WITNESSETH That whereas, the Secretary authorized the Concessioner, under the terms of Contract No. (hereinafter referred to as the "Concession Contract") to provide accommodations, facilities, and services for the public within (Name of area); and Whereas, the Concessioner has applied for a loan from SBA in the amount of $--(hereinafter sometimes referred to as the "Loan"), and in making the Loan SBA desires that its rights and interests shall be protected with respect thereto in the event of default by Concessioner in the payments of interest or principal on the note evidencing the Loan, or default in respect of any agreement or covenant executed in connection with or pertaining to the Loan; and Whereas, the Secretary consents to the making of the Loan by SBA to the Concessioner and to the protection of the rights and interests of SBA as hereinafter provided for. Now, therefore, pursuant to the authority contained in the Act of August 25, 1916 (39 Stat. 535; 16 U.S.C. 1-3), and other laws supplemental thereto and amendatory thereof, and the authority contained in the Act of July 18, 1958 (72 Stat. 384; 15 U.S.C. --------), the said parties, in consideration of the mutual promises herein expressed, covenant and agree to and with each other as follows: Sec. 1. Term of Agreement. This Agreement shall be for and during the term of (-) years* from 19----, except as it may be terminated as herein provided. Sec. 2. Loan. SBA agrees to make a loan to Concessioner in the principal amount of $_. upon the terms and conditions set forth in the Authorization approved by SBA on 195_, a conformed copy of said Authorization is attached hereto and made a part hereof and marked Exhibit "A". Sec. 3. Indebtedness. The term "Indebtedness" as used herein shall mean the disbursed and unpaid balance of the Loan, including principal, interest, and expenses, whether contingent, now due or hereafter to become due and whether heretofore contemporaneously herewith or hereafter contracted. Sec. 4. Assignment. The Concessioner agrees to sell, assign, transfer and convey to SBA, by assignment or other appropriate instrument, all of Concessioner's right, title and interest in and to "Concessioner's Improvements" as described in Section of the Concession Contract, including, but not limited to, all improvements made with the proceeds of the Loan, as collateral security for the Loan, and the Secretary agrees to approve such sale, assignment, transfer, and conveyance. In the event of foreclosure and sale by SBA, SBA will pay to Concessioner any and all moneys received by it in excess of the amount of the Indebtedness. Sec 5. National Park Service Lien. The Secretary agrees that the lien of the SBA shall be prior to the National Park Service lien on all assets of the Concessioner. Sec. 6. New Concessioner. In case of a default on account of the Loan by the Concessioner, SBA agrees to notify the Secretary of such default After consultation with SBA, the Secretary shall determine if a new concessioner should be obtained. In the event a new concessioner is obtained, the Concessioner agrees to supply any and all compensation received by it for the use, temporary or otherwise, of its property on account of the payments due and falling due on the note evidencing the Loan. Sec. 7. Assumption of Obligations by Successor Concessioner. If there should be a successor concessioner to a defaulting Concessioner, the Secretary will require, as a condition precedent to the granting of a permit or contract to operate the facilities, that such successor concessioner shall assume all of the obligations of the defaulting Concessioner with respect to the Indebtedness and all agreements and covenants executed in connection with or pertaining to the Loan. *This term shall be for the term of the Loan but in no event to extend beyond the termination date of the Concession Contract. Sec. 8. Sale of Possessory Interest. If it becomes necessary to sell a defaulting Concessioner's interest after arbitration as provided in the Concession Contract to reach an agreed selling price, SBA agrees that such arbitration shall be supervised by the Secretary and the matter settled without the intervention of SBA Sec. 9. Impairment of Concessioner's Rights. The Concessioner agrees that if its rights as contained in the Concession Contract, particularly those set out in Section entitled Concessioner's Improvements are impaired by the terms of this Agreement, the terms of this Agreement shall prevail. In witness whereof, the parties have hereunder subscribed their names and affixed their seals, this day of 19_. -9 Mr. HUNGATE. In the item here, "Standard language to be used where applicable in concession contracts," without objection will be made an exhibit. It is rather bulky, so it will be filed with the committee. (The document above-referred to will be found in the files of the committee.) Mr. HUNGATE. Do you sometimes get complaints about the method of letting the contracts? Mr. HARTZOG. Occasionally, yes. We had a controversy arising out of the award of the contract at Grand Canyon on the South Rim, for example. The contract was awarded to the existing concessioner, who under the Concessions Policy Act of 1965 had a preferential opportunity to negotiate a new contract. Mr. HUNGATE. The right of first refusal, and that sort of thing? Mr. HARTZOG. Right. He must meet all of our requirements. He just doesn't automatically get this. He has the obligation to meet the requirements that we have laid down. And if he does, then he has the preferential opportunity to contract. We got into a dispute with an organization that had submitted a proposal-and it was a good proposal, but it was such a grandiose scheme that it was nothing that we wanted developed on the South Rim of Grand Canyon. The existing concessioner was awarded the contract. But very, very rarely do these things crop up. Mr. HUNGATE. As I understand you, a man who was interested in this, if he would write your Department, he would then go on the mailing list, and he would be informed from time to time? Mr. HARTZOG. Yes, sir. One of our biggest problems is really to get the private segment to take these chances; that is our biggest prob lem. Mr. HUNGATE. You might say it is not a normal type of business, is it? Mr. HARTZOG. That is right. Mr. HUNGATE. Now, when they have one of these agreements or authorizations or contracts, and they do erect a structure on there, or improve an existing structure, make capital improvements, in which you say they have a possessory interest, what sort of removal titles do you have, and how does that work when you are doing it? Mr. HARTZOG. Well, we have defined this as a special concept of real property involving all incidents of fee ownership except naked legal title. And the only right that attaches to naked legal title is the veto power to remove the structure. In other words, we don't want the concessioner to be able to take down the building without the Secretary's agreement. So we reserve simply naked legal title. Mr. HUNGATE. If he is going to take down the building, he would have to get that agreement, and there would probably be some supervision over how he did it. Mr. HARTZOG. That is right. Mr. HUNGATE. And the possessory interest-suppose it is decided that he can't remove this particular building without messing things up-is he then compensated under a formula? Mr. HARTZOG. We have to then pay him, and the mechanism is established in that language for paying him. If, for example, we are going to require him to remove that building and replace it with another building, then we have to pay him the fair market value. If we are going to require him to move that building and we are going to terminate the service, then we pay him for the unrecovered depreciated book value. Mr. HUNGATE. You said that the largest 17 had gross receipts in excess of a million dollars. Where was the largest one? Mr. HARTZOG. The largest one is Yosemite, with $13,600,000, followed by Fred Harvey Co. at Rainier, Sequoia, and Grand Canyon, with $11,600,000; Yellowstone Park Co. at Yellowstone, and Everglades, with $9,700,000; and then, going on down-and I will be happy to give you this breakdown if you would like. Mr. HUNGATE. Without objection, that will be made a part of the record at this point. Thank you. (The material above-referred to follows:) UNITED STATES DEPARTMENT OF THE INTERIOR, DIVISION OF CONCESSIONS MANAGEMENT-Highlights of 1970 Net profits in 1970 amounted to $3,152,769 for about a 3.53 percent return on gross receipts in comparison to a 3.77 percent return for 1969. Total gross receipts reported by concessioners for 1970 amounted to $89,239,648 up $6,714,357 over 1969 for a gain of about 8.14 percent. Public use of the areas providing concessions services totaled 117,304,400 visitors for an increase of 5,670,700 or a gain of about 5.08 percent. A comparative summary by Region follows: In analyzing the 1970 sales volume of the 175 concessioners' operations, the following was noted: 120 ahead of 1969, 33 down from 1969, 12 even (variance less than $1,000), 10 new concessioners. The following tabulation has been revised to combine the concessions operations under common ownership thereby reducing to 17 the number of concessioners reporting gross receipts (including subconcessioners gross receipts where applicable) in excess of $1,000,000. These 17 concessioners accounted for about 73.64 percent of the business reported for the year. 75-295 O - 72 - 4 |