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Norwalk’s Maritime Aquarium should pay up

Maritime Aquarium Feb 24 2013

The Maritime Aquarium was built with city of Norwalk funds.The lease was then rewritten; none of the money has been paid back, Finance Director Thomas Hamilton said.

By Diane C2:

“Things Norwalkers Really Need to Know”

NORWALK, Conn. – Exposing unpopular facts about Norwalk has its consequences, not the least of which are scathing personal attacks on anyone who dares to point out even the most minor of imperfections. Often, just asking questions can be seen as challenging the authority of the powers that be. Sure makes asking the tough questions, well, really tough.

And so I thought a long while about whether to submit this opinion piece, knowing that I’m going to broach a subject related to one of several “sacred cows” in Norwalk: the famous Maritime Aquarium and their infamous financial debt to this city.

Here are my questions to elected and appointed officials of Norwalk:

• How is it possible, even as they approach their 25th anniversary, that the Maritime Aquarium still has more than 25 years of unpaid debt, totaling $35 million, to the City of Norwalk?

• How can our city in good conscience “fire sale” residential properties for past due property taxes of less than $10,000 and yet ignore the unpaid loan of the Maritime Aquarium?

• Which former and current Common Council members and mayors now serve or have ever served on the Maritime Authority or as Trustee? And why haven’t they coordinated the repayment of the $35 million debt?

• Finance folks at City Hall confirmed that the Aquarium does not pay its debt because the contract was restructured to allow them to pay only after they have excess revenues. Problem is their business strategy so far ensures that they never have any net excess revenues. Why did our elected officials allow this happen?

• Given that the contract was renegotiated in favor of the aquarium, why can’t it be renegotiated again, right now, in the favor of Norwalk taxpayers, so that the debt repayment is a top-line budget item, and not net excess revenues?

• The minutes of the Maritime Authority’s June 2012 meeting indicate annual revenues in excess of $10 million. Ten million dollars. If their expenses can include a director’s salary of more than $200,000 annually, and total salaries plus fringe that make up 43 percent of their budget (also on their minutes), then don’t you agree they can afford some taxpayer payback?

• When has a consultant, this city, or state tourism officials ever conducted an audit to confirm the highly touted, much anticipated and oft-quoted “millions” in revenue that the Aquarium reportedly generates for the city and state? As for local revenue, you can watch the stream of “destination” visitors for yourselves – they visit only the aquarium, where they can spend their tourism dollars in one spot for entertainment, dining and souvenirs. If someone can prove they are generating money for local businesses or the city, please do so.

Yes, these are the tough and unpopular questions. And yes the Maritime Aquarium is a wonderful family-friendly and educational gem in Fairfield County. However, no matter how worthy the cause or the endeavor, our elected and appointed officials simply cannot continue to execute contracts in good faith with the expectation of repayment in a timely manner and then choose to ignore the 800-pound shark in the room. Think of the capital improvements $35 million can buy. And think teachers and cops. Think money to update our technology to streamline processes and save money. Think money for playgrounds. Or think about my personal favorite – lower tax increases.

In their June 2012 minutes, the Maritime Authority reported “Annual operating revenue of $10,928,000…and operating expenses of $10,928,000…”. They spend or reserve what they bring in, and pay all their bills apparently, except ours. As someone more eloquent than I recently said, “Not-for-profit is a tax status, not a business model.” The authority should authorize expenditures for only what the aquarium absolutely needs, including their debt to Norwalk.

Perhaps getting paid back is a pipe dream to some but I think taxpayers can hope for two things at this point: That no one in this or any future administration considers forgiving the debt of the Maritime Authority and that some fiscally-responsible officials will restructure the Maritime debt agreement to guarantee timely and full repayment of their $35 million indebtedness to us taxpayers.

20 comments

jlightfield February 26, 2013 at 3:47 pm

The Maritime Aquarium is a wonderful asset to the City of Norwalk and worth every penny of investment City leaders have made over the years. Yes, the loan terms favor the Aquarium. But in reality the City should have granted the Aquarium the investment instead of perpetuating confusion over whether a non-profit organization should “borrow” from the city.

The Maritime Aquarium represents one of many cultural institutions that attract tourists and visitors from nearby towns who do in fact spend money in Norwalk and Norwalk’s many businesses. There have been studies in Norwalk about the effect of investment in cultural attractions, and the result was that for every dollar spent in supporting public cultural attractions, six get circulated back in the city.
The Norwalk Arts Commission paid for the study as part of development work undertaken to build the capacity of the City to advocate, to educate and to promote our cultural assets. This work is vital and the difference between successfully obtaining federal and state support in the form of grants and professional assistance.

I am tired of watching our tax dollars go to towns around the rest of the state instead of being returned back to Norwalk.

Suzanne February 26, 2013 at 6:30 pm

I guess this means that if you are popular enough with the right people in Norwalk, you don’t have to pay your bills. Pity all taxpayers aren’t considered as having such winning personalities as the Aquarium (oh, and the golf course.)

Original BARIN February 26, 2013 at 9:59 pm

Start the contract renegotiation now, 35 million! Those that voted for this should reveal themselves, just in case they want to be, or currently are an elected or appointed official.
Can you name names Diane?

Diane C2 February 26, 2013 at 11:09 pm

These ones who voted for the original bond debt did so over 25 years ago, but members from every council since has sat as appointees on the Maritime Authority.
Current members who are on this Council are:
Anna Duleep, John Igneri, and David Watts + Mayor sits on authority as well.
I can look up the past members as well.
If Nancy permits, I’ll post a second part to the story that speaks to the finances of the Aquarium and the debt status of the city related to the Aquarium.

SB February 27, 2013 at 11:49 am

Diane,
You are so right about this and your timing is excellent. If the state goes through with cutting the Tourism budget, the Acquarium will lose more funds and come crying to the city.
I remember when this all started with the taxpayers promised that we would not have to pay any of the original $20M in bonds to cover the project. Then it had cost overruns and we were left holding the bag. It is well past time for the Acquarium to stando n its own and pay us back, howevwer long it takes.

Diane C2 February 27, 2013 at 2:23 pm

Thanks SB, and I want to state again for anyone who missed it – the Aquarium is a wonderful amenity in Norwalk. They do educational programs and provide much-needed family friendly entertainment.
It’s not that I don’t want them here – it’s that I don’t want to pay for them to be here.

Diane C2 February 27, 2013 at 2:29 pm

@Jlightfield: I still challenge you or anyone to produce the audited numbers of what, if any, revenue is created by Aquarium for City of Norwalk, or for local businesses (remember, aquarium is one-stop-shop destination).

While I’m thinking of it, how about the argument that places like the aquarium create much needed jobs: how many employees live locally and of that number, how many are full time with benefits? I think we need more full time with benefits jobs with real living wages and less part time, a sad result of all the retail. Like Lowe’s. But I digress…

jlightfield February 27, 2013 at 10:33 pm

Hi Diane, I think your request for audited numbers on the revenue generated from the Aquarium miss the point of how you conduct an economic impact study. So let’s start with, something easy. People who drive to Norwalk to go to the Aquarium typically will pay to park. The revenue goes to the city.

A percentage, if I recall from our study, 28% go to other places in Norwalk to eat or shop. Now, you can argue the methodology of the study since it is self reported numbers, however, these type of studies are done all the time, and there’s a general sense of whether Norwalk’s numbers are within the mean average of national studies, and I can say they are.

A job created in Norwalk whether the employee lives in Norwalk still benefits Norwalk. Employees who dine at Norwalk restaurants, buy goods in Norwalk stores and otherwise contribute to the local economy are in fact supporting Norwalk.

Diane C2 February 28, 2013 at 8:02 am

Jackie, i read all the economic impact studies. They are about as worthwhile as a traffic study in Norwalk….
Please note my repeated requests for an audited review….”what gets measured gets done” or at least analyzed in this case.
Busloads of kids are not likely to patronize local resaurants and retailers; I don’t think buses pay to park; there is no data I’ve seen that shows their employees either dine or shop here, or park here, for that matter.
Supporting local businesses is good for a thriving city, but we don,t get our share of sales tax revenue back from Hartford. And people buying lunch and a t-shirt are not pumping back cash to Norwalk taxpayers, and certainly not to tune of the $35 million loan to build the aquarium…which, if you add in interest, etc., is actually closer to having paid $50 million.
If your ratio of invested dollars to generated dollars were true (1:6), then Maritime Aquarium would have spurred over $300 million in spending elsewhere in the city…do you have any audits of where and when these funds were “circulated” back to our community?

SB February 28, 2013 at 1:08 pm

I agree with Diane that I’ve always liked the Acquarium but felt bilked by the “bait and switch” promise used by the city when it floated the bonds years ago. They have never repaid a penny and also have received
operational support from the city and that never gets discussed.

Betsarama February 28, 2013 at 5:26 pm

Good work, DC2. Even a token amount would help. When children have little access to school libraries because we can’t afford librarians, we’re in no position to forgive loans. Maritime is hardly the huge universal draw to downtown Norwalk. People regularly visit Caffeine and Beadworks, and never go to the Maritime. Should we give them a pass on their taxes too? What about the movie theater? That’s a big draw. No one entity can claim to have so much positive impact that they’re worth $35M to taxpayers.

jlightfield March 1, 2013 at 10:59 am

Diane, I’m not sure what your reference to traffic studies means exactly. The traffic studies that I’ve been presented are in fact pretty spot on. The reality of projecting economic impact or traffic impact has become rather standardized. Is your objection that standardized formulas don’t apply to Norwalk because Norwalk is unique or something?

You reiterate the request for an audited review? Of what? The number of visitors attending the Aquarium? How much fees are generated? Or a more complicated wish that all the area businesses survey everyone who walks in the door and asks if they visited the Aquarium that day?

The Aquarium does in fact report the number of group visits vs individual visits.

And yes, you may find it hard to believe but sales tax is not the only measure of how dollars support a local community. Take your t-shirt, someone was paid to design it, manufacture it and screen print on it. It is for sale in a local business. That place of sale is a business that pays property taxes, and employees at least one person. That person in turn works and spends money in Norwalk, and so on and so on like the Breck commercial.

Arts and cultural organizations tend to have a higher return on dollars spent because they tend to spend more local dollars in operations. Exhibits, promotion, operational costs are more concentrated than in a typical chain retail store for example. These numbers and ratios are modeled on evidence collected nationally, and also regionally. As I said, the Arts Commission paid for such a survey in order to drill down to our local impact.

Suzanne March 1, 2013 at 4:23 pm

All those words: they still owe the city 35 million dollars. Irrefutable and left unaddressed, jlightfield, but your explanations cannot explain away what is owed.

jlightfield March 1, 2013 at 6:27 pm

@Suzanne, yes words tend to explain things. So what are you proposing, that the city foreclose on the aquarium?

Original BARIN March 1, 2013 at 6:33 pm

Thank you very much AGAIN Diane, I think Ms. Lightfields passion for the Aquarium is being confused with the fact they owe us 35 Mill, it’s that simple.
Talk of traffic studies and such only distract attention from the 35 Mill owed to us.
Focus people focus.

Suzanne March 5, 2013 at 6:44 pm

jlightfield, I love how a small challenge to one’s ideas results in going to the extreme: yes, that’s what I think they should do. Foreclose on the Aquarium. How silly you are! How about a decent payment plan, a refinance of existing debt, something from the revenue they secure at the door. This is no less an expectation than you or I would have if we had borrowed money: a percentage of the door or a flat rate, either way, pay the money back to the City that it owes (the Aquarium, I mean, not you.)

jlightfield March 8, 2013 at 9:19 am

@Suzanne The debt that was undertaken over 20+ years ago was for capital improvements to the Aquarium. I don’t have the time to research all the meetings and minutes from that far back to understand the mindset of why the Aquarium was given funds. But I do know a thing or two about economic impact and economic development, and for the past two decades, the City of Norwalk has acted through various administrations fairly consistently in how they viewed those funds. It is clear that it has been viewed as more of an investment into the economic development of South Norwalk, than a loan. That is why the land that the city holds title to, i leased to the Aquairum, it is why the City has representation through the Maritime Aquarium Commission on operations, it is why the city invested in building a parking garage, not where it should have been built, but across from the Aquairum.

I also understand a thing or two about financing, and when you cease to make payments on a loan, the grantor then has an obligation to foreclose.

SB March 8, 2013 at 10:39 am

OK foreclosure is a dumb idea. What they need to do is start a payment plan and not have the 33M forgiven, which is want they’re asking behind the scenes. According to Wikapedia, the Acquarim had an endowment of $9M + in 2006. If they can afford an endowment, then they can ask the same wealthy contributors to help them pay off their debt.

Diane C2 March 9, 2013 at 9:31 pm

@jackie: It is clear that it has been viewed as more of an investment into the economic development of South Norwalk, than a loan.

I hope you would agree that taxpayers don’t care that elected officials have ignored the debt and “viewed” it as an investment. That is NOT how the deal must have been sold to the taxpaying public when it was issued as a loan, to be repaid. In the private sector, this practice of making a loan into a “wink wink” not-a-loan would be unethical at best and criminal at worst.

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