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(March 10, 2021, 11:15 a.m.) -- On March 9, the City Council voted 9-0 to approve a $5 million Tidelands-backed loan to the City's Aquarium operator, citing pandemic-related economic impacts but allowing repayment (at the current low interest rate) for up to 13 years. City management agendized the item which doesn't propose Council or public oversight of proposed Aquarium draws on the loan, leaving this to non-elected city management.
The Aquarium operator (Aquarium of the Pacific Corporation) is a 501(c)(3) non-profit entity. and under three Mayors (O'Neill, Foster,. Garcia) multiple Councils have for years let the Aquarium operator prevent public and press access to its decisionmaking board meetings and minutes, effectively enabling closed-door approval of its operations. In March 9 Council discussion, no Council incumbent(s) supported adding a transparency/openness condition enabling public/press access to the Aquarium operator's governing board meetings where it makes its spending decisions. Councilwoman Cindy Allen made the motion to approve the loan, indicating she was confident the Aquarium operator would repay the loan prior to its 13 year expiration. Councilwoman Suzie Price said she would vote for the item despite concerns, cited in city management's agengizing memo, over how Tidelands Funds are being leveraged. Vice Mayor Rex Richardson and Councilwoman Mary Zendejas both voiced support for the $5 million loan. No other Councilmember spoke before casting votes to approve the transaction as proposed by city management. No public speakers signed up to speak on the item. Prior to the vote, LBREPORT.com reported for our readers the current lack of public and press access to the Aquarium's governing board meetings (where spending and policy decisions are made.) Over a period spanning several years, LBREPORT.com has consistently advocated attaching an openness/transparency requirement to Aquarium requests for discretionary Council approvals. To our knowledge, no other LB media outlet has urged this openness/transparency item in the past or in the most recent opportunity on March 9. [Scroll down for further.] . |
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In March 9, 2021 Council discussion, no Council incumbent(s) mentioned six figure sums (pay and benefits) visible in the Aquarium operator's < href="https://www.aquariumofpacific.org/downloads/Tax_Form_990_and_990-T_2019_Public_inspection_2019.pdf">IRS Form 990 (2019) paid to the Aquarium operator's top executives (Schedule J, page 2.). 990 form indicates LB's privately run "non-profit" Aquarium operator paid its then president/CEO (Schubel) (who retired in 2020) a base salary of $369,240, plus bonus and incentive compensation of $87,500, plus other reportable compensation of $9,693, plus retirement and other deferred compensation of $64,355, plus non-taxable benefits of $11,919 for a total of $542,707. Others in the seven highest paid among Aquarium management were paid (total sums) between $184,357 and $260,340, The Aquarium's newly hired replacement for Dr. Schubel didn't respond when LBREPORT.com asked for his salary in 2020.
As previously reported by LBREPORT.com in 2020 (and unmentioned in city staff's agendizing memo) the Aquarium operator, sought and apparently qualified for the federal taxpayer Paycheck Protection Program loan program in an amount up to $2.5 million. Responding to an emailed request (July 9) for a simple narrative on why the Aquarium sought relief under the PPP program, Aquarium CFO Anthony Brown replied via email (July 9, 2020) The Aquarium sought relief from PPP program because more than 75% of its revenue is admissions and admissions related. Despite the facility being shut down completely from March 14 - June 11, a significant number of employees were needed for essential duties, including but not limited to monitoring life support systems and feeding and taking care of the live animals. The Aquarium also maintained staff to prepare for reopening and to offer educational programs and lectures online during the closure to stay engaged with the public. LBREPORT.com also asked at the time which salaries, if any of the top compensated Aquarium officials had been reduced during the COVID-19 pandemic and if so by roughly how much, and CFO Brown replied: "Top compensated Aquarium officials took a pay cut, which was made effective in April 2020."
City management's March 9, 2021 agendizing memo stated in pertinent part: It is in the interests of the City to assist the Corporation to avoid a default on the rent payment as the City would have to make good on the equivalent of the rent amount, one way or the other for bond debt service, and it would not be in the interest of the Corporation if they were to have a default on the payment of rent. The Corporation has determined that the loan needed may range between $1.2 to $10 million, but that the range of $1.2 million to $5 million seems more likely...[A]s the pandemic has proved, there are many uncertainties and the situation could change.
Under "Fiscal Impact," city management's agendizing memo states: The loan is from the Oil Field Abandonment Reserve in the Tidelands Oil Revenue Fund Group. This reserve currently has $34 million and is accumulating funds to pay for the cost of permanently abandoning wells when the Tidelands oil fields close. Much more than $34 million will be needed to pay for oil field abandonment and the Reserve is being added to, currently at the rate of about $6 million a year, except for the suspension in FY 20, and the anticipated suspension in FY 21 and possibly FY 22 due to the City's financial constraints as a result of the pandemic. the main costs for oil field abandonment are estimated to come later than 2035, although Federal, State or economic actions could make it earlier.
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