Tag Archives: property

Aug 27 2014

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

Mar 6 2013

Does Burning Man Need a New Home?

by Whatsblem the Pro

Whither goest thou, Man, in thy arty car in the night?

The struggle to allocate dollars for education and road projects has been heated between Northern and Southern Nevada in this session of the State Senate, and now Burning Man has come to the government’s attention as a ripe plum to contend over.

With over 60,000 participants annually and a ticket revenue of some 30 million dollars, “That Thing in the Desert” has become a sought-after cash cow for local and federal agencies.

Nevada State Senator David Parks

Nevada State Senator David Parks

State Senator David Parks, a Democrat representing the 7th District (which includes Las Vegas), made strong overtures toward the Org’s lobbyists after a committee meeting in which a presentation was given on the economic and cultural boost that Burning Man brings to Nevada.

“We have a lot of dry lake beds in Southern Nevada,” purred Parks seductively to the the lobbyists. “Have you ever contemplated, perhaps. . . off I-15, we’ve got the Ivanpah Lakebed.”

“It is definitely bringing people into our state,” said Black Rock Solar representative and lobbyist Tom Clark in reference to Burning Man. Clark also mentioned that a Regional event was at one time held in the desert outside of Las Vegas, but had to be canceled when the federal government began demanding permit fees for the event.

Ivanpah Dry Lake Bed

Ivanpah Dry Lake Bed

It remains to be seen how the Org intends to handle the problems presented by keeping the event in the Black Rock Desert. The cost of running the event has risen significantly as more and more city, county, state, and federal agencies have come to the table with their hands out, demanding larger and larger slices of ticket revenue.

We’ve also got a law enforcement problem on the playa; the number of on-duty officers from various agencies tripled on the playa between 2011 and 2012. Radical expression being arguably the most important of the ten principles, this is a situation that cannot be ignored for long.

Clearly, Burning Man needs to move. . . but where? Relocating to the Ivanpah Lakebed could be just the thing, or it could be going from the frying pan to the fire. There has been talk of purchasing Fly Ranch in the Hualapai Valley, but like Ivanpah, there are some serious challenges with that plan, not least of which are environmental. Private property, however, does seem to be in our future, given the decreased fees and increased freedom that holding the event on private property would bring.

But when?

Fly Ranch, Hulapei Valley - Photo by QPY

Fly Ranch, Hulapei Valley – Photo by QPY

Moving Burning Man would be good for all of us in many ways. Given the inroads made on our freedom to express ourselves and have a good time by the rapidly-growing law enforcement presence on the playa, you’d think this would be the Org’s top priority. . . but do they even care? They don’t seem to mind wasting literally years worth of our collective time with half-baked ticketing schemes, even though that problem could be (and should have already been) solved easily. Does the Org feel the pressure to move, or is that just our problem? They make their money either way; tickets will be in demand either way. . . but if we stay on BLM land, the rank-and-file burners will continue to find it increasingly difficult to find true freedom at Burning Man.

Fly Geyser - Photo by Jawsh

Fly Geyser – Photo by Jawsh

Relocation would also, I think, tend to invigorate our culture. People are highly prone to regarding things as sacred once they become traditional, and this is a corrosive influence. It starts with angry shushing at Temple Burn, and ends with Burning Man transmogrified into the Rainbow Gathering. Moving the event to new digs would help, for a while, to break that unwanted bond of holiness some of us seem so prone to forming with alkaline dust.

What would the downside of moving the Man be? The main reason we are tolerated at all by harrumphing officialdom is because we are a cash cow. If we move to private property and sidestep all those fees and permits, how will that affect, say, the way that police and highway patrol units treat us on our way in, or during Exodus? Local municipalities will continue to love us and our influx of dollars no matter where we go, but moving could have a chilling effect on the way State and federal authorities view burners. Would we rather be interfered with and potentially harassed on the highway coming in and out of Burning Man, or on the streets of Black Rock City itself? That may be the choice that must be made.