Long Beach ‘not-for-profit’ aquarium operator – who paid its recently retired president / CEO $ 540,000 + (salary + benefits) in 2019 and its key executives total between 100,000 and 200,000 $ – wants a $ 5 million loan (backed by Tidelands) to help cover the operating expenses of the Aquarium
Under “Fiscal impact”, the memo from the city management indicates:
The loan is from the Tidelands Oil Revenue Fund Group oil abandonment reserve. This reserve currently stands at $ 34 million and is accumulating funds to pay the cost of permanently abandoning wells when the Tidelands oil fields are closed. It will take well over $ 34 million to pay for the abandonment of the oilfields and the reserve is being added, currently at a rate of about $ 6 million per year, with the exception of the FY20 suspension and of the suspension planned for FY 21 and possibly FY 22 due to financial constraints of the City due to the pandemic. the main costs of abandoning the oilfields are estimated to come after 2035, although federal, state or economic actions could do so sooner.
While there is a need to provide funds for abandonment of oilfields on an annual basis from oil revenues before oil revenues fall too low, there is no immediate need for the money to. the oilfield abandonment reserve. Oilfield abandonment reserve funds can be loaned as long as the loans are repaid before oilfield abandonment costs are incurred.
Although the repayment of the loan by the Company over the 13-year term, and potentially much sooner, appears likely based on its historical performance, it is not assured. As a result, the loan is backed by the Tidelands Operating Fund Group (Tidelands Fund) which derives a large portion of its operating income from oil and 5% of the port’s income. If the Aquarium does not repay its loan on time, the Oil Field Abandonment Reserve will be returned full by the Tidelands Fund.
The long-term financial well-being of the Tidelands fund appears difficult, even as the debt service paid by this fund declines over the next few years. The Fund has relatively high operating costs which are difficult to reduce. In addition, the beach area supported by the Fund has significant capital needs.
There are also significant unfunded obligations regarding the Oilfield Abandonment Reserve that will require the diversion of an increasing share of annual oil revenues to the reserve. Indeed, oil revenues will decrease with the loss of natural productivity from older wells, while the contributions required to the reserve will likely remain the same or increase. A higher price of oil would help considerably, both in terms of revenue and exploration potential extending the life and production of oil fields. Based on current projections, there is a significant deficit expected in the Tidelands Fund in FY21 due to low income from parking and urban commons, and from the Aquarium (if they do not receive the loan offered). Oil revenues are currently expected to be higher than expected and could partially offset other lower revenues and reduce the expected shortfall.
Despite the performance of oil revenues, it seems likely that at least some Tidelands reserves will need to be used in FY 21. For at least a few years from soon, the increase in oil revenues is likely due to contractual conditions, independent of oil prices, but the cost of financing the reserve for abandonment of oil fields can significantly offset the increase in income.
In the context of this financial situation, the loan offered by the Company is backed by the Tidelands Fund. The Tidelands Fund is responsible, not for the loan itself, but to repay the loan if the Company is unable to do so. The status of the loan should be monitored; if the Company has difficulty repaying the loan, the Tidelands Fund will need to set aside funds to repay the well abandonment reserve.
The loan support from the Tidelands Fund is a potential, but unlikely, financial burden on the fund; however, supporting the loan is in the best interests of the Tidelands Fund. The loan support will help the Tidelands Fund in the long term by helping the Aquarium return to normal financial activities as soon as possible and by allowing the Company to make normal rent payments to the Tidelands Fund from the income of the Company.
There will be serious repercussions for the Tidelands Fund if the company cannot make the normal rent payments, but at this time the company is unlikely to either pay the rent or repay the loan on time. timely. If the loan is approved by the municipal council, it will be managed by the financial management department and the drawing authorization will be approved by the deputy general manager on the basis of a drawing request from the Corporation. Requests for increased appropriations necessary to technically authorize loan drawdowns to the Company will be presented to city council after the fact in future city council letters of city-wide budget adjustment.
The aquarium operator (Aquarium of the Pacific Corporation) is a 501 (c) (3) not-for-profit entity. and city council has for years allowed the aquarium operator to prevent the public from accessing its decision-making board meetings and reflective records, allowing closed-door approval of its operations.
The Aquarium’s most recent IRS Form 990 tax return – visible on this link main salaries of the period on p 32. This indicates that the President / CEO of the Aquarium, Dr Jerry Schubel (who retired in 2020) received during the tax reporting period 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 among the top seven paid Aquarium management were paid (total sums) between $ 184,357 and $ 260,340, the Aquarium’s new replacement for Dr Schubel did not respond when LBREPORT .com requested his salary in 2020.
The Aquarium’s board of directors (members here) currently includes brothers Molina, Mario and John. Like most of the other members of the Aquarium Board of Trustees including former Mayor Bob Foster and former LBCC Planning / Trustee and the current LBCC board member. the LBUSD Doug Otto, they are not remunerated.
John Molina is a co-founder of Pacific6 which, through a subsidiary, operates “LBPost.com”. In November 2020, Ms Allen (endorsed by Mayor Robert Garcia and almost all board holders) defeated Reform Ticket nominee Robert Fox and she is now one of two LB (affected Tidelands) waterfront board members with 3rd District Councilor Susie Price.
To date, neither Ms Allen (despite her years of operating an LB press briefing) nor Councilor Price (currently Board member for six years), nor any other LB Board member or LB press briefing n ‘supported LBREPORT.com’s position to gain public / press access. at the Aquarium Board of Directors meetings.
As previously reported by LBREPORT.com in 2020 – but not mentioned in the memo from city staff – the aquarium operator, sought out and apparently qualified for the Paycheck Protection Program Loan Program. federal taxpayers for up to $ 2.5 million. Responding to an email request (July 9) for a straightforward account of why the Aquarium requested P3 relief, Aquarium CFO Anthony Brown responded by email (9 July 2020)
The Aquarium requested relief from the PPP program because more than 75% of its revenues are from admissions and related entries. Despite the complete shutdown of the facility from March 14 to June 11, a significant number of employees were required for essential tasks including, but not limited to, monitoring life support systems and feeding and nursing. live animals. The Aquarium has also maintained staff to prepare for the reopening and offer educational programs and online lectures during the closure to stay engaged with the public.
LBREPORT.com also asked at the time what salaries, whether any of the top paid Aquarium officials had been cut during the COVID-19 pandemic and, if so, by how much, and CFO Brown replied, “The top paid Aquarium managers suffered a pay cut, which took effect in April 2020.”
In the mid-1990s, city officials under Mayor O’Neill’s administration told LB taxpayers that the Aquarium could likely cover the annual debt service of its operations. (The media of the time called variously members of the public who questioned these “opponents”). In a few years, the performance of the Aquarium has shown that the opponents are right. Supporters of the aquarium went on to claim that the problem resulted from a lack of “critical mass” that would be resolved when the “Queensway Bay Entertainment and Retail” project provided a regional attraction. Today it has been renamed “Pike Outlets” with franchises and jumps. center-style retail and food offerings.
|Support the truly independent news in Long Beach. No one in the ownership, reporting, or editorial decision-making of LBREPORT.com has any connection to development interests, advocacy groups, or other special interests; or seeks or receives benefits from decisions related to the development of the City; or occupies a position of appointment to the town hall; or contributed money to political campaigns for the incumbents or challengers of Long Beach. LBREPORT.com is not part of an out-of-town business group and none of its ownership, editorial or editorial decisions have been on the board of directors of any city government agency or organization. ‘another entity whose policies we report. LBREPORT.com is supported by readers and advertisers. You can help keep information truly independent in LB, the same way people support NPR and PBS. Were not
Recommend LBREPORT.com to your Facebook friends:
Follow LBReport.com with: