City OKs Plan to Reduce Debt of Struggling Long Beach Aquarium

Trying to prevent a municipal bailout of the struggling Aquarium of the Pacific, the Long Beach City Council on Tuesday approved a plan to refinance the aquarium and transfer ownership of its building to the city.

Long Beach officials say the move will reduce the overall debt of the aquarium, which might not be able to afford this year’s interest and principal on bonds sold to build it.

The city has pledged to help pay the debt service if the aquarium can’t, a prospect that municipal officials would like to avoid. But city leaders, including former City Manager James Hankla, have said in the past the situation would never reach the point that city funds would be needed to pay for the attraction.

“We are headed in the right direction,” said Tammie Brailsford, the aquarium’s chief operating officer. “I am very, very optimistic. This will relieve the financial pressure on us and give us time to mature our fund-raising efforts.”

Compared to the same period last year, Brailsford estimated that attendance has increased 6% to 7% for December, January, February and March. The uptick follows a 40% decline in visitation since 1999.

“I don’t see much choice here, but a lot of chance. We can’t give up on a project that started out strong and has good potential,” Councilman Ray Grabinski said before the unanimous vote.

The attraction, which opened with much fanfare in June 1998, is a critical component of the city’s effort to turn its downtown waterfront into a premier tourist destination in Southern California.

With enough space to fill three football fields, the aquarium displays about 12,000 animals ranging from sharks and sea lions to delicate sea horses and moon jellies. Built at a cost of $140 million, it is one of the most expensive tourist attractions of its type in the country.

During the first 12 months of operation, aquarium officials reported about 1.8 million visitors. Since then, attendance has steadily declined to about 1.07 million last year. The original attendance forecasts, prepared before construction, called for at least 2 million visitors by 2000.

Under the plan approved Tuesday, the city will pay off $117.5 million in bonds with a new bond issue of up to $134 million. Officials say that step will result in a saving of between $2.5 million and $3.5 million in annual interest payments during the next five years. Additional savings of $200,000 to $500,000 a year are projected after that.

According to a city report, if the bonds are not refinanced, the aquarium anticipates falling $2 million short of its $5.9-million bond payment due June 15, an amount the city would have to make up.

Long Beach Finance Director Bob Torrez said the debt will be restructured to defer payments on the principal for five years and extend the debt seven years, until 2030.

To refinance it, the city will assume ownership of the aquarium more than 20 years before it was supposed to. The attraction is now owned and operated by a nonprofit organization, which will still run it.

Torrez said the city had to step in because the aquarium, under federal law, cannot refinance its bonds by itself until 2005.

Critics of the aquarium said the refinance plan is just a stopgap measure that does not solve the attendance problem.