Aquarium swims out of stormy fiscal strait.Byline: LARRY BACON The Register-Guard NEWPORT - Financially speaking, it's been a rough winter for the Oregon Coast Aquarium The Oregon Coast Aquarium is an aquarium in Newport, Oregon. - in fact, the roughest ever for the 10-year-old nonprofit organization Nonprofit Organization An association that is given tax-free status. Donations to a non-profit organization are often tax deductible as well. Notes: Examples of non-profit organizations are charities, hospitals and schools. that runs Newport's major tourist attraction Noun 1. tourist attraction - a characteristic that attracts tourists attractive feature, magnet, attractor, attracter, attraction - a characteristic that provides pleasure and attracts; "flowers are an attractor for bees" . The doors remained open, the fish got fed, all employees got paid and nobody got laid off, aquarium aquarium, name for any supervised exhibit of aquatic animals and plants. Aquariums are known to have been constructed in ancient Rome, Egypt, and Asia. Goldfish have been bred in China for several hundred years and are still the most commonly kept fish in home officials said this week. But in October, the aquarium started falling behind in its payments to a number of vendors who provide supplies the aquarium needs to operate, aquarium President Phyllis Bell said. "We're probably talking 90 to 120 days behind," she said. Bell couldn't provide an estimate of the number of businesses that were or are still owed money. But she said a cash transfusion Transfusion Definition Transfusion is the process of transferring whole blood or blood components from one person (donor) to another (recipient). of $500,000 from the Newport Urban Renewal Agency is allowing the aquarium to pay its vendor debts. The aquarium shelled out $250,000 in January, she said, and an additional $50,000 will be paid by the end of this month. That should bring everything current, she said. A variety of circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or triggered the aquarium's cash-flow crunch (1) To process data. See number crunching. (2) To compress data. See data compression. 1. (jargon) crunch - To process, usually in a time-consuming or complicated way. , including an attendance slump Slump A temporary fall in performance, often describing consistently falling security prices for several weeks or months. that resulted from the recession and the Sept. 11 terrorist attacks on the East Coast. December attendance sank to about 18,000, down from nearly 25,000 the previous December. By comparison, last July's attendance was about 104,000. The difference in monthly attendance revenue between July and December 2001 was about $650,000. Normally, proceeds from the high-visitor summer months are enough to help cover costs during the lean winter months, but not this winter. The other factors contributing to the aquarium's fiscal squeeze were having to borrow nearly $2 million for construction of the new "Passages of the Deep" exhibit when a fund drive fell short, and deciding to spend $3.25 million to buy the lease held by the Free Willy willy Noun pl -lies Brit, Austral & NZ informal a childish or jocular word for penis Keiko Foundation on the tank formerly occupied by Keiko the killer whale killer whale or grampus, a large, rapacious marine mammal, Orcinus orca, of the dolphin family. Male killer whales may reach a length of 30 ft (9 m) and females half that length. . Fiscal situation improves Bell and Al Gleason, chairman of the board of directors since October, said the aquarium's financial stability has been much improved with the payment from the Urban Renewal Agency and by rescheduling two bank loans to provide better insulation insulation (ĭn'səlā`shən, ĭn'sy  –), use of materials or devices to inhibit or prevent the conduction of heat or of electricity. from the drop
in attendance revenue during the winter months.
The urban renewal money is, in effect, a return of money paid to the agency when the aquarium was built, to help it get clear title to the land so it could lease it to the aquarium. But the agency will be paid back, in the form of increased rent, over five years starting in 2003, Bell said. Gleason is a retired chief executive officer of PacifiCorp and former Port of Portland president. He expressed concern that the aquarium's recent cash-flow problems might be perceived as a financial crisis. What really happened, he said, was an imbalance imbalance /im·bal·ance/ (im-bal´ans) 1. lack of balance, such as between two opposing muscles or between electrolytes in the body. 2. dysequilibrium (2). between outstanding debt and incoming revenue. That situation has now been corrected, he said, and the nonprofit corporation nonprofit corporation n. an organization incorporated under state laws and approved by both the state's Secretary of State and its taxing authority as operating for educational, charitable, social, religious, civic or humanitarian purposes. is in "wonderful financial condition." "People get scared" when debts have to be rescheduled, he said, "but this was simply that the original loans didn't recognize the true economics of the aquarium." The bank loan factor Gleason said the aquarium's financial problem started developing when a fund raising drive to build the highly successful "Passages of the Deep" attraction, which opened in May 2000, fell about $1.3 million short of the project's $8.8 million cost. Keiko was moved to Iceland in 1998 by the Free Willy Keiko Foundation, his owner, so he could be returned to the wild. That project is continuing under a successor organization, the Ocean Futures Society. The "Passages" exhibit - which allows visitors to walk through a 200-foot-long underwater Underwater 1. The condition a call option is in when its strike price is higher than the market price of the underlying stock. 2. The condition a put option is in when its strike price is lower than the market price of the underlying stock. tunnel and view 3,500 creatures in three ocean environments - became the aquarium's new premier attraction. When the fund drive for the project fell short, the contractor was paid with some cash reserves Cash reserves See: Cash investments cash reserves Investment funds that are held in short-term assets such as Treasury bills and certificates of deposit until more permanent investment opportunities are available. and with money from two Newport bank loans taken out in 2000: A $1 million loan from West Coast Bank (formerly Bank of Newport), to be repaid with pledges from the fund raising campaign that weren't due until 2004 (the $1 million loan was later paid down to $725,000). The loan originally required payments over a four-year period, with the next one due in April. But it has been converted to a revolving fund revolving fund n. A fund established for a certain purpose, such as making loans, with the stipulation that repayments to the fund may be used anew for the same purpose. Noun 1. loan that Bell and Gleason said will build surplus cash that will earn interest in high-revenue months and provide an operating line of credit to help carry the aquarium through its leaner months. A $955,000 loan from Umpqua Bank (formerly Security Bank) that would have been due now, but aquarium officials negotiated a new arrangement that allows it to be paid off over a four-year period, with payments required only during peak attendance months. Buying Keiko's former tank The Free Willy Keiko Foundation built the movie-star killer whale's tank for about $8 million and gave it to the aquarium, which leased it back to the foundation for a minimal charge. When Keiko left Newport, aquarium officials believed it was necessary to use the tank and negotiated a buyout Buyout The purchase of a company or a controlling interest of a corporation's shares. Notes: A leveraged buyout is accomplished with borrowed money or by issuing more stock. of the foundation's 20-year lease at a cost of $3.25 million - an initial payment of $1 million and $250,000 annually from Oct. 1, 2000, through Oct. 1, 2008. The aquarium has managed to stay on schedule with those payments but faced an additional $350,000 in debt when a dispute was resolved in the foundation's favor on Nov. 1, 2000. Recognizing how much Keiko boosted aquarium attendance, the aquarium previously had agreed to pay the foundation 60 percent of its gate receipts and 75 percent of all sales of Keiko-related merchandise during the 2 1/2 years the whale was in residence, payments Bell said totaled more than $9 million. The foundation claimed that still more was owed, and the November 2000 settlement recognized that fact. The aquarium paid the foundation $150,000 in December 2000, with the balance due last December, but Bell said foundation officials agreed to let the aquarium make the final payment between March and May of this year. The future looks brighter Although the bank debt was rescheduled so the loans could be paid off over four years, Gleason said, revenue projections show that the aquarium will be in a position to repay the loans within the next 18 months if it chooses to do so. He credited bank officials with understanding the causes of the aquarium's cash-flow problem and for helping aquarium officials find a way to deal with it. Has the financial problem hurt the aquarium's credit rating? Gleason and Bell say not. Bell said vendors have been very understanding and none has threatened to quit doing business with the aquarium. Most of the vendors have had a long relationship with the aquarium, she said, and she and her staff have done their best to keep them informed about when they can expect to be paid. "None of them has been unkind or obnoxious to me," she said. Bell said the debt problems apparently haven't hurt the aquarium's ability to raise money. A drive to collect nearly $65,000 for a new "Enchanted en·chant tr.v. en·chant·ed, en·chant·ing, en·chants 1. To cast a spell over; bewitch. 2. To attract and delight; entrance. See Synonyms at charm. Seas" exhibit - to commemorate com·mem·o·rate tr.v. com·mem·o·rat·ed, com·mem·o·rat·ing, com·mem·o·rates 1. To honor the memory of with a ceremony. See Synonyms at observe. 2. To serve as a memorial to. the aquarium's 10th anniversary in May - is going very well, she said. She expects to begin another drive soon to raise money for an endowment fund Noun 1. endowment fund - the capital that provides income for an institution endowment patrimony - a church endowment chantry - an endowment for the singing of Masses , for an amount yet to be determined, that would provide an additional revenue source for the aquarium. Neither Bell nor Gleason believe that it was unwise to take on so much debt to develop the "Passages" exhibit and acquire Keiko's former tank. Bell said it would have been a waste of resources to let the tank sit empty. And she said it's important for the aquarium to keep developing new attractions to keep people coming back. The opening of "Passages of the Deep" immediately boosted aquarium attendance by more than 90 percent, she said. Gleason said among the lessons learned from what happened are if large loans become necessary in the future, the aquarium should work with the lender to ensure the payment schedule reflects its seasonal revenue swings. "And when we do another (fund raising) campaign," he said, "our board has to work harder to ensure we raise every dollar we need. That's where this all started. Had the board been more of a help in fund raising, this never would have occurred in the way that it did." |
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