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Friday, Oct 24, 2014

Many questions still to answer about Clearwater aquarium deal


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CLEARWATER — Even if voters approve a referendum next month that allows the City Hall property to be leased, a final deal with the Clearwater Marine Aquarium will still be a long way off.

That’s the consistent refrain of aquarium supporters, including its backers on City Council, when critics question the $160-million project’s viability, painting a gloomy picture of a failed 200,000-square foot attraction sinking downtown rather than anchoring its resurgence.

“It is not at all certain if the referendum passes that the aquarium will be built,” Vice Mayor Paul Gibson said.

The city would have ample opportunity to review a feasibility study expected after the vote, work out the specifics of anticipated traffic problems and ensure the aquarium has its finances in order before signing away a key piece of public land.

If the aquarium doesn’t have funds secured by Aug. 1, 2016, the project would stop.

For the time being, residents must sift through what’s known versus what’s unknown about a proposal that would leave a long-lasting mark on downtown because the lease would be for 60 years.

Aquarium fans say the generous terms laid out in a preliminary agreement with the city are reason enough to vote yes: a new city hall paid for by the aquarium, $250,000 in annual rent payments and a dynamic tourism driver on waterfront land. For detractors, the fact that no city funds would be committed to the aquarium offers little solace. Should attendance projections prove to be inflated and revenue decline, the city might one day be asked to help pay to keep movie star dolphin Winter in her new home.

“If you think this thing is going down, that they’re not going to come to the City Council and ask them to bail them out, I don’t agree,” downtown resident Tom Petersen said at a recent forum.

At stake: value of City Hall property

The single biggest issue confronting voters — and the reason a referendum is required — is whether a prime parcel of public land should be handed over to the aquarium’s use.

In recent years, residents haven’t been keen on giving public lands along the downtown waterfront to developers.

In 2000, a multimillion-dollar proposal for Coachman Park that would have put the land in a developer’s hands for 99 years at an annual rate of $1 was roundly rejected in a referendum. A project that followed two years later faced the same fate, City Manager Bill Horne said.

The aquarium has upped its offer from a no-cost 60-year lease to paying the city $7.5 million plus interest to build a new city hall followed by rent payments of $250,000 per year.

Gibson and other city officials have said that’s a great deal for a parcel that was valued at $6.6 million in an appraisal they ordered last spring.

City and business leaders have long agreed that this prime spot, perched on a bluff overlooking Clearwater Harbor, could be put to better use. But the city wasn’t planning to move out anytime soon.

After the recession put the brakes on several expensive capital projects, the city opted to invest in upgrades to the air system and elevators on the nearly 50-year-old building to prolong its life into 2025, Horne said.

Rather than pay nearly $132,000 in annual maintenance plus mounting costs of replacing old wiring, plumbing and other systems for a building that will one day be razed, aquarium officials have said they would be giving residents a brand new city hall at zero taxpayer expense.

“Eventually, all of you are going to be paying for a new city hall with your tax dollars. Why not let CMA take care of that for you?” said Frank Hibbard, the former Clearwater mayor and aquarium board member, speaking at a recent forum

The aquarium has also agreed to pay for moving several nearby tennis courts.

Limiting the city’s costs

The city would pay an estimated $615,000 to connect Pierce and Drew streets and add a traffic circle to the west end of Cleveland Street, measures meant to ease traffic.

Removing asbestos or any other environmental hazards would also go on the city’s bill.

The cost of building and maintaining a parking garage to help accommodate more than 1 million yearly visitors hasn’t been hashed out yet. Also unclear is how to resolve major traffic snarls predicted in a city staff report.

The memorandum of understanding approved by City Council explicitly states that none of the city’s general funds can be used in the project, and aquarium officials have repeatedly said they aren’t asking for taxpayer dollars.

Part of the aquarium’s financing plans calls for about $35 to $60 million in public funds, but those would come from federal grants, Pinellas County tourist development taxes and tax-increment financing.

The aquarium would be located within the city’s community redevelopment area, where increases in property tax revenues are dedicated to economic development rather than going into the city and county general funds. The so-called bed tax is levied on overnight visitors to benefit the county’s tourism industry.

The terms of the agreement aren’t convincing for Petersen and other opponents, who point out that it’s not legally binding. It could be totally rewritten after the vote, they say.

Frank Dame, the aquarium’s chief operating officer, says that’s nonsense.

“If we were to go back and say we want general fund dollars or we want ad valorem taxes, we’d have an uproar,” Dame said.

Many questions still unanswered

If voters were to approve the aquarium deal, there would be numerous public hearings between the vote and approval of the lease, projected to happen by June 2015.

Nov. 5, though, is the only direct vote residents will get on the project, and many questions can’t be answered until after the referendum.

A feasibility study of the aquarium’s business plan, for example, won’t be completed until after the vote.

Aquarium officials contend their attendance and revenue estimates are realistic.

Even if the aquarium falls short of the 2 million people projected for the first year, it can easily attract the 975,000 people needed to break even, especially with a “Dolphin Tale” sequel being filmed here this fall, Dame said.

If the forthcoming study indicates otherwise, the city can always back out of the deal, Dame said.

The aquarium will have to make a strong business case to investors to secure all the funds needed by 2016, and that should offer more reassurance that the project is on solid ground.

What if the aquarium fails?

The doomsday scenario for skeptics looks years into the future when interest in Winter might decline and attendance slowly wane, making the aquarium unprofitable.

There are examples of aquariums being built only to fall into deep debt later, such as the aquarium in Denver or the Florida Aquarium in Tampa.

Under the memorandum of understanding with the aquarium the City Council approved in August, the city won’t be responsible for any of these debts, and the aquarium would have the choice either to sack management or demolish the building and return the land to the city.

“The city has no obligation to cover the indebtedness of CMA,” Hibbard said at a recent forum.

“That will increase our lending costs.”

How an insolvent aquarium would pay back its debt to the city and how long it might sit vacant in the middle of downtown before the land is returned to the public isn’t clear.

The terms of the current agreement don’t preclude the possibility that a struggling aquarium could ask a future City Council for financial help, Horne said.

“I wouldn’t see that in our future, but I can certainly understand the naysayers taking that point of view. Why? Because it has happened in other places.”

Gibson said the deal will inevitably have some risks, but the aquarium’s many potential benefits outweigh them.

“There’s no such thing as a risk-free business transaction. It’s incumbent upon the City Council to minimize those risks to the greatest extent possible,” he said.

jboatwright@tampatrib.com

(727) 215-1277

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