Why is a national park sitting on $105 million for projects that are too secret to disclose?
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The Presidio Trust just published its annual report for 2006. This slick-looking document is distributed to the national park's George W. Bushappointed board of directors and to the purported shareholders of this quasi corporation, the American taxpayers.
If you just read the executive director's message, scan the pretty pictures, and glance at the numbers to make sure they're on the proper side of zero, then this unique endeavor to privatize a national park looks peachy. Revenue is coming in, operating expenses are being covered, projects are getting completed. The goal is to be self-sufficient by 2013 without any federal subsidy; the trust thinks it will meet that goal. Donald Green, a former economist for the Office of Management and Budget and SRI International and now a Sierra Club Presidio committee member, told us he agrees.
"The financial picture, from their point of view and mine, is good," Green said. "They're already financially viable."
But when the Guardian took a look at the balance sheets, we had a few troubling questions. The investments line in the assets category jumped out at us: it turns out the Presidio Trust has more than $105 million in the bank. Well, not quite in the bank that money's actually invested in federal securities. But it's still a huge pile of cash for a public agency to sit on. The National Park Foundation, another goverment agency chartered by Congress, that collects funding from philanthropists and private corporations to support national parks, had total assets of $81 million for 2005, $58 million of which is invested in marketable securites.
What is all that money for, where did it come from, and why isn't it being used? And if the trust has so much in the bank already, why did its leaders ask Congress for a $20 million loan for 2008 on top of $50 million the federal government has already loaned the trust?
The answers or rather, the lack of answers demonstrate exactly what's wrong with Presidio Trust operations.
According to a detail of the assets line item, the trust, which spends about $50 million a year running the park, has $103,031,000 in excess money invested in nonmarketable Treasury securities. About a third of that doesn't mature until 2029. Another two-thirds $69,787,000 has the slightly lower interest rate of 5.02 percent and will drop $2 million of interest into the kitty for 2006, leaving a balance of $105 million.
At the same time the trust is investing in the Treasury, it's also making interest payments. In 1999 the park borrowed $49,978,000 to jump-start renovations and get some money flowing. So far, the trust has only been paying off the interest on the loan, at 6.12 percent which translates to a hair less than $3 million per year.
Pause now to consider those numbers: making $2 million in interest, spending $3 million on interest payments. Huh.
According to Dana Polk, the trust's senior adviser for government and media relations, the $105 million is a combination of money granted by the Department of Defense for environmental remediation, unspent money from the 1999 loan, and money received from various sources and obligated toward various projects.
When we asked for more specifics on how much money came from where and how it's going to be spent, Polk said there was an itemized detail of that budget line but added, "That's not a public document."
In other words, the taxpayers don't get to know what's happening with their money.
"Often they don't want to even explain their own numbers," Green said, "which is pretty pathetic for a governmental organization."
What we do know is that when the Army turned over the base to the trust, the Department of Defense cut a $99 million check to pay for the toxic spillage left in 15 areas throughout the park. About half that money has been spent, and places such as Coyote Gulch, Sunset Scrub, and Thompson Reach are now reblossoming into the natural areas they once were.
But in the seven years since these projects began, unknown contaminants and cost overruns for the massive environmental remediation projects have bumped the total price tag from $100 million to $130 million.
A note in the annual report states that $23 million of the overrun is still unfunded and is expected to come from interest earned on investments, "of which $14.9 million has already been earned."
Those of you who are not utterly boggled by these numbers may extrapolate from an above paragraph that the trust is netting about $2 million a year in interest income. It's going to be a while before the agency has that $23 million to pay for the guys in the Hazmat suits.
Additionally, the report reads, "If cleanup costs for the enumerated sites exceed the $100 million threshold ... by $10 million, the Army must seek additional appropriated funds for the enumerated sites."
Polk confirmed the trust is pursuing additional funding from the Department of Defense and from insurance that is carried for the projects.
So why does the trust still need to earn $23 million in interest if it is asking the DOD for the money anyway?
The trust isn't a bank, so why does it need to sit on so much money rather than spend it on the various projects around the park, many of which are currently funded by tenants or philanthropists? Right now tenants who are leasing space have to pay for their own renovations.
What special projects is the money earmarked for?
There may be a perfectly sound explanation, but we've tried mightily to extract it from Presidio officials, and we are, frankly, baffled. Polk refused to answer our questions and when we pressed her, she said our coverage of the park is too critical. Then she hung up on us.
But $105 million is a lot of money; maybe Polk can explain it to you.
Her direct line at the Presidio Trust is (415) 561-2710. Good luck. *