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

Maritime Aquarium  014-20130322
Common Council members indicated approval last week of a new lease for the Maritime Aquarium, which will eliminate rent payments to Norwalk. The lease will be voted on at Tuesday’s council meeting.

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The lease is outdated, as it was written when the area was being developed, Assistant Corporation Counsel Diane Beltz-Jacobson said.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

Comments

8 responses to “City: Maritime Aquarium’s bond paid; new lease up for vote”

  1. Don’t Panic

    Here we go again. What is the city going to do if the maritime comes to ask for a loan for operational or capital expenses in the coming years like Oak Hills?

  2. Diane C2

    With the exception of a single $50k payment from the Aquarium, the $50 million debt was paid by the Norwalk taxpayers. When the original loan was restructured, it opened the path for the Executive Director and the Board to create budgets that guaranteed no net excess revenue, and therefore had a built-in formula to ensure never paying back the loan.
    $50 million buys a lot of paved potholes, school computers, and additional police….surely, with annual revenues in excess of $10 million, the Aquarium can pay us back even at a half-million a year…

  3. Fish Story

    A microcosm of government at its finest. Zero accountability. Massive debt. Taxpayer bailouts. Self serving curator with less imagination than a 5 year old. Worse, has an attitude like everything is owed to her. Things looks great on the surface for the few hours they are open for the week, but the reality is the taxpayers are just about completely subsidizing this high society folly and will be stuck fixing the building for eternity.

  4. dawn

    I Love the Aquarium.
    My kids love going there and it is a great asset to the city. It is in no way a folly.
    .
    But why would the city pay to build it? Isn’t it a private enterprise?
    .
    If the city built it and the city is still funding it then why doesn’t the city own it?
    .
    Call me stupid, but i don’t understand.

  5. NorwalkVoter

    Diane C2 once again is speaking loudly about something she knows little or nothing about. So, her proposal closes down the Aquarium. What does she care? It is just another cause for her to open her mouth and show how uninformed she is. What else is new?

  6. Diane C2

    @Norwalk Voter – I have a great deal of knowledge about the finances of the organization, and have to ask you how on earth you concluded that my proposal would close them down? Obviously you know “little or nothing” about their revenue and expenses. Instead of being nasty and accusatory, why don’t you point out anything I have written that is inaccurate. Better yet, why don’t you provide any numbers at all that support your case that repayment will cause them to close. Facts and data, that’s how I operate here. If I have any facts wrong, please let me know.

  7. Diane C2

    @Dawn, no one disputes that the Maritime Aquarium is a good destination for families and school children, and indeed their learning programs and exhibits all appear to be top notch. I’m glad you and your children enjoy it, and are able to afford the admission.
    As I understand it, the city was involved in funding the building of it as a means of spurring economic development in the SONO area, part of the broader and much-needed revitalization program. The city owns the building and land, and leases it to the aquarium for $1 (?) now. Citing consultant studies that calculated the additional revenue for the state and city, those who wanted to have the city issue bonds for its construction touted it as a panacea. Unfortunately, it is hard for people like me (show me the money type of gal) to believe that even a fraction of those revenues have materialized, and in fact, the boom that the aquarium was to be to local business apparently never happened either. The aquarium was allowed to become a one-stop-shopping destination, containing entertainment, food, gifts and onsite catered affairs. Patrons, especially families or Moms with small kids, need only park and walk into the aquarium for an afternoon of tourism or adventure. But then, most exit and go back to their cars and head elsewhere, or perhaps to Stepping Stones (the other publicly funded non-profit here). It is my opinion that our local restaurants, retailers, movie theatres, bowling alleys, hotels, and arcades benefit little, if at all, from having had the aquarium built.
    I don’t want the aquarium to close but I do want them to step up and repay the very taxpayers who funded their existence. Perhaps they could not afford to pay in the early days, but they can certainly afford to pay now. So you see, you are absolutely not stupid, Dawn, as it is a complicated arrangement dating back some 25 years, and many people, perhaps including some of your elected officials, apparently have some difficulty understanding the saga, too.

  8. Piberman

    An interesting contrast is the privately funded Mystic Seaport with twice the revenues, no debt and a 42 million dollar endowment. And a wide swath of contributors. By arranging public funding at the outset the Aquarium never had to rely mightily on private funding. At $50 million it’s only about $2,000 per city adult. That’s not too bad in a city that pays the highest salaries in CT. Most us feel the Aquarium has been good value.

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