City Council OKs $5M loan for aquarium
Long Beach is coming to the Aquarium of the Pacific’s rescue.
The City Council on Tuesday voted to authorize a loan of up to $5 million to the nonprofit that runs the facility, as it faces ongoing financial woes due to closures forced by the coronavirus.
The proposed loan is similar to a separate agreement the City Council authorized last year for the aquarium, which the facility did not end up needing to use.
While the Aquarium of the Pacific is typically able to meet all of its financial obligations based on public attendance, the full closure of the facility for much of the last year has left the aquarium
without its usual cash flow.
The nonprofit has tried its best to cut costs, Long Beach’s interim financial management director, John Gross, wrote in a staff report, but it’s still losing about $1.1 million per month when the facility is completely closed and about $600,000 per month when outdoor operations are allowed, as they are now.
In addition to maintenance and animal care, the Aquarium of the Pacific also must pay its annual rent to the city in October, and it’s unclear now if the facility will have the means to do so. So, to prevent the aquarium from defaulting on that payment, Gross wrote, it’s in Long Beach’s best interest to provide the loan.
The loan will come from the city’s Oil Field Abandonment Reserve in the Tidelands Oil Revenue Fund Group. The nonprofit has 13 years to repay it, but believes “total repayment is likely to be made substantially sooner,” Gross wrote.
But if, for some reason, the Aquarium of the Pacific can’t repay the loan, the tidelands fund, which is already facing trouble, would provide the money.
The tidelands fund, which pays for the maintenance, operations and development of Long Beach’s oceanfront, is facing a “significant deficit,” Gross wrote, because of low revenue from parking in the area and from the Queen Mary’s operator, Urban Commons, which is undergoing Chapter 11 bankruptcy proceedings.
“There will be severe impacts on the Tidelands Fund if the [Aquarium of the Pacific] cannot make normal rent payments,” Gross wrote, “but at present, it is considered unlikely that the [nonprofit] will fail to make rent payments or fail to repay the loan on a timely basis.”
And, he added, even if the nonprofit fails to repay it, backing the loan “will help the Tidelands Fund in the long run by assisting the Aquarium to return to normal financial operations as soon as possible and to allow the [nonprofit] to make normal rent payments to the Tidelands Fund.”
Councilwoman Suzie Price said Tuesday that even though she has concerns about the implications for the tidelands fund, she supported authorizing the loan.
“I think for many years, there was a belief that the tidelands fund was positive and secure and stable and a reliable source around a lot of the infrastructure that we have along the ocean, including major city assets like the convention center, like the Queen Mary, like the aquarium,” she said. “That is no longer the case, and as we look forward to our obligations in the tidelands area, and we factor in the liabilities that we have to now fund as a result of some realities that we have as a city, I think it’s important for us to be mindful every time we leverage this fund.
“Our efforts to provide equity and access to the coast, our ability to program for those opportunities will be significantly limited if the tidelands fund continues to experience stress,” Price added, “and I know that that is a priority for the city and the council — is figuring out how to use tidelands dollars to bring people to the coast and allow for access citywide and regionally to the coast.”
Councilwoman Cindy Allen, meanwhile, said she understood those concerns, but she believes the Aquarium of the Pacific will be a trustworthy partner.
“While I know the commitments and concerns surrounding the health of the tidelands fund,” she said, “I trust that this short-term loan will keep the aquarium operating and will preserve and protect this incredible institution and our city.
“I also trust,” Allen added, “that it will be repaid once the aquarium is allowed to fully reopen.”