THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Thursday, September 28, 1995 TAG: 9509280367
SECTION: FRONT PAGE: A1 EDITION: FINAL
SOURCE: BY ALEX MARSHALL, STAFF WRITER
DATELINE: NORFOLK LENGTH: Long : 107 lines
Despite city pledges that Nauticus would always be self-supporting, a new plan being considered by the City Council would require Norfolk taxpayers to provide an average of $1 million annually for the next two decades to underwrite the attraction.
The money will come out of the city's general fund and might otherwise have been available for libraries, schools or repairing streets, Mayor Paul Fraim acknowledged Wednesday.
The City Council considered the proposal to restructure the attraction's debt Tuesday night in a session that was closed to the public, but delayed a vote until next week's meeting, when the public will be allowed to speak.
The bailout, which would put Nauticus more directly under city control, comes after little more than a year of operation. The center opened in June 1994.
The bailout fulfills prophecies made by opponents that the attraction would have to be subsidized by taxpayers.
The restructuring proposal comes after Nauticus officials and City Council members in early August said they were confident that the museum would be able to pay its own bills.
Fraim said Wednesday that attendance and revenue did not meet projections for July and August.
Under the latest plan, the city would assume Nauticus' $35 million debt principal and make the center's payments - an average of $2.6 million for the next 20 years. The National Maritime Center Authority, the council-appointed body that supervises Nauticus, would repay the city over a 35-year period, by making annual payments averaging $1.6 million.
The result will be that the city will have to make up a large difference early in the loan and will recoup its money decades later.
In initial years, a city finance officer said, Norfolk would be paying as much as $3.4 million on the bonds initially issued to pay for the attraction. The payments would decline to $2 million or less later in the loan, the officer said.
This money is in addition to the city applying the tax revenue Nauticus generates - last year more than $500,000 - to the attraction's debt service instead of city coffers.
The plan is akin to parents taking over car payments for a son or daughter who is struggling financially. The parents pay off the car's original loan, and the dependent pays back the parents over a longer period of time.
``The city is going to have to put more money out initially, but it will get it paid back in the long run,'' Fraim said.
Nauticus officials or board members could not be reached for comment on the proposed debt plan.
Councilman Herbert Collins, who organized an unsuccessful petition drive to force a public referendum on Nauticus and Harbor Park before his election to council last year, said the debt restructuring proves he was right.
``With those big price tags, the city should have been up front and allowed citizens to make a decision,'' Collins said.
Whether by design or mistake, the council and the administration misled citizens about the prospects of Nauticus becoming self-sufficient, Collins said.
``The figures they were giving us didn't add up,'' Collins said. ``When they were saying it would draw more people than Colonial Williamsburg, we knew that was a joke. They weren't honest with the citizens.''
The council discussed the pros and cons of the plans in a closed-door session Tuesday night, Collins said, including how to present the plan to the public.
Under state law, the council is generally only allowed to discuss personnel matters, land sales or lawsuits in sessions closed to the public or press.
City Attorney Philip R. Trapani said the Nauticus discussion qualified under state law because the council was discussing the legal implications of the financial restructuring.
If the council approves the plan, it would put the center on the Elizabeth River in line with many other area science centers and museums that are supported financially by their cities.
Virginia Beach, for example, is paying an average of $3 million annually - and will do so for the next 20 years - to support the Virginia Marine Science Museum, said a Virginia Beach finance official. Most of the money is for a planned $35 million expansion, which is scheduled for completion next year.
Virginia Beach officials, however, never pledged that the Marine Science Museum would be self-supporting. Norfolk officials made that pledge about Nauticus.
``You make your decisions on the best advice available,'' Fraim said. ``And the best advice we had was that the facility would pay for itself.''
Fraim said citizens should not forget that Nauticus is drawing people and money downtown, which was its principal aim. He also pointed out that Harbor Park, built at the same time as Nauticus and which also faced public opposition, has drawn more people and revenue than predicted.
In addition to the restructuring of the debt, the city is also talking about doubling the payback period of a $4.5 million loan to Nauticus from NationsBank from five to 10 years.
And the city is also considering becoming Nauticus' fiscal agent, which means Norfolk would take over the paperwork for handling the museum's purchases and payroll. If the council approves, the National Maritime Center Authority would lease the center from the city rather than paying the mortgage directly.
Although Nauticus is considered a private, nonprofit facility, these changes put the museum more within the embrace of city government. Already, Bill Luther, a city employee, is acting director of the museum.
Collins said he may ask for additional public hearings before a formal vote by council. But he said he saw no alternative to approving the debt restructuring.
``I don't think we have much of a choice,'' Collins said.
KEYWORDS: NORFOLK CITY COUNCIL NAUTICUS by CNB