
        lease, significant revenue is returned to NPS and to a repair 
        and maintenance reserve that is nearly expended annually. In 
        less than 5 years, more than $10 million was paid to NPS in 
        rent and an additional $3.25 million was used to repair, 
        maintain, and preserve the historic properties.

Indiana Dunes National Lakeshore
    We have also visited Indiana Dunes National Lakeshore. The historic 
assets that are best known at this park are the five homes which were a 
part of the Century of Progress International Exposition for the 1933-
34 World's Fair in Chicago. Preservation non-profit Indiana Landmarks 
partnered with the National Park Service to lease all five houses, four 
of which are subleased to private residents. The House of Tomorrow 
remains, and Indiana Landmarks plans to restore and lease the house on 
a short-term basis in the future.
Isle Royale National Park
    We have visited this park. Like Apostles Island National Lakeshore 
and Cumberland Island National Seashore there are many historic sites 
maintained by life-tenants who owned their property before the 
establishment of the park. We recommend that the NPS give serious 
consideration toward developing a policy to ensure that life-tenants, 
at the end of their tenancy, are eligible to lease the properties they 
have lived in and maintained for many years.
Martin Luther King, Jr. National Historical Site
    See discussion immediately below.

    Question 2. Do you agree with NPS that there are only 47 priority 
buildings for historic leasing? How would you go about developing such 
a list that is all-inclusive?

    Answer. We have reviewed the March 29, 2018 letter from the Office 
of the Secretary to Chairman Murkowski describing the NPS process in 
identifying the 47 ``High Priority Candidates for Leasing.'' It seems 
like a fine process, but we expect there are multiple other buildings 
that would qualify as high priorities. For example, we have had a 
series of conversations with Martin Luther King National Historical 
Park and the Southeast Regional Office regarding a potential commercial 
B&B opportunity at 497 Auburn Avenue, NE and 493 (A, B & C) Auburn 
Avenue. The SE Region was preparing a ``Request for Expression of 
Interest'' in late 2017. It is our understanding that the Request was 
never formally issued. We do not think that this situation meets the 
criteria in the March 29, 2018 letter. However, we continue to believe 
that the subject property could be a very viable candidate for leasing 
if NPS leadership were to focus commercial real estate expertise from 
other regions and national staff to assist the park and region in 
successfully moving the project forward.
    We do not have a specific recommendation on how to develop an all-
inclusive list and we do not believe that is the most productive 
activity the NPS should undertake at this time. Instead, we would 
recommend, as described more fully below, creating a ``Timer-Team'' to 
identify real-world, commercially viable opportunities and then invest 
the time, resources and leadership necessary to make a growing number 
of individual projects successful.

    Question 3. Do you agree that historic leasing should be used 
proactively to head off the need to even include properties on the 
backlog? It appears NPS has limited its review to properties already on 
the backlog. Is that correct? How would you go about looking more 
broadly for the advance use of historic leasing to keep buildings good 
shape before they decline and become a liability for NPS and the 
Federal budget?

    Answer. From our perspective, the preservation priority is to lease 
underutilized historic structures, many of which are vacant and needing 
rehabilitation funds. Our general sense is that the properties NPS has 
reviewed are already on the backlog, but NPS would be in the better 
position to answer that specific question.
    We have not evaluated the ``advance use'' of leasing to maintain 
buildings before they decline. One exception to consider is discussed 
above in our answer to Question 1 as it relates to the life-estate uses 
at Apostle Islands (and other similar situations like Cumberland Island 
and Isly Royale). There may be instances where that is a viable 
strategy but we have not explored where those opportunities may be 
found. This could be a task for the ``Tiger-Team'' described below.
    One of the benefits of leasing is that a third party, and not the 
NPS, is responsible for the maintenance of the leased building, and 
also the beneficiary of lease payments generating net positive income 
to the agency. In some cases, such as Hot Springs, the NPS has invested 
funds in preparing long abandoned buildings to a condition where third 
parties would be more willing to enter into long-term leases.

    Question 4. Much of the focus of historic leasing to date has been 
to wait for NPS to decide to make a property available for leasing. 
This appears to be a slow and bureaucratic process that is limiting the 
use of this tool. What would you do to create new avenues for getting 
properties onto the list of possible leasing? Do you believe that 
outside parties should be able to propose unsolicited leases? And 
should the full range of potential uses be covered, not just high 
visibility business uses in metropolitan areas?

    Answer. We agree that the existing process is not resulting in a 
critical mass of new successes. There are some successes, and we know 
the agency is working on a number of exciting projects, which is very 
positive, but we believe there could be more. Even if properties were 
on a list, if leasing is not identified as a priority by NPS 
leadership, and if there is not the staff capacity and funding required 
to actually solve the real estate and process challenges that preclude 
the creation of more leases, there is little reason to believe that 
placing a property on a list would result in successfully executing a 
lease.
    We would defer to NPS on the best way to identify how outside 
parties can best catalyze opportunities for successful leases. Perhaps 
proposals from third parties could go to a national team to provide an 
initial assessment of practicality and for those ideas that passed a 
threshold of consistency with park use and potential economic 
viability, the national team could recommend action and provide support 
to the park and region to create a fuller proposal. And, yes, 
absolutely, a full range of uses compatible with the park mission 
should be evaluated, including smaller business and agricultural leases 
in small towns, rural and suburban areas. Existing successes at Hot 
Springs, Valley Forge and Cuyahoga demonstrate the potential.

    Question 5. Your organization has suggested that a ``Tiger Team'' 
of historic leasing experts in the Park Service could be established to 
improve the program. What would a tiger team look like? What function 
would they serve to field staff?

    Answer. The term ``Tiger Team'' arose in a conversation with 
National Park Service leadership as a cost effective and pragmatic 
approach that would address the general lack of successful leasing 
experience throughout the agency. It would also address the significant 
barriers of culture and practice that preclude experts in headquarters 
from reaching out directly to parks to make recommendations on 
successfully pursuing leasing opportunities and, similarly, barriers 
that preclude an expert in one region from reaching out to a park in 
another region.
    Creation of a ``Tiger Team'' would be a tangible expression that 
NPS leadership is committed to expanding the use of historic leasing as 
an agency priority, through a cost-effective approach of applying 
existing expertise to solving commercial real estate challenges beyond 
the experience of most Superintendents and regional staff.
    We are not wedded to any particular model and believe that the NPS 
is in the best position to identify the optimal configuration of a 
small group to effectively implement change. But as we have discussed 
the concept of a ``Tiger Team'' needs to be a small group of 
experienced real estate professionals well-versed in successful 
examples of historic leasing from throughout the NPS, including 
headquarters, select Regions and parks. The team could travel to 
specific parks where leasing opportunities exist and advise 
Superintendents and regions on the best practices to achieve success. 
It could also participate/lead national trainings and workshops focused 
on the keys to overcoming obstacles to achieve success.
    Once high priority properties are identified, a multi-disciplinary 
group similar to the Northeast Regional Roundtable should be assembled 
to evaluate more critically particular proposals, including staff who 
are experts in facilities management, partnerships, leasing/concessions 
and budget.
    However, we are convinced that the most important key to success is 
for NPS leadership to embrace the concept that historic leasing is a 
significant strategy to rehabilitate underutilized buildings for 
visitor enjoyment, to bring new uses to revitalize communities in and 
near specific parks, and to abate the maintenance backlog.

                                 ______
                                 

    Mr.  Westerman. The gentleman yields back.
    The Chair now recognizes Mr. Bob Kempkes for 5 minutes.

STATEMENT OF BOB KEMPKES, OWNER, QUAPAW BATHHOUSE AND SPA, HOT 
                SPRINGS NATIONAL PARK, ARKANSAS

    Mr.  Kempkes. Thank you all for being here. We really 
appreciate you coming to Hot Springs.
    I think Mr. McCabe has kind of hit on some of the financing 
hurdles that we all face trying to get a bathhouse open, and I 
think Mr. Cassidy's on point with the suggestion of commercial 
real estate specialists.
    A little background. In 2005, we submitted a proposal to 
lease the Quapaw Bathhouse. Our idea at that point in time was 
to provide low-cost access to thermal waters and bathing for 
the general public. Currently that was being provided by the 
Buckstaff Bathhouse in a traditional format, which works well, 
but we thought something maybe a little more updated might be 
well received. We then signed a lease in 2007, so it took a 
couple years to work through all those lease terms. We opened 
our business in 2008.
    We are now in the 11th year of our lease. I am very 
satisfied with our relationship with the National Park Service. 
I would like to mention, as Pat did, Superintendent Fernandez, 
without which we would have never gotten through the leasing 
program.
    And to Mr. Cassidy's point, I think it is really well made, 
we had numerous people we had to deal with through the leasing 
process. I think this could be simplified. I think the person 
we were dealing with most was Sandy Cool. She is retired now. 
She was director of concessions, so not necessarily up to date 
on leasing.
    The other problem we had in our financing situation was 
nobody could give us a value to the lease. Well, a lease 
actually does have value and a real estate specialist would 
understand, promote that, or a real estate appraiser. We pay a 
very limited rent in return for our return on investment of our 
initial money we put in the bathhouse, so there are things 
there that really are not being, I don't think, championed to 
people. And I think, to your point, somebody along the lines 
that has more day-to-day knowledge of real estate could make a 
huge difference.
    And the other thing that would be nice to see is some kind 
of single source to deal with in terms of trying to go through 
the leasing process. As Pat has experienced in his lease terms, 
you think you are done and then somebody from some other 
department sends an e-mail saying what about this, and then you 
think you have to start over. So, I think some simplification 
that would allow a one-stop shopping kind of thing would be 
really helpful.
    Now, going back to the whole maintenance idea, I do see 
that as a total win-win. In my written testimony, I have kind 
of outlined the amount of investment we made, the amount of 
maintenance we have done, the amount that we keep in a 
maintenance reserve fund. One other thing I could suggest is 
that that maintenance reserve fund be capped at a certain 
point, because as it is, it is 2 percent of our gross progress, 
and that is pretty substantial. We tried to negotiate with that 
when we were negotiating our lease, but that didn't go 
anywhere. And I think Pat tried to do the same thing with the 
same result.
    Anyway, I do see, as Pat said, the program being just a 
win-win for everyone. We see the fact that we have to do 
maintenance as prescribed by the National Park Service as 
something that comes with the territory of being a steward of a 
national historic landmark building, and I think we all take 
that seriously, and I think the city of Hot Springs does too. 
The fact that we do have to maintain our buildings regularly is 
great. I mean, this is our best foot forward to the world.
    Quapaw Baths gets people from all over the world, not just 
the United States, and people always comment on how beautiful 
Hot Springs National Park is. So, it is a wonderful thing.
    I would also like to say, under the overall program, it is 
really a jobs creation program too, and I don't know that that 
gets stressed enough. Quapaw currently has 46 team members. We 
have a payroll in excess of $1.4 million annually. We are 
generating a lot of good things there with people now having 
jobs, people paying taxes, people investing all sorts of things 
that benefit our entire community. I understand that the lease 
program may not be right for areas, as you mentioned, that are 
rural. But in any kind of a semi-urban environment, it just 
makes so much sense to get the participation of the city and 
the parks working together. That public-private partnership is 
a great thing and I think it works really well here.
    In closing, I would just say thank you again. We think the 
program is working well, and hope to see it being used more 
often around the country.

    [The prepared statement of Mr. Kempkes follows:]
   Prepared Statement of Bob Kempkes, Chief Executive Member, Quapaw 
                               Baths, LLC
    Chairman Bishop, thank you for bringing Washington, DC to Hot 
Springs, Arkansas. My name is Bob Kempkes and I am an architect by 
trade and also a partner in Quapaw Baths, LLC. As the name implies our 
group leases and operates the Quapaw Bathhouse in Hot Springs National 
Park. The Quapaw was the first leased bathhouse to reopen to the 
public. During that leasing process and subsequent business operation 
we learned a great deal and hope our testimony today can help other 
entrepreneurs around the country to invest in our National Parks and 
the communities they inhabit.
    In May 2005 our group, Quapaw Baths, LLC, submitted a Proposal to 
the National Park Service to lease the Quapaw Bathhouse in Hot Springs 
National Park, Arkansas. Our goal was to provide low cost access to the 
Hot Springs thermal water to individuals and groups in a modern 
facility in a National Landmark Building. Our Proposal was accepted at 
the Regional Level of the NPS and we began due diligence which included 
securing the necessary financing and reviewing the sample lease for any 
items requiring negotiation.
    One of the major challenges with leasing from the NPS is that they 
retain ownership of the improvements to the building leaving a lender 
with minimal collateral which when coupled with an unproven, start-up 
business significantly increases the risk exposure. The required 
project equity can also be challenging but the NPS was able to work 
with us to provide a long-term lease of 55 years that allowed us to 
take advantage of the Federal Historic Rehabilitation Tax Credits which 
at the time were 25 percent of the qualified rehabilitation expenses. 
These tax credits were syndicated to an investment group which provided 
capital to meet the equity requirement of the financing package. The 
NPS was also able to receive permission to provide the lender and 
investor an estoppel agreement which in case of default by the borrower 
would allow them, with NPS approval, to bring in a new operator.
    One of the big unknowns when we were talking to lenders was 
determining the value of the lease. Since no one had a leased a 
Bathhouse and because the lease rate had not been determined it was 
difficult to assign a value to the lease for appraisal purposes. 
Eventually the NPS determined that the fair market (in 2007) rent 
should be $9.50 per square foot per year. Noting that the lessee was 
making a considerable investment in the Bathhouse it was determined 
that the rent would be $1.00 per square foot per year. The difference 
between fair market rent and the NPS rent gave the lease a value and 
provided us with a reasonable annual rate of return of approximately 
7.5 percent on our overall investment of $2.5 million. Another NPS 
incentive for the developer was the construction term rent of $1.00 per 
year for 3 years. This allowed us to get the building renovated and 
open for business while operating essentially rent free. This enabled 
us to get the business stabilized faster and provided an additional 
level of comfort for the lender.
    After working through the financing challenges, we executed a lease 
with the NPS in April of 2007 during the NPS celebration of the 175 
year anniversary of the Hot Springs Reservation.
    One of the major advantages of the leasing program for the NPS are 
the maintenance requirements in the lease. The lessee is required to 
fund a maintenance reserve account with 2 percent of the gross 
revenues. This fund has no cap and if the lessee leaves the fund 
balance becomes the property of the NPS. The NPS must approve any 
expenditures from the account. A Reserve Account is a typical 
requirement by a lender but being held by the Lessor it provides the 
NPS with the ability to stay proactive on the condition of its 
building. Major maintenance items are typically things that occur every 
5 years or longer. We received a grace period to start depositing to 
the fund of 2 years of business operation which was another aid to the 
business start-up. Since 2010 we have spent approximately $200,000 on 
major maintenance items and maintain a six figure balance in the fund. 
We are also required to perform routine maintenance, which includes 
painting the exterior of the building on a 5 year schedule, as defined 
in our Preservation Maintenance Plan and as noted in any NPS 
inspections. This plan includes correcting any deficiencies in 
accordance with the Secretary of Interiors Standard for Rehabilitation 
which ensures proper preservation of an historic structure. We have 
spent over $170,000 on routine maintenance since opening the business. 
As the lessee we have never had any issues with the NPS over routine or 
major maintenance issues. We both understand our responsibilities in 
caring for a public treasure and take that very seriously.
    Quapaw Baths and Spa employs 46 team members with an annual payroll 
of $1.4 million. We are currently in the 11th year of our lease and are 
extremely satisfied with our working relationship with the NPS. Our 
interaction has always been more like a working partnership than the 
standard Landlord-Tenant agreement we are involved with on the private 
side of Central Ave. The NPS' efforts to lease, renovate and bring back 
to life the long vacant bathhouses has been a catalyst for increased 
downtown tourism as well as a source of pride for our community and our 
visitors.

                                 ______
                                 

    Mr.  Westerman. Thank you, Mr. Kempkes.
    I also want to thank all the witnesses for your testimony, 
and remind the members of the Committee that Committee Rule 
3(d) imposes a 5-minute limit on questions. The Chair will now 
recognize Members for any questions they may wish to ask the 
witnesses. I was going to yield to Chairman Bishop, but he has 
yielded back to me, so I will begin the questioning.
    First off, just to maybe highlight the magnitude of what we 
are talking about, and I will ask Ms. Simmons this question. My 
understanding is there are 8,000 to 9,000 buildings in the 
National Park Service system that are currently unused, and of 
the $12 billion of maintenance backlog, $4 billion to $5 
billion of that is for those historic structures. Do you have 
different numbers?
    Ms.  Simmons. We have a database that identifies 
approximately 50 buildings that would be available for lease 
across the National Park Service. That information is provided 
by parks across the Service.
    And in regards to the deferred maintenance numbers, it 
really depends greatly on the adapter reuse of that building as 
far as the deferred maintenance, because when a lessee comes 
into a building, they are not simply addressing the deferred 
maintenance for that building, but they are adapting it for 
what they will be using it for. So, they would not just, like I 
said, be addressing the deferred maintenance, but if they were 
going to convert it into a boutique hotel, there are items in 
there that they would actually improve for that adaptive reuse.
    Mr.  Westerman. Leasehold improvements, I guess, is what--
--
    Ms.  Simmons. Actually, the capital improvements that are 
made in those structures can go toward offsetting the rent, so 
it is a credit toward the rent.
    Mr.  Westerman. Mayor McCabe, you talked about the 
difficulty in going through the financing process, and I am 
guessing Representative Hill, who is actually the Whip on the 
Financial Services Committee in the House, he will probably 
have some questions around that as well. And then you talked 
about the expertise, Mr. Cassidy, and then Mr. Kempkes talked 
about it as well, the expertise within the Park Service to do 
all the real estate side of it. Now, you suggested a tiger 
team. We would like to call it something different here in 
Arkansas, the Razorback team or maybe, for Secretary Zinke's 
purpose, a strike team or something like that.
    I would like to go down the panel and have you give me your 
Number one improvement you think could be made to the Historic 
Leasing Program. Because if we want to expand this to other 
places, and there is so much experience here in Hot Springs 
about how to make it work, is there like a top one or two 
recommendation you would make?
    Mr.  McCabe. I want to go back to the National Park Service 
as a landlord. Take the word ``National Park Service'' out and 
you think of a landlord and you are going to make improvements 
to that building. They want to retain those improvements. I get 
that. I understand that. From a bank's perspective, in 
financing those improvements, they know that those are attached 
and they are not going to get those back. You have the SBA on 
this other side telling the finance institution we are 
guaranteeing this loan. You have to get more collateral. You 
have to ensure that the taxpayers are protected.
    And then one of the issues that we ran into was the loan 
proceeds in the event that the structure burned beyond 
recognition or significant enough that the Park Service said, 
well, we are not going to rebuild. That was an issue that we 
just had, and Superintendent Fernandez was in my corner on 
that, at least from the comment, why is the SBA being so 
difficult here? It is money going into a Federal building.
    Mr.  Westerman. So, we need to maybe work on getting those 
SBA loans where they are more friendly toward us?
    Mr.  McCabe. I think so. I mean, I think that would be a 
good thing, where those dollars are going into a Federal 
building and that project is considered to be a good project by 
the virtue of the lease. I think they can relax that.
    Mr.  Westerman. We have 30 seconds. Anybody else have a 
comment?
    Mr.  Cassidy. Sure. I would just note that you had a number 
of about 26,000 or 27,000 buildings that are potentially 
subject to lease, 27,000 assets from the Park Service. This is 
a letter from the Interior to Sherman Calvert about a year and 
a half ago. He identified potentially 9,000 structures that 
could be evaluated through leasing. And then a letter of March 
29 of this year. The Park Service identified 47 high-priority 
candidates for leasing. I would note that, based upon our 
experience, there are more. But what it comes down to--and I 
don't mean to--well, I guess I do mean to emphasize this.
    Mr.  Westerman. Make it quick. I am out of time.
    Mr.  Cassidy. OK. All right.
    Mr.  Westerman. So, I yield back, and I recognize Mrs. 
Radewagen from American Samoa for 5 minutes of questions.
    Mrs.  Radewagen. Thank you, Mr. Chairman.
    I, too, would like to welcome the panel. Thank you for 
appearing today.
    I have a question for Ms. Simmons. Are there any statutes 
that prevent the full implementation of a user-friendly leasing 
program across the NPS? Are there any that you would recommend 
be repealed or amended or new authorities authorized, and are 
there any provisions in the Code of Federal Regulations that 
the agency could consider revising that would make it easier to 
expand and improve historic leasing in national parks?
    Ms.  Simmons. Thank you. That is a very good question. We 
feel that we have the flexibility that we need to initiate the 
leasing program across the National Park Service. We would be 
more than happy to work with the Committee on any suggestions 
that you may have, but we do feel like we have the flexibility. 
We realize Secretary Zinke's interest in public-private 
partnership to address deferred maintenance, and that leasing 
may be one of those tools, but we will be more than happy, if 
you have any suggestions, to look at those suggestions.
    Mrs.  Radewagen. Mr. Cassidy, can you speak to how historic 
leasing can help address the $11.6 billion deferred maintenance 
backlog of the NPS?
    Mr.  Cassidy. Sure. I think we have had a couple of 
examples already. The Park Service doesn't have to pay to keep 
in mothballs buildings that weren't productive and weren't 
being utilized by people. We had some adaptive reuses. We will 
see them this afternoon on the tour.
    The leasing authority that exists is used to bring 
buildings that have been abandoned from derelict to productive 
use, and in some cases, it has also gone to have a net positive 
return income back to the Treasury. I think of a place like the 
Presidio, which is a little bit of an odd case because a 
specialized system was set up to deal with that. But the day 
the Presidio became part of the Park Service, it was the 
biggest part of the maintenance backlog in the whole country. 
Fort Baker near Sausalito was an enormous maintenance backlog, 
but you have innovative regional leadership that facilitated 
long-term leases that brought in the historic tax credit. And 
right now, you have this remarkable place that Ms. Simmons 
referenced, the Cavallo Point. It is a cool place to go. People 
go there all the time. Before it was just buildings on a list 
of things that weren't being taken care of.
    Mrs.  Radewagen. Thank you, Mr. Chairman. I yield back the 
balance of my time.
    Mr.  Westerman. The gentlelady yields back.
    The Chair recognizes the gentleman from Arkansas, my 
colleague, Mr. Hill, for 5 minutes.
    Mr.  Hill. Well, thank you, Mr. Westerman, to be in your 
district. It is the second best district in the state.
    I want to welcome our distinguished Chairman. We appreciate 
him taking his time to be in Arkansas. And I do commend both of 
you for holding this hearing.
    And, Chairman Bishop, I hope you get a chance to go up the 
old Carriage Road to the top of the mountain and get on top of 
the tower before you leave because that is the same view Teddy 
Roosevelt had when he visited here and climbed the first tower 
back in 1910. It will give you a real feel for just what a 
beautiful, beautiful place Hot Springs is.
    Bruce, yes, I was very interested in talking about this 
from a banker's point of view. I was in banking for 30 years 
before I ran and was elected to Congress, and so I do think 
about this from a financial point of view, and I think the 
witnesses have done an excellent job thinking that through, 
which is all over America, people use a ground lease owned by 
somebody else and yet they build extraordinary things and 
somehow that gets financed. And I promise they are not all 
putting up their grandparents' CDs and have not necessarily a 
very good secondary source of collateral.
    One question I had for Mr. Cassidy. You referenced historic 
tax credit, something that Mr. Westerman worked very hard on in 
the last tax bill. We appreciate his leadership. I support it 
as well. Could you reflect on the historic tax credit as well 
as the new market tax credit program? Because both these 
programs, under certain circumstances, build an equity 
component which does make lenders quite comfortable. Could you 
reflect on that, and have you seen that used somewhere in the 
National Park Service?
    Mr.  Cassidy. In the same letter that the Park Service sent 
to the Appropriations Committee earlier this year, I think they 
identified three leases that utilized the historic tax credit. 
That is not enough; I think actually it is a little bit wrong, 
there are probably five or six. If Hot Springs comes fully on-
line, we are up to seven, but that is not enough.
    I am not aware of a new markets project within the Park 
Service, but I am aware of multiple instances where new markets 
has been a part of the capital staff. Everybody may not know 
what that is, but that is what you need to figure out how much 
money you have to make the deal happen. There are multiple 
examples of new markets being twinned with historic, and the 
benefit of that is that you would have a structure 
rehabilitated to the Secretary's standards for historic 
preservation. On its own, a new markets project is not subject 
to those restrictions.
    So, why hasn't that been done more? I think it is what I 
spoke to earlier. The expertise on commercial leasing is a rare 
commodity in the National Park Service.
    Mr.  Hill. Not to interrupt you, but one issue is that the 
new markets program has gotten so many people's hands in the 
pockets of the program that the cost is so high, that you have 
to have a $10 million project before it really warrants doing 
the agency cost aspect of it. One suggestion I have always made 
before I committed in other places is we need to drive down 
those agency costs and offer a new market tax credit to make 
more programs qualify for it. There are a lot of good ideas for 
a national park building that don't require $10 million in 
capital outlet.
    Mr.  Cassidy. I would be delighted to speak with you off-
line because we have a for-profit subsidiary, the National 
Trust Community Investment Corporation, that regularly receives 
new market allocations. And we are working with them as we did 
the reauthorization of the historic tax credit. Thank you, 
again, Congressman Westerman. Thank you, Mr. Bishop, for co-
sponsoring that bill. We want to make improvements in the new 
markets tax credit. I would love to have this conversation with 
you.
    Mr.  Hill. Good. And I can't see how much time I have left, 
but I will ask Ms. Simmons in the seconds remaining, hidden 
best practices on a ground lease, is there any statute that 
prohibits you to have a different negotiation, for example, on 
the maintenance log or is that purely just a policy decision of 
the Department?
    Ms.  Simmons. It is absolutely possible to have that as 
part of the negotiation. We look at the length of the lease 
term, the maintenance that is needed, and we want that 
maintenance reserve in there because we are protecting those 
resources to ensure that there is a pot of money set aside 
should some unforeseen maintenance need arise in that building. 
But it is a negotiation tool that we have at our disposal.
    Mr.  Hill. Thank you, Chairman, I yield back.
    Mr.  Westerman. The gentleman yields back.
    I would, again, like to thank Representative Hill for 
joining the Committee today. As I said, he serves on the 
Financial Services Committee, but Federal land issues are very 
important to him and he took time out of his busy schedule to 
come over and meet with our Committee today, so thank you for 
doing that.
    The Chair now recognizes the Chairman, Representative 
Bishop, from Utah, for 5 minutes.
    The  Chairman. Let me go through some of these as quickly 
as we can. Ms. Simmons, I know the Park Service has compiled a 
high-priority candidate list of leases, potential leasing. Have 
you considered developing an inventory of all unused property 
that can be considered for leasing?
    Ms.  Simmons. We rely on our parks to provide information 
related to property that meets the determinations for leasing. 
That is a very good question. From the field level, I would be 
more than happy to talk to my Washington staff and provide an 
answer for that.
    The  Chairman. But we have yet to compile that in one spot?
    Ms.  Simmons. We have a high-priority list, and we have a 
database of available properties that relies on the parks 
submitting the structures that meet those determinations.
    The  Chairman. When you choose to go with a concessionaire 
or a lease, what criteria do you use?
    Ms.  Simmons. A concessions contract is a necessary and 
appropriate visitor service, and Mr. Cassidy was talking about 
developing a headache over reviewing that. Well, it is a 
complex process, and it depends greatly on that particular part 
because what may be necessary and appropriate visitor service 
in one park may not be a necessary and appropriate visitor 
service in another park.
    The  Chairman. OK.
    Ms.  Simmons. You rely on your park planning documents. You 
rely on the demographics. If you have a hotel in a park, such 
as the boutique hotel that we are opening here in Hot Springs, 
that is an appropriate lease because you can go across the 
street and down a block and there is a hotel. If you look at 
the north rim of the Grand Canyon, that hotel there is a 
concessions contract because there is no other lodging 
facilities within close proximity of that hotel, so it makes it 
necessary.
    The  Chairman. So, a case-by-case more than anything else.
    Mr. Cassidy, they talked about a strike, or tiger team, 
whatever you want to call it. Right now we don't have those 
kinds of skill sets except in various entities. If there was 
one centralized strike team that worked for everything that was 
out of the Park Service, is there enough use or volume of need 
to actually justify that?
    Mr.  Cassidy. I sure think so. Yes.
    The  Chairman. That was a good answer.
    Mr. Kempkes, you talked about the problem you have within 
the Park Service itself, one may be approving it and then 
somebody else came in there and you had to do the process over 
again. Can you be a little bit more specific about that, and 
was that all within the Park Service? It wasn't another entity 
outside of the Park Service?
    Mr.  Kempkes. It was not outside the Park Service, no. And 
what kind of happens along those lines is, like any government, 
there are a lot of different layers there and each layer likes 
to be heard. So, when you think you jumped a hurdle with, let's 
say, the code reviewer in Omaha, Nebraska, that is a good 
thing, and then all of a sudden, there is an environmental 
reviewer that is telling you how big your dishwasher should be, 
things like that. There is no centralized person or group of 
people asking you for information.
    The  Chairman. Well, this kind of goes back to what 
Secretary Zinke was talking about in his reorganization 
efforts. But you are talking now within the entity, the agency, 
not amongst the different divisions that are already in 
existence?
    Mr.  Kempkes. Yes. I think they all are fine. It is just 
somebody overseeing them all and coordinating communication.
    The  Chairman. Mr. McCaskill, if we are actually going to 
be talking about doing leasing programs, urban or rural, I 
guess the question is, does the leasing problem provide a draw 
to bring tourists in or is it just an asset to bring tourists 
in?
    Mr.  McCaskill. It is an extra layer of interesting things 
that are happening here. The national park has a lot of natural 
assets that people are coming to visit, but because of the 
built structures and built environment that exists in downtown, 
to have those bathhouses be sitting there and unused just 
doesn't quite make much sense.
    The  Chairman. I hope this could be used in a rural 
atmosphere as well, but we will see with that. And I have 30 
seconds, Mayor.
    Mr.  McCabe. Yes.
    The  Chairman. You created a hotel off one of these things.
    Mr.  McCabe. Correct.
    The  Chairman. Why? Why did you want to do this in the 
first place?
    Mr.  McCabe. I was a young man when we started the process. 
That was in 2013. In fact, it was this week in 2013 that I 
called Bob Kempkes and we toured the Hale Bathhouse. The Park 
Service wasn't all the fault for the delay. The financing was a 
challenge. We wanted to do something downtown. I was a city 
director at that time. The numbers I saw coming through on our 
sales tax were slowly rising. I told my wife, if you want to 
get in business, you better do it now, and now is 5 years 
later, so we are happy.
    The  Chairman. There may be some second question rounds, I 
think.
    Mr.  Westerman. Yes. We will give Members an opportunity 
for a second round of questions. I will recognize myself for 
the first 5 minutes.
    We talked about this strike team and how it could be 
beneficial in making the process move more quickly. The Federal 
Government actually has a commercial real estate expert in 
place right now. It is the General Services Administration, or 
the GSA.
    Ms. Simmons, does the Park Service reach out to GSA for 
subject matter expertise?
    Ms.  Simmons. When we are leasing facilities, we actually 
have leases within the Midwest region with GSA on several 
structures, and those GSA leases, in turn, are leasing to 
another individual.
    Mr.  Westerman. Have you considered adapting GSA job specs 
or using their training curriculum for the Park Service?
    Ms.  Simmons. There are so many elements that are involved 
with our leasing program with the uniqueness of the properties, 
the ones that need improvements, the ones that do not need 
improvements, on requirement to obtain fair market value rent, 
if there are appraisals that are needed. We have not considered 
that. If it is something that the Committee is interested in, 
we will be more than happy to look into that.
    Mr.  Westerman. I know this has been talked about quite a 
bit at this meeting today, and it is probably not the first 
time you have heard about it, but what is the Park Service 
doing to ensure that staff has the resources and training that 
they need in this area or is it just something new that you are 
starting to look into?
    Ms.  Simmons. No. Absolutely. We have developed training 
for the leasing program and it is provided at our commercial 
services for superintendents training. It is provided on an 
annual basis. Personally speaking, from the Midwest region, 
two-thirds of our superintendents have overturned in the last 3 
years. When we have a new superintendent come into a park, they 
come and spend time in the regional office with the program 
leads. I take that opportunity when I see them with the 
superintendent to let them know about the leasing program, the 
opportunities that exist. They might not know at that time when 
they come in if there are structures that would be applicable 
for the leasing program, but it gives them a tool in their 
toolbox for them to consider that when they get back to their 
park. If they run into something, they know they can give us a 
call and we can pursue that further.
    Mr.  Westerman. I have had the opportunity to see this 
because I was born here in Hot Springs but, Mayor and Mr. 
Kempkes, can you go back maybe 30 years and describe what the 
town was like when the bathhouses were shuttered before there 
was any real development on that side of Central Avenue?
    Mr.  McCabe. There wasn't a lot of reason to come downtown. 
The Park Service side was basically closed for business, with 
the exception of the Buckstaff, which was the one that was 
continually operational. What we call the business side had 
significant challenges because the mall was built toward the 
edge of town. A lot of stores went down there. And they put a 
green canopy to try to compete so you could walk underneath 
without getting wet, and that was more of an eyesore than a 
benefit. We really had some challenges.
    Over time, we created a Main Street Hot Springs and other 
endeavors, a central business improvement district that the 
stores invested in, putting utilities underground, and things 
started slowly coming back. So, the leasing program was great. 
The city of Hot Springs introduced a thermal basin fire 
district, which required owners within that footprint of the 
district that had buildings that were three stories or higher 
to implement a fire suppression system. That one thing made a 
big difference because those building owners who didn't want to 
pursue that sold it to people who had an idea.
    Mr.  Westerman. Bob, 30 seconds. Would you like to add 
anything?
    Mr.  Kempkes. Sure. Thirty years ago, about 30 percent of 
the Hot Springs Central Avenue storefronts were occupied, and 
those businesses were not any that you could consider family 
oriented. A group of local citizens realized the need for the 
bathhouses to be improved. One of the first things they did, 
and some of them are here today in the audience, and I 
appreciate that, was they decided to remove the canopy that Pat 
mentioned, which is a great thing because when you walked under 
it, you couldn't tell where you were. You couldn't see the tops 
of the buildings, so you didn't really know. Anyway, from 
there, some investment went into the bathhouses through Senator 
Bumpers at the time. He created some changes to tax laws that 
helped Hot Springs.
    And I did want to say this too, that at that same time, the 
Park Service invested a lot of money in the Fordyce Bathhouse 
Visitor Center. That investment in the Fordyce Bathhouse 
Visitor Center enabled Mountain Valley Spring Company to take a 
look at downtown and say, we are seeing this investment over 
here. We should make an investment on the private side. So, at 
the same time, the two groups opened for business. I believe 
Fordyce opened in 1988. And Mountain Valley opened a brand-new 
national headquarters in downtown Hot Springs, which included a 
visitor center. That was a catalyst to a whole lot of 
additional investment.
    Mr.  Westerman. I am going to have to cut you off because I 
am out of time. I didn't get a chance to ask Mr. McCaskill 
whether he thinks, when we look at the past, if the future is 
looking bright, and I am pretty sure he would say it is looking 
bright.
    With that, I recognize the gentlewoman from American Samoa, 
Mrs. Radewagen, for 5 minutes.
    Mrs.  Radewagen. Thank you, Mr. Chairman.
    I have a question for Ms. Simmons. The Northeast Region of 
the National Park Service has a high number of leases in place. 
Has NPS implemented any Northeast Region practices service-wide 
to promote the success of historic leasing?
    Ms.  Simmons. From the field perspective of the Midwest 
region, I am not familiar if that has taken place. I will be 
happy to get the answer and get back with you.
    Mrs.  Radewagen. Thank you.
    Mr. Cassidy, just very briefly, Can you speak to why your 
organization is in support of NPS expanding its Historic 
Leasing Program?
    Mr.  Cassidy. Because it could work and because there is a 
$12 billion maintenance backlog and because there are 
facilities that are underutilized or abandoned that could, with 
expertise, which is hard to ask a park to develop, to figure 
out how to do a master lease if they have a lot of small 
buildings. It is unfair to ask the park superintendent to be an 
expert on that. It is unfair to think that an individual park 
superintendent is going to have the confidence to cede control 
through a lease of one of their properties for an extended 
period of time. It has to come from leadership. And what has 
happened in the Northeast Region is that you have innovative 
superintendents, as was the case in Golden Gate, who have had 
the courage to try something new, and now what they have in the 
Northeast Region, they have a commercial real estate specialist 
who can assist other parks in utilizing just common-sense 
approaches to real estate. It is not inherent with most Park 
Service people, who are some of the best people in the world, 
and we are so lucky to have the National Park Service staff, 
but we are speaking about a more specialized and different 
knowledge industry.
    Mrs.  Radewagen. Thank you, Mr. Chairman, I yield back.
    Mr.  Westerman. The gentlewoman yields back.
    I, again, recognize the gentleman from Arkansas, Mr. Hill, 
for 5 minutes.
    Mr.  Hill. Thank you, friends, and we thank you again for 
holding the hearing.
    I am co-sponsor of H.R. 6510. I appreciate the Chairman and 
your leadership on that work as well. We are doing a lot of 
things, I think, in Congress right now that really speak to 
this backlog.
    Representative Dingell and Representative Fortenberry have 
a significant issue that is similar for the conservation 
agencies in the wildlife area, and I appreciate their work. I 
just saw a text where my old friend, John Dingell, has had a 
heart attack today, so I hope you will keep him in your prayers 
this week, and his wife, now Congresswoman Dingell, our 
colleague.
    And another reason I am interested is, thanks to Chairman 
Bishop and Mr. Westerman, we have expanded the footprint of 
Little Rock Central High School this last year. We appreciate 
the Chairman's work on that. And there we have added seven 
historic houses on South Park Street there across from Central 
High. This week is the 61st anniversary. Sixty-one years ago 
today, all eyes were on Central High and the possibility of 
integration there. So, this educates, I think, all Members of 
Congress on how to do a better job on these public-private 
partnerships with our National Park Service, but for me are 
other natural resource agencies as well, so I am learning a lot 
today.
    I have successfully gotten the U.S. Forest Service to lease 
the old Girl Scout Camp at Lake Sylvia in the Ouachita National 
Forest to a private sector entity, and I would like to see more 
of that. I am looking at how do we streamline this whole 
process of getting unutilized assets into private hands.
    On another financial topic, I note that the National Trust 
in their 2013 report on the MDS leasing issue found that there 
is a typical 10-year recalculation issue for rents built into 
projects and that can cause, I would think, lessees to end up 
paying twice, one for property appreciation and one for the 
fact that they got this 10-year window on the lease term.
    What was the rationale between 10 years? Does it have 
anything to do with Federal budget rules or again, is that just 
some National Park policy? And would you consider longer lease 
terms if it fit the business use for the property?
    Ms.  Simmons. That is a very good question. The National 
Park Service is required to obtain fair market value rent, so 
that reconsideration clause is partially in there to assure 
that the National Park Service is actually obtaining a fair 
market value rent. That rent reconsideration can be as simple 
as tracking the rent against the Consumer Price Index. And in 
addition, that rent reconsideration may not only be on the side 
of the National Park Service, it can also apply toward the 
lessee, and the lessee could approach the National Park Service 
about possibly adjusting the rent. So, it is in there and it 
assures that both sides are taken care of.
    Mr.  Hill. Thank you.
    Mr. Cassidy, do you want to respond to that or add some 
commentary to it?
    Mr.  Cassidy. I am less informed on that than most things, 
so I will go back to what the report said years ago.
    The  Chairman. Oh, I am sorry. Yes, Mr. Kempkes?
    Mr.  Kempkes. We do pay a CPI multiplier annually, so we do 
have our rent adjusted that way. I think the other part of that 
was the 10-year intervals in our lease gave the Park Service 
the right to review our books, for instance, and determine if 
our rent payments were still fair, if the business was 
successful, not successful, that kind of thing. It just gave 
them an opportunity, as she mentioned, a sure fair market rent.
    Mr.  Hill. So, from your point of view as a user, you 
didn't view that per se as a burden?
    Mr.  Kempkes. No, not at all.
    Mr.  Hill. Thank you for that.
    Chairman, I yield back.
    Mr.  Westerman. The gentleman yields back.
    I now recognize the gentleman from Utah, Mr. Bishop, for 5 
minutes.
    The  Chairman. As we go through this, we are just 
scratching the surface of this entire possibility here, so I 
think what we are going to have to do is talk about some other 
ways of looking at this in the long term. The essential 
question is 10 years inhibiting in the ability of getting these 
things started or not.
    Ms. Simmons, you talked about deciding between 
concessionaires and leasing, that sometimes you have to take 
them on a case-by-case basis deciding what is necessary and 
appropriate. Even those terms, ``necessary'' and 
``appropriate,'' are problematic because that is a gray area 
and it becomes problematic because we are dealing with a 
national program. And the issue is, if we come up with tight 
guidelines for these areas, does that then tie our hands so we 
are not actually solving problems?
    I think one of the things I would like this panel and us to 
think about is maybe some kind of a rewards program that we 
could institute that would allow the land manager at some park 
and/or monument entity to get a bonus or reward for innovating 
some of these proposals so that you are not just going out and 
putting your neck on the line. But if you actually try 
something and it becomes successful, maybe there is a process 
that we can give some kind of bonuses toward maintenance 
backlog or something else that would encourage the local land 
managers to become involved in trying to be much more flexible 
in this without having to worry about getting their head handed 
to them at the same approach to it. It would also mean that 
what I am hoping for is to invite some local entities to be 
more of a voice and advise land managers, park managers on what 
they should be doing in that particular area and somewhat 
providing that kind of flexibility.
    You also mentioned--and I am running out of time here, I 
apologize--impediments to people applying and getting the 
historic tax credit. There are some barriers to that. I would 
like to look at that specifically on how we can try to minimize 
those type of barriers. We are talking here about having a 
leasing process, and all of you said it is a wonderful idea, 
but it takes time that is counterproductive. How then do we 
actually come up with a program that incentivizes the 
shortening of that time period so we can actually get these 
things up and running faster without having to come back with 
the national guidelines that tie our hands into the creativity 
in the future? It is part of the process of having a national 
system that needs to be fair with everybody, but at the same 
time make it creative enough so you can be flexible to meet 
needs of people.
    And that is not just with the Park Service. That is a 
problem with every Federal program that we run, but what we 
need to do is now see that this is a good program. We need to 
work on leases. It needs to be approved. How can we actually 
eliminate some of those barriers and try to make more 
flexibility in the system to get this accomplished, to get 
everything up and running?
    I am not going to ask a specific question here because as 
Chairman, I like to hear my voice. That was a joke by the way.
    Mr.  Westerman. We all like to hear your voice.
    The  Chairman. Yeah, yeah, yeah. What I am saying is there 
is a great potential here that needs to be expanded, and I need 
to have all of you help us to come back with some specifics on 
how we can actually go forth to bring more flexibility to this 
program without damaging the underlying principle that is 
there. And I, too, want to thank you all for being here.
    I have like 1 minute left. Let me do this. Mayor, thank you 
for allowing us to use your facilities here, your hospitality 
in inviting us down here. I appreciate that. I appreciate all 
of you.
    To the witnesses, thank you for actually coming and 
spending your time with us. And to Congressman Westerman, thank 
you for encouraging us to come down here into your hometown, 
into your district, and for helping to put this thing together. 
I appreciate all of that. On behalf of the Committee, thank you 
so very much. I am done.
    Mr.  Westerman. Thank you, Chairman. And you are always 
welcome in Hot Springs, as well as all of my fellow Members of 
Congress. And I do believe we have a good story here to tell 
that can be beneficial for all across the country.
    Again, I would like to thank all the witnesses for your 
valuable testimony and thank my colleagues for your questions.
    Also, for the record, I would like to submit a letter from 
Ms. Rose Schweikhart, who is the owner of Superior Bathhouse 
Brewery.
    Without objection, I would also like to submit a letter 
from Senator Boozman, without objection; a letter from Mr. Bill 
Burrough, without objection; a letter from the National Park 
Service to Senator Murkowski, without objection; and also an 
Op-Ed by Gary Troutman from here in Hot Springs, without 
objection. I will submit all those for the record.
    Members of the Committee may have some additional questions 
for the witnesses and we will ask you to respond to these in 
writing. Under Committee Rule 3(o), members of the Committee 
must submit witness questions within 3 business days following 
the hearing by 5 p.m., and the hearing record will be held open 
for 10 business days for these responses.
    And one other item of business. We are going to take a tour 
of Bathhouse Row, and we invite members of the audience to go 
along with us to see Bathhouse Row. We will do that as soon as 
we wrap up here, and the Park Service will lead that tour.
    If there is no further business, without objection, the 
Committee stands adjourned. Thank you.

    [Whereupon, the Committee was adjourned.]

            [ADDITIONAL MATERIALS SUBMITTED FOR THE RECORD]

Rep. Bishop Submission

             Written Testimony of The Pew Charitable Trusts

    Chairman Bishop, Ranking Member Grijalva, Representative Westerman, 
and members of the Committee, thank you for the opportunity to submit 
written testimony today on historic leasing and deferred maintenance 
within our national parks sites.
    The Pew Charitable Trusts' Restore America's Parks campaign seeks 
to conserve the natural and cultural assets of the National Park System 
by providing common-sense, long-term solutions to the $11.6 billion 
deferred maintenance challenge facing the National Park Service (NPS).
    National parks often have the same infrastructure as a city or 
town, and as a result face the same deterioration and maintenance 
needs. In total, the agency is responsible for protecting and managing 
over 75,000 assets, while also ensuring that visitors can safely access 
and enjoy these resources. NPS assets are tangible properties that 
serve a specific park function and can include: roads and bridges, 
trails, historic buildings, employee housing, wastewater and electrical 
systems, military fortifications, monuments and memorials, and 
seawalls. Maintenance is required at regular intervals to ensure 
acceptable park facility conditions; when this maintenance is delayed 
for more than a year, it's considered to be ``deferred.''
    Over 47 percent of assets on NPS' deferred maintenance list are 
considered historic. As such, Pew supports and encourages the increased 
use of historic leasing as an important tool to address deferred 
maintenance challenges facing the NPS. Leasing of historic properties--
there are an estimated 9,000 within the National Park System--is a type 
of public-private partnership that helps restore these properties, save 
NPS money, and provide revenue-producing businesses in communities.

    Examples of historic leasing and public-private partnerships being 
leveraged to address deferred maintenance. include:

    Hot Springs National Park. In Hot Springs, Arkansas, natural 
springs have supplied water for therapeutic baths since the 1800s. The 
eight historic bathhouses contained within Bathhouse Row were 
constructed between 1892 and 1923; by the 1960s, however, their 
popularity declined and bathhouses began to close. In 2004, the NPS 
began significant efforts to renovate these historic sites so they 
could be enjoyed by the public once again. Of the original eight 
bathhouses, the agency helped restore five that are currently used by 
NPS or other tenants. Historic leasing, including the historic tax 
credit, were essential to financing the renovations, and current uses 
include spas, museums, and a brewery and distillery that crafts beer 
from the hot springs.

    Martin Luther King National Historic Park. NPS funds the 
maintenance for federally-owned houses within the park unit with 
revenue generated through leasing 29 of the historic buildings as 
private residences. These structures include apartments, duplexes and 
single-family homes and the leasing program has proven to be very 
popular.
    Valley Forge National Historical Park. This park site houses a 
Montessori school that reached an agreement with the park to pay for 
needed repairs to preserve the 3.5-acre Ivy Hollow Farm site in 
exchange for a long-term lease that would allow the school to meet 
there. The mutually beneficial agreement resulted in the restoration of 
the 19th century farm and a vacant barn with years of deferred 
maintenance; today, the buildings contain a library and parent meeting 
room, and a six-classroom school that is provides an idyllic setting 
for its students.

    Pew is pleased that the Committee recognizes historic leasing and 
its role in addressing the deferred maintenance backlog. We encourage 
Congress and the National Park Service to expand opportunities for the 
agency and private entities to use this important tool.

                                 ______
                                 

Rep. Westerman Submissions

                              United States Senate,
                                             Washington, DC

                                                 September 12, 2018

Hon. Rob Bishop, Chairman,
House Committee on Natural Resources,
U.S. House of Representatives,
1324 Longworth House Office Building,
Washington, DC 20515.

    Dear Chairman Bishop:

    While regrettably unable to attend due to votes in the Senate, I am 
glad to hear of the House Committee on Natural Resources' field hearing 
in Hot Springs National Park. It is a brilliant idea from my colleague 
and friend, Congressman Bruce Westerman, and I commend you for taking 
the time to explore the park and illuminate the way the National Park 
Service, in partnership with our local officials, have revived the 
attraction with creative ideas and the National Park Service's Historic 
Preservation Program. As we both know, the National Park Service's 
resources are stretched thin and it's imperative that we identify 
innovative ways to preserve these national treasures.

    I hope that you enjoy your time in Arkansas and find several 
examples you can take back. Again, I appreciate the Committee's visit 
and the interest in Arkansas' public lands, especially Congressman 
Westerman for shedding a public light on the good things happening in 
Hot Springs. I'm certain you will understand why Bruce and I are so 
proud.

    As always, thanks for your friendship and leadership in these 
important matters.

            Sincerely,

                                              John Boozman,
                                                      U.S. Senator.

                                 ______
                                 
                               City of Hot Springs,
                        Hot Springs National Park, Arkansas

                                                 September 17, 2018

Hon. Rob Bishop, Chairman,
House Committee on Natural Resources,
1324 Longworth House Office Building,
Washington, DC 20515.

    Dear Chairman Bishop:

    The City of Hot Springs welcomes you, as warmly as our natural 
springs, to our city. We would like to thank you and the House Natural 
Resources Committee for visiting Hot Springs National Park.
    Since President Andrew Jackson protected our hot springs and the 
areas around it in 1832 as the Hot Springs Reservation to the formal 
recognition of Hot Springs National Park in 1921, our area has grown in 
partnership with federal support. Today, the area continues to attracts 
visitors from all over the United States.
    Through the persistence of private business leaders and in 
partnership with local, state and national agencies, this area is on 
track to remain an important natural and economic resource. Last year, 
the park attracted nearly 1.6 million visitors, roughly an 18 percent 
increase from the previous year.
    New businesses, including local hotels, restaurants and breweries, 
are thriving from the benefit of this federally-protected resource. 
Government protections, afforded by the natural partnership between 
federal and local, will sustain private sector growth in our city for 
generations to come. In short, we exist but for one another.
    As a city, Hot Springs is investing in this area through the 
improvement of Northwoods Urban Forest Park. Building upon the existing 
natural beauty, we are providing infrastructure that will grow our 
ecotourism economy. By making the area accessible to all who enjoy the 
outdoors--hikers, sightseers, and mountain bikers included--the City of 
Hot Springs is confident that continued public and private investment 
will complement each other, creating a multiplying effect on our 
economy.

            Sincerely,

                                             Bill Burrough,
                                              Interim City Manager.

                                 ______
                                 

        United States Department of the Interior,  
                           OFFICE OF THE SECRETARY,
                                             Washington, DC

                                                     March 29, 2018

The Honorable Lisa Murkowski,
Chairman, Subcommittee on Interior, Environment, and Related Agencies,
Committee on Appropriations,
U.S. Senate,
Washington, DC 20510.

    Dear Chairman Murkowski:

    This letter is in response to the Subcommittee's request to provide 
a report on the National Park Service's use of leasing authority for 
historic structures. Language contained in House Report 114-632 
accompanying the Department of the Interior, Environment and Related 
Agencies Appropriation Bill, 2017 (H.R. 5538) is included in the Joint 
Explanatory Statement that accompanied the Consolidated Appropriations 
Act, 2017. The language from House Report 114-632 is as follows:

        Leasing of Historic Buildings.--Leasing of historic park 
        buildings has proven to be an effective public-private 
        partnership that has brought private investment to the repair 
        and maintenance of historic park resources. In previous 
        Committee reports, the Committee has encouraged the Service to 
        make expanded use of leasing authority. The Committee commends 
        the Service for recent steps it has taken to increase the 
        utilization of this tool, including establishing a leasing 
        manager to oversee and expand the historic leasing program. The 
        Committee renews its previous request that directs the Service 
        to provide a report, within six months of enactment of this 
        Act, detailing its progress toward expanding use of this 
        authority. Included in this report should be (1) a list of 
        structures the Service considers high-priority candidates for 
        leasing, (2) a list of structures currently under a lease 
        arrangement, (3) an estimate of the number of leases that have 
        enabled private sector investments using the Service-
        administered historic tax credit, and (4) any statutory or 
        regulatory impediments that now inhibit the enhanced use of 
        leasing of historic structures.

    The National Park Service (NPS) has authority to lease historic and 
other buildings and associated property under the National Historic 
Preservation Act and the National Park Omnibus Management Act of 1998. 
The NPS continues to make progress toward increasing the number of 
public-private partnerships through leasing. In the last 18 months the 
NPS has executed a master residential lease at First State National 
Monument; a lease with Navajo Nation Hospitality Enterprises, a wholly 
owned subsidiary of the Navajo Nation, at Canyon De Chelly National 
Monument; and executed an Inter-Agency Agreement with the United States 
Forest Service to lease two buildings at Fort Vancouver National 
Historic Site.

    In addition, the NPS is currently preparing to enter into 
negotiations with a potential lessee for the Riis Beach Bathhouse at 
Gateway National Recreation Area; is working on an agreement with the 
Bureau of Indian Affairs to occupy one of the buildings at Fort 
Vancouver National Historic Site; and recently issued a request for 
proposal for the Maurice bathhouse at Hot Springs National Park. The 
leasing program staff is also continuing to develop formal training for 
NPS staff to expand capacity across the NPS to initiate and manage 
park-level leasing programs. As part of that effort, the NPS has 
integrated a leasing section into the annual Commercial Services 
Training for Superintendents curriculum.

House Report 114-632 requested that the following information be 
included as part of this report:

   A list of structures that the Service considers high-
            priority candidates for leasing

     See enclosed list. The NPS prioritizes eligible properties for 
            leasing based on knowledge that park staff have regarding 
            local market demand for facilities, along with direction 
            from the service-wide leasing program office. The enclosed 
            list reflects those properties for which parks and regions 
            are actively working on leasing. The list contains 
            properties under a range of situations, including those for 
            which the NPS expects to issue a Request for Proposal 
            within the next two years, those for which a Request for 
            Proposal received no responses, and those that were under 
            life tenancy and have recently transferred to NPS control.

   A list of structures currently under a lease arrangement

     See enclosed list, which includes properties reported by parks 
            through regional leasing and concession staff. This 
            information has been checked against the NPS facility 
            management database.

   An estimate of the number of leases that have enabled 
            private sector investments using the Service-administered 
            historic tax

     While the NPS does not include language in its leases that would 
            prevent a lessee from taking advantage of the historic 
            preservation tax credit, there are requirements for 
            obtaining historic preservation certification from the 
            National Park Service and the State Historic Preservation 
            Office, as well as Internal Revenue Service regulations 
            governing the tax credits for rehabilitation that must be 
            met before the tax credit can be utilized by the lessee.

     The NPS is currently aware of three lessees that have taken 
            advantage of the benefits offered by this program: Cavallo 
            Point Lodge at Fort Baker, the Argonaut Hotel in Golden 
            Gate National Recreation Area, and the Quapaw Bathhouse at 
            Hot Springs National Park. It is possible that other 
            lessees have used the historic tax program previously, but 
            NPS records do not cover a number of the early years of the 
            tax-credit program.
   Are there any statutory or regulatory impediments that now 
            inhibit the enhanced use of leasing of historic structures?

     The NPS has authority to enter into a lease with any ``. . . 
            person or government entity . . .'' (54 U.S.C. 
            Sec. 102102(a)). Other agencies, with some exceptions, 
            generally do not have such authority, which is instead 
            vested with the General Services Administration (GSA) (40 
            U.S.C. Sec. 585). Therefore, other federal agencies are 
            often reluctant to execute agreements with the NPS to 
            occupy facilities that are administered by the NPS without 
            going through the General Services Administration. So, 
            while the NPS is authorized to lease structures to any 
            governmental entity, other agencies do not have clear, 
            specific authority to enter into a lease with the NPS 
            without going through GSA. However, under the Service First 
            authority (43 U.S.C. Sec. 1703), the NPS can enter into 
            leases with other agencies within the Department of the 
            Interior and the Department of Agriculture, without 
            consultation of GSA.

     In general, market conditions and demand pose the greatest 
            challenge to expanding the current leasing program. 
            Investors are often more interested in purchasing outright 
            `fee title' property, rather than investing in the 
            rehabilitation of a property that is owned by, and 
            possession of which will eventually be returned to, the 
            federal government. Also, the lease opportunities available 
            within parks may not provide a viable business opportunity 
            given the higher costs associated with the restoration or 
            rehabilitation of the structures compared to the relatively 
            low rents available in local areas, many of which are rural 
            and sparsely populated. In more urban areas, there appears 
            to be a greater demand from the public to lease facilities 
            in parks for residential use, office space, or other 
            commercial activity.

     Additionally, NPS has limited resources available to conduct the 
            up-front planning necessary to determine fair market value 
            rent, and to develop the required Request for Proposal to 
            lease historic facilities. Without such work, the NPS 
            cannot accurately gauge the level of private sector 
            interest in its properties.

    The NPS greatly appreciates the Committee's support throughout the 
appropriations process and looks forward to collaborating to find 
creative ways to utilize public-private partnerships to help preserve 
and maintain historic assets for future generations to use and enjoy.

    A similar letter has been sent to the Honorable Tom Udall, Ranking 
Minority Member, Subcommittee on Interior, Environment, and Related 
Agencies, Committee on Appropriations, U.S. Senate; the Honorable Ken 
Calvert, Chairman, Subcommittee on Interior, Environment, and Related 
Agencies, Committee on Appropriations, House of Representatives; and 
the Honorable Betty McCollum, Ranking Minority Member, Subcommittee on 
Interior, Environment, and Related Agencies, Committee on 
Appropriations, House of Representatives.

            Sincerely,

                                      Olivia B. Ferriter,  
                                Deputy Assistant Secretary,
                     Budget, Finance, Performance, and Acquisition.

                                 ______
                                 

Hot Springs: A wonderful story to tell

by Gary Troutman

Guest columnist

Hot Springs Sentinel Record

September 16, 2018

Locals and tourists alike know the heart and soul of Hot Springs is 
Bathhouse Row. Looking down Central Avenue today, the heart of Hot 
Springs beats strong. But as many know, this has not always been the 
case.

As generations passed, use of the bath houses dwindled and the once-
majestic properties were forced to close. Gone were the days of the 
rich and famous, the days of the sick seeking healing in Hot Springs' 
thermal waters. Bathhouse Row had gone from a hub of activity to a line 
of boarded up windows, sucking jobs and tourism in Hot Springs down the 
drain.

What Bathhouse Row needed was a new vision. The problem, however, was 
twofold. For one, when the Quapaw, Superior and the others closed, they 
became property of the National Park Service. The federal government 
simply lacked the authority or the dollars to radically change the 
direction of the deterioration. Compounding that problem as the 
condition of the bath houses worsened, the cost to restore them 
continued to rise. Without private investment and public support, the 
situation looked dire for both Bathhouse Row and Hot Springs as a 
whole.

Thus, an innovative idea was hatched--instead of letting the buildings 
fall into further disrepair, the Park Service decided to lease the bath 
houses to private businesses. Entrepreneurial owners were handed the 
keys to these historic structures, under the condition that they 
restore the bath houses to their former glory. It took several years to 
see the plans come to life, but the gamble worked. Businesses from a 
brewery to a boutique hotel currently under construction occupy these 
formerly empty structures, and downtown is now thriving.

The result of Hot Springs National Park partnering with private 
business resulted in investment and growth. First, it has allowed the 
park to reduce its deferred maintenance backlog. With private business 
restoring the bath houses, it has saved the federal government and the 
American taxpayer millions of dollars in building repairs. Hot Springs 
National Park still has a deferred maintenance backlog of more than $12 
million, but it would be much higher without the leasing program that 
has brought these buildings back to life.

Beyond addressing the park's maintenance backlog, these new businesses 
occupy prime real estate downtown and have become active members in Hot 
Springs business community. The owners of these businesses are leaders, 
investing their hard-earned money in a city and a national park many 
had written off for dead.

The fire that destroyed the Majestic Hotel in 2014 created much doubt 
about downtown's ability to survive. But the work that had already gone 
into redevelopment of Bathhouse Row in the years before and continued 
efforts by the Greater Hot Springs Chamber, Metro Partnership, Hot 
Springs National Park Rotary Club and downtown business owners allowed 
downtown to thrive with more than 100 new businesses opening since 
February 2014 and more than $80 million invested downtown. Tourism has 
increased, too, with 1,561,616 travelers visiting Hot Springs National 
Park in 2017 compared with 1,325,719 in 2013, an increase of nearly 18 
percent, or 235,897 people, in just five short years.

Investment in the historic bath houses along Central Avenue is an 
example which can be followed by national parks throughout the country. 
Whether an urban park like Hot Springs or a park in a more remote 
locale, partnering with private industry can bring new life to these 
parks and the communities which surround them.

That is why I am excited for the House Committee on Natural Resources 
to visit Hot Springs on Monday (Sept. 17). Our city and its national 
park have a wonderful story to tell and can be an example for the 
country. Congressman Bruce Westerman, a Hot Springs native and a member 
of the Natural Resources Committee, knows this. His efforts to bring a 
field hearing to the city are appreciated, as we share our story with 
America and inspire investment--both public and private--in our 
country's national parks.

                                  ***

    Gary Troutman is the president and CEO of the Greater Hot Springs 
Chamber of Commerce and Metro Partnership. He previously served as vice 
president of First Security Bank in Hot Springs and general manager of 
The Sentinel-Record.

                                 ______
                                 
                                                 September 15, 2018

    Congressman Westerman,

    My name is Rose Schweikhart, and I am the sole owner and decision 
maker of my company, Superior Bathhouse Brewery. I hold a 55 year lease 
with the National Park Service to operate my business inside Hot 
Springs National Park. I am very proud to be the only brewery in a 
National Park and the only brewery in the world to make beer (and root 
beer!) with thermal spring water.
    I have been asked to write about my experience with the National 
Park's leasing program. I want to take this opportunity to briefly and 
succinctly share both pros and cons to the process from my unique and 
relevant perspective as a park partner.
    First the positives. I have been in business for 5 years. The 
business was profitable almost immediately with sustained growth year 
after year. In year 3, I was ahead of the 10-year projections in the 
business plan. I attribute this success to the visibility of my 
historic location for which I am very thankful. While the two year 
negotiation process was somewhat arduous, it was worth it in the end. I 
was able to take a simple business idea (brew beer commercially with 
Hot Springs' famous thermal water) and make it happen. The fact that a 
pathway existed to propose an idea, negotiate a contract, and turn it 
into reality is a shining example of functional public-private 
partnership and I am thankful for the officials that made that pathway 
possible.
    I believe my relationship with the National Park Service is truly a 
win-win situation for both parties. I get to operate a profitable 
business with a great story in exchange for assuming the financial 
burden of a large historic building. I estimate that I am saving the 
Park about $100,000-$150,000 per year between utility bills, 
maintenance and repair, flood and building insurance, and of course my 
monthly rent.
    Of course as with any complex business relationship, there have 
been difficulties. I wish to take this opportunity to highlight a few 
of those difficulties, with the intention of creating an open dialogue 
with the goal of improving the process for all parties involved. I 
would like to address two contractual obligations from my lease which 
could be improved from a small business perspective.
    My lease requires me to maintain a maintenance fund of 2% of my 
gross sales. ``The funds in the Maintenance Reserve Account shall be 
used to carry out, on a project basis, repair and maintenance needs of 
the Premises that are non-recurring within a seven-year time frame.'' I 
am 100% behind the purpose of the Maintenance fund and I diligently 
comply with this requirement. In 2017, the building's main HVAC system 
installed by the Park in 2007 needed a total replacement to the tune of 
$45,000 across two projects and I was thankful to have the money 
available for that project. The negative to this arrangement from a 
business perspective is the impact of the maintenance reserve on my 
cash-flow. As a small business, I would rather use 2% of my gross 
receipts building my business. I could hire additional employees, 
purchase inventory or equipment, or pay down debt. My proposal to the 
National Park Service is that I be allowed to maintain a maintenance 
fund in the form of a revolving line of credit from a local bank. What 
is the difference to the National Park Service if I have $45,000 
sitting in a bank account or $45,000 in available credit? I would be 
happy to pay any interest incurred in drawing upon that line of credit 
in exchange for having additional cash available for growing my 
business on a day to day basis.
    The second issue I would like to mention is the insurance 
requirement placed upon me by the lease which is, in my opinion, 
excessive. I am required to carry property insurance in the amount of 
``the full insurable value of the Premises. All such policies shall 
specify that proceeds shall be payable whether or not any damaged or 
destroyed improvements are actually rebuilt.'' As you can imagine, a 
9,000 sq foot historic brick, plaster, and marble building is literally 
priceless. In the event of a building loss, the lease gives the 
National Park Service the authority to terminate the lease and collect 
the insurance proceeds as `additional rent' or 2) require me to rebuild 
the premises. While we can all agree that the loss of the historic 
Superior Bathhouse would be a tragedy, can we also agree that it is 
irreplaceable? Modern materials, construction methods, and building 
codes would make it impossible to recreate this historic structure ``to 
the condition that existed prior to the damage or destruction;'' If 
such tragedy occurred, it is unlikely that the Park Service would want 
a modern structure built on Bathhouse Row. In my first years of 
business that coverage cost me an astronomical $13,500 per year! It has 
subsequently dropped as I was able to switch to an insurer that handles 
business who have been open for 5 or more years but it is still almost 
$5,000/year. Does the committee find it reasonable that I should be 
required to carry such coverage for 55 years if the lessor has the sole 
authority to terminate the lease, and collect the proceeds of such 
policy when it is unlikely that the building would ever be rebuilt? My 
suggestion is that we find a reasonable ceiling for that property 
insurance that could be used in case of a partial loss but that full 
coverage is against the interests of the park partner's small business. 
Perhaps that ceiling could be the cost of my rent for the remainder of 
the lease contract.
    If the National Park Service would consider changes to these 
policies, it would make long term leases more attractive to future 
tenants who may see these expenses as deal breakers. I hope that if any 
of my suggestions are considered , that the National Park Service would 
consider making these modifications in good faith to my existing lease 
so that my company may benefit from them in the future.

    Thank you for the opportunity to submit my written testimony.

            Sincerely,

                                          Rose Schweikhart,
                             Owner of Superior Bathhouse Brewery,  
                               Hot Springs National Park, Arkansas.
```