How Much For That Ranch In The Desert?

The Black Rock Beacon published a story about the Burning Man Founders’ cash out. The $10 million figure they use seems very much on the low side, unless it is per director. See The Great BMOrg Cash Out $28-45 million post – so far, no-one has attempted to dispute the calculations from our guest author A Balanced Perspective. These calculations did not include the estimated $2.5 million per year in royalties paid to Decommodification LLC, a private company owned by the founders which in 2017 will probably be sold back to themselves (ie., another entity in their complex web of for-profit and tax-free companies). This transaction is by no means a done deal, since the directors still have the power to vote against the transfer.

The cash out numbers we have estimated do not include any rent the organization pays for the use of their Nevada work ranch and other properties. This year, just before the announcement that Burning Man had finally “completed” their transition to a non-profit, the ownership of the Gerlach ranch was transferred to yet another private company in their complex, non-transparent corporate web.

Santafemous did some investigation of this property:

Beginning in 1999, Burning Man had a 10 year lease on an 80 acre parcel they called The Work Ranch (80 Jackson Way) and, in 2001,they purchased 200 acres next door (88 Jackson Way) called Black Rock Station.

“…this property originally served as a landing zone for all the stuff left on the playa after every event..the years of stuff now amount to an unorganized tract of land. We will completely remove and relocate operations to Black Rock Station…because Washoe County Community Development isn’t happy with some conditions on the property.”

…Some of the…properties are, “Black Rock Station (a fully functioning work ranch), the Gerlach Office, “Helen’s House”, the Black Rock Social Club and the Gerlach Showers. From these properties, Burning Man uses these properties for administrative operations, supplies storage, and staff support facilities.”

work ranch burning_man2

aerial view burning_man_80_acres

In a 2008 permit application, the ranch at 88 Jackson Lane was owned by Black Rock City, LLC

On January 9 2014, the title was transferred from Black Rock City LLC to Black Rock City Properties LLC for $0. On March 3, 2014, BMOrg announced the completion of their non-profit transition.

Black Rock City Properties LLC was formed at the end of 2013, presumably for the sole purpose of this real estate transfer. It has the same address as Burning Man’s HQ. Black Rock City LLC is listed as the managing member. Will Roger is the only listed director. This is different from Gerlach Holdings LLC, which lists all 6 founders as officers  – does anyone know what that company does?

So just before they announced they’d fully transitioned to a non-profit (which later turned out to be not true), they shifted the real estate holdings out of one company in their group, and into another. Why?

The government valuation information on the work ranch is:

2013/2014 Fair Value

$582,177 taxable

$203,762 assessed

According to a consultant from Piscataway Homes, Gerlach real estate is only going one way: down. Dramatically so.

2014/2015 Fair Value:

$487,244 taxable

$170,535 assessed

They purchased the property in 2001 for $70,000. In 2013 the taxable improvement value was $550,177.

Does Black Rock City LLC pay rent to Black Rock City Properties LLC? Although there is no direct evidence either for or against that, I think it is a reasonable assumption. The IRS Form 990 filings from the non-profits show that both Black Rock Arts Foundation and the Burning Man Project pay rent. Since both organizations are housed at BMHQ, this establishes the precedent that BMOrg is cross-charging rent (and other expenses) across its various entities. Occupancy was $5500 in 2012 for BMP, and $12,900 for BRAF. Office Expenses were $9,497 and $26,390 respectively.

The rent charges skyrocketed (62%) at the same time that BMOrg announced their transition plan, 2011. They’ve been growing dramatically every year since.

Rent (from Afterburn reports):

2013    $732,900

2012    $615,944

2011    $444,000

2010    $274,000

2009    $167,000

2008    $236,000

2007    $281,000

In 2013, Burning Man moved its headquarters from 3 floors of a $17 million building in Market Street, to a building in the Mission. Here are the details on that building from LoopNet:

660 alabama

The 2 lower floors are 11,555 square feet each; level 4 is 15,000 square feet. Burning Man’s headquarters address is Level 4, 660 Alabama Street.

Burning Man took up 3 floors in their Market Street offices. The floors there are 4500 square feet each.

Consolidating the work force onto a single floor that is slightly larger seems to make sense. The top floor at 660 Alabama has high ceilings, as you can see in the photos here. There are stairs in the offices, but these seem to go to a mezzanine, rather than to one of the lower floors.

bmhq stairs

bmhq mezzanine

This page from 2010 lists the rent for the upper 3 floors of the building at $65,100 per month.

Assuming the lower floors are priced less than the penthouse, a reasonable estimate for the rent is half the total: $32,550 per month.

Rents in San Francisco have been steadily increasing over the last few years, so let’s factor in 10% growth per year. This brings us to $43,000 per month by 2013, or $520,000 per year.

From the 2013 Afterburn report, total rent of premises was $732,900.

So my estimate is about $200,000 per year goes to rent the Nevada properties. If this ends up in the pockets of the founders, then this is another $1.5 million or so over their 7-year cashout. Presumably this is a revenue stream that will continue as long as the event is held on the Playa.

If the money doesn’t go to the founders, then why would they transfer the real estate holdings out of Black Rock City LLC, before transferring Black Rock City, LLC to the Burning Man Project? If the properties needed to be transferred at all, why not transfer them directly to the Burning Man Project? Why form yet another private, secret corporation?

If all the rent simply goes to the HQ building, then that is more than $60,000 per month. The company claims 30 full time employees and contractors, so they would be paying $2,000 per person, per month. Even in rent-hungry San Francisco, in the hipster Mission District, that seems unfathomably high.

Another possibility is that Burning Man rented the whole building, then sublet the other floors. Revenue data is not shown in the Afterburn reports, all we have to go on is Maid Marian’s claim of $30 million per year. This scenario still does not explain the last minute transfer of real estate holdings to another private company.

As always, if anyone else has other data, or a different take on the math, please share.

ranch burning_man4

5 comments on “How Much For That Ranch In The Desert?

  1. The tone of this post feels a bit conspiratorial (i.e. “…yet another private company in their complex, non-transparent corporate web.”). While burning man’s origins are from a culture that resisted business as usual, and the event is still largely enabled through unpaid labor, it has been for many years an explicitly for-profit venture. By extension those at the center of ownership, will naturally maximize their profit in whatever way they can… which includes attempting to maintain some notion of an authentic burner culture, to the extent that it is their only commodity. Like many who have gone for years, I am disheartened by the corporate develops, but the notion that burning man was ever truly outside the “default world,” is simply nonsense. It can only come as a shock to those that attend the event, and are naive enough to conflate the power of their personal experiences with some kind of organizational/governing structure that is progressive or new. The dominate political ideology of burning man is largely libertarian, concealed under a heavy layer of a-political escapists sentiment, which is fine, because it’s only a festival, a carnival, whose magic is dependent upon its predefined constraints. Some of the biggest moments of consumption in my year, have been in preparation for this supposedly non-consumerist event. Part of the burning man mythology is the archetypal narrative of a communal project becoming the very thing that it’s resisting. Sad as it may seem to some, we simply are what we are… a pre-bought economy of excess, with numerous parties profiting in the process. Do you disagree?

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