City: Maritime Aquarium’s bond paid; new lease up for vote

NORWALK, Conn. – The bond owed Norwalk by the Maritime Aquarium has been paid, city officials said last week.

Maritime Aquarium President Jennifer Herring said the payoff had happened in February, contradicting information previously provided by the city.

A request for more information has gone unanswered.

The topic came up Wednesday at the Land Use and Building Management Committee meeting, where revisions to the aquarium’s lease were discussed. Those revisions, which include eliminating the aquarium’s rent payments to Norwalk, will be voted on at Tuesday’s council meeting.

The lease is outdated, as it was written when the area was being developed, Assistant Corporation Counsel Diane Beltz-Jacobson said.

“Now that the project is established and the bonds actually paid off, the city and the Maritime Aquarium have met and generally agreed on terms, which essentially would eliminate the rental payment because the rental payment was based on the assumption that the Maritime Aquarium would participate in the payment of the debt, and that once the debt was paid off that there would be rental payments made to the city,” she said.

Councilman Bruce Kimmel (D-District D) asked when the bond had been fully repaid. Herring said that had happened in February.

“Well, congratulations,” Kimmel said. “At some point we were wondering if it would ever be possible to totally pay it off. That’s terrific. I didn’t know that.”

East Norwalk activist Diane Cece wrote a column in February, asserting that the aquarium should pay off its debt to Norwalk. It was published here.

“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?” Cece wrote.

She also wrote to Norwalk Finance Director Thomas Hamilton. On Feb. 26, Hamilton wrote to Cece, and said the bond had not been totally paid off.

“We refunded those bonds which were eligible for refunding on several occasions as interest rates declined,” he wrote then. “The City also paid off a portion of the bonds early (about $7.0 million) in 2003 which were eligible for pre-payment.  The capital appreciation bonds were non-callable, non-refundable bonds.  The last payment on these bonds was made in February 2013.  The total amount of principal and interest was approximately $50 million. At the present time, all bonds for the Maritime Aquarium have not been paid off.”

On Thursday, NancyOnNorwalk sent Hamilton an email, asking when the bond was paid off, and whether it had been paid by the city or the aquarium. There has been no reply.

The new lease, to be voted on Tuesday, stipulates that the aquarium will assume full responsibility for the aquarium property and the costs of maintenance, and will no longer pay rent to the city. It also specifies that the city reserves the right to build a bike and walking path on the property.

Beltz-Jacobson said the city will have more use of the property under the new lease, which will be effective through 2031.

Kimmel asked Herring how much rent the aquarium had been paying to the city.

“They were one third of the assessed valuation of the property plus 10 percent of the gross revenues,” she said.

He asked what the gross revenues were.

“More than $1 million per year,” she said.

Ten percent of $1 million is $100,000. In February, Hamilton said the aquarium has not paid more than $50,000 in rent since 1986.

“Under the Maritime Aquarium lease, the Aquarium is required to turn over all funds collected to the City, which are then disbursed back to the Aquarium based on the annual budget approved by the Maritime Authority,” he wrote to Cece. “Excess net revenues (net operating revenues) are to be paid to the City as rent, and applied to the payment on the bonds.  According to the City Comptroller, no more than $50,000 has been paid to the City as rent since 1986, because The Aquarium has generally not had any excess net revenues, and therefore no amount was due the City.”

The unanswered Thursday email to Hamilton asked for clarification on that issue, and for the amount of money the city has been paying for maintenance.

In February, Hamilton explained the situation to Cece, saying the aquarium has struggled.

“The original expectation was that the Aquarium was going to pay the debt service on the $35.0 million in bonds used to construct the Aquarium,” he wrote. “Shortly after the Aquarium opened, however, it became clear that they would be unable to pay the debt service.  The lease was modified at that time, because under the original lease, the first dollars they collected were suppose to be turned over to the City and held for debt service each month.  The problem with that arrangement was that it quickly because apparent that if this were done, there would be no money left over to actually run the facility (i.e. pay staff salaries, keep the lights on, etc.), and without being able to open the doors, there would be no aquarium.  So, the lease was modified to the present arrangement, where they are required to turn over net excess revenues, of which there has been almost nothing.”

Herring said Wednesday that one roof at the aquarium still needs to be repaired, and the work is in process. The aquarium needs to replace both heating and air conditioning units, she said, but there is state funding to do at least one of them. The IMAX projection and sound equipment will need to be replaced, she said. “Life support” chillers need to be replaced, she said.

Under the terms of the new lease, that’s on the aquarium, she said.

Committee Chairman Fred Bondi (R-At Large) said the aquarium is one of Norwalk’s best assets.

“We’re trying our best,” Herring said.