U.S. GOVERNMENT PUBLISHING OFFICE

31–588 PDF WASHINGTON : 2018

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 

( 

Available via the World Wide Web: http://www.govinfo.gov 

or 

Committee address: http://naturalresources.house.gov 

(II) 

COMMITTEE ON NATURAL RESOURCES 

ROB BISHOP, UT, Chairman 

RAU ́ L M. GRIJALVA, AZ, Ranking Democratic Member 

Don Young, AK 

Chairman Emeritus 

Louie Gohmert, TX 

Vice Chairman 

Doug Lamborn, CO 

Robert J. Wittman, VA 

Tom McClintock, CA 

Stevan Pearce, NM 

Glenn Thompson, PA 

Paul A. Gosar, AZ 

Rau ́l R. Labrador, ID 

Scott R. Tipton, CO 

Doug LaMalfa, CA 

Jeff Denham, CA 

Paul Cook, CA 

Bruce Westerman, AR 

Garret Graves, LA 

Jody B. Hice, GA 

Aumua Amata Coleman Radewagen, AS 

Daniel Webster, FL 

Jack Bergman, MI 

Liz Cheney, WY 

Mike Johnson, LA 

Jenniffer Gonza ́lez-Colo ́n, PR 

Greg Gianforte, MT 

John R. Curtis, UT 

Grace F. Napolitano, CA 

Madeleine Z. Bordallo, GU 

Jim Costa, CA 

Gregorio Kilili Camacho Sablan, CNMI 

Niki Tsongas, MA 

Jared Huffman, CA 

Vice Ranking Member 

Alan S. Lowenthal, CA 

Donald S. Beyer, Jr., VA 

Ruben Gallego, AZ 

Colleen Hanabusa, HI 

Nanette Diaz Barraga ́n, CA 

Darren Soto, FL 

A. Donald McEachin, VA 

Anthony G. Brown, MD 

Wm. Lacy Clay, MO 

Jimmy Gomez, CA 

Nydia M. Vela ́zquez, NY 

Cody Stewart, Chief of Staff 

Lisa Pittman, Chief Counsel 

David Watkins, Democratic Staff Director 

(III) 

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 

(1) 

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. 

2 

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 

3 

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 

4 

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:] 

5 

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 

6 

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 

7 

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 

8 

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 

9 

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 

10 

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. 

11 

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 

12 

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 publicprivate 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 

13 

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 systemwide 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. 

14 

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. § 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? 

15 

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. 

16 

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 

17 

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. 

18 

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 

19 

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 

20 

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 

21 

1 54 U.S.C. §§ 312102(a), 320101. 

2S. Rep. No. 1110, 81st Cong., 1st Sess. 4 (1949). 

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-theground 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. 

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. 

22 

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. 

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, Ce ́sar E. Cha ́vez 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 

23 

4See 54 U.S.C., section 102102 and section 306121. 

5 House Report 112–51, H.R. 2584. 

6FY16, H. Report 114–170, H.R. 2822. 

7FY17, H. Report 114–632, H.R. 

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. 

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: 

The Committee encourages the Park Service to pursue the use of costeffective, 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

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

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 highpriority 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

24 

8The letter is date stamped ‘‘Jan 18 2016’’ but we believe it is a 2017 letter. 

9We 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). 

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

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 

25 

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 

26 

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 

27 

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 

28 

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. 

29 

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, 

30 

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 yearround. 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. 

31 

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. 

32 

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 

33 

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. 

34 

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 onestop 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. 

35 

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 

36 

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 

37 

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 

38 

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. 

39 

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 cosponsoring 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 

40 

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 

41 

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? 

42 

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 

43 

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 

44 

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 

45 

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-bycase 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. 

46 

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 OpEd by Gary Troutman from here in Hot Springs, without objection. 

I will submit all those for the record. 

47 

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 commonsense, 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. 

48 

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. 

49 

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 

50 

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. 

51 

• 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. § 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. § 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. § 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. 

52 

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. 

53 

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 

54 

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. 

Æ