By Meghan Hall
When the Presidio Trust was established in the mid-1990s, it was labeled as an unprecedented experiment, one that would oversee the nation’s first—and to date only—fully independent national park. Over the past several decades The Presidio has operated on its own, without any government funding or federal assistance, relying on its own income in order to stay afloat. However, with so much of its revenue generated by hospitality and retail-related endeavors, the pandemic and shelter-in-place orders have hit The Presidio’s bottom line at a time when easily accessible public open spaces have become paramount.
“Like many businesses and organizations in the city as well as around the country, we have been hit really very hard by the economic fallout from the coronavirus pandemic,” explained Presidio Trust’s Chief Executive Officer Jean Fraser at a recent Board meeting. “We’ve had to make, and we will continue to have to make, some very difficult choices.”
The U.S. Army formally lowered its flag at the longstanding base in 1994, after which The Presidio was incorporated into the National Park Service. Through the implementation of The Trust Act, 80 percent of the Presidio was granted to the Trust and sustained without any direct annual taxpayer support. By law, failure to become fully self-sufficient would result in selling the Presidio as excess federal property.
However, by being independent, The Presidio has the flexibility to use its revenue to invest in programs, renovations and expansion projects. Success, notes the Trust, is possible—since becoming entirely financially independent in 2013, the Trust has run a clean audit for the past seven years, relying only on revenue earned, grants and donations. By the end of the prior fiscal year, The Trust’s net income came in at $8 million.
According to Fraser, the Trust has experienced a huge reduction in revenue as The Presidio closed its inn, lodge, golf course and restaurants. The Trust plans on spending $25 million less in operations in fiscal year 2021 than it had planned prior to the advent of the pandemic. In the coming year overall, The Presidio will operate at a $17 million loss, creating a “truly challenging” financial picture. As a result, The Presidio has had to lay off 20 percent of its staff over the past several months, as well as vacate its original offices with the hope of leasing their former space to another company.
“It is a challenge of course in times like this, because there is no real backstop,” stated Josh Bagley, deputy chief business officer of real estate development with the Presidio Trust. “We do not receive appropriations, and we are not eligible or qualified for several assistance programs.”
As a result, The Presidio has had to lay off 20 percent of its staff over the past several months, as well as vacate its original offices with the hope of leasing their former space to another company. The Trust is taking additional steps to reinvent its business model, including looking for a master tenant to lease its venue space—for which it received 10 different proposals—as well as leasing buildings 201 and 215 out to food-related businesses.
The Trust is also working to prioritize deferred maintenance and utilities, while bringing other assets to market as quickly as possible in order to generate new revenue. Even prior to the pandemic, the cost to replace assets that were outdated on the site totaled $402 million, according to a 2019 performance and accountability report released by the Trust.
Even with the challenges that lie ahead, the Trust is optimistic: The Presidio recently received a treasury loan to help cover some of the original losses. Additionally, the Trust and National Parks Conservancy raised $98 million for its Tunnel Tops project, which is expected to be completed in 2021 and attract at least one million visitors in its first year.
While the next year may remain difficult, the Trust is optimistic that things will turn around for the 2022 fiscal year, and its mission to keep The Presidio open and accessible to the public remains paramount.
“One of the most important things from our perspective is that The Presidio is a forever place,” said Bagley. “It was established by Congress to be a model that is supported as a public place—forever. We feel pretty good that that will be the case. I think it is [about] what are the tough decisions we will continue to make in order to ensure the Presidio is a forever place and viable.”