The John F. Kennedy Center for the Performing Arts

Testimony was given concerning: (1) the John F. Kennedy Center for the Performing Arts' revenue bond indebtedness to the Federal Government and the accrued interest obligation stemming from these bonds; (2) the appropriate cost sharing of operating costs between the Center and the National Park Service; and (3) the responsibility for long-term structural repairs. In 1968, revenue bonds were issued to help finance the construction of the Center's parking facilities. These bonds are held by Treasury, and the principal and annual interest were to be paid with revenues from parking operations. However, no interest payments have been made on the bonds since 1968, and no provisions have been made for repaying the principal. Instead, parking revenues have been used for operating expenses and the repayment of other loans. An interagency working group as proposed: (1) the establishment of a sinking fund to retire the bonds; or (2) the waiver of the interest obligation and the removal of the requirement for future interest on the revenue bonds, which would require a policy decision by Congress. GAO has prepared estimates of alternative payment schedules for Congress. Although the formula presently used to allocate operating costs between the Center and the National Park Service does not reflect current estimates of the Center's usage, changing the cost sharing ratio could decrease the Center's ability to meet its financial obligations, including the retirement of bond indebtedness and maintenance costs. Finally, GAO found that the Center has not set aside sufficient reserves to cover the costs of long-term structural repairs. Unless Center officials establish adequate reserves, Congress will be petitioned to supply the funds.