Though it seemed like a begrudging choice for some members, the Mobile City Council voted to absorb a $2 million debt owed by the GulfQuest National Maritime Museum of the Gulf of Mexico to help stabilize the beleaguered attraction and avoid the possibility of $26 million in federal grant clawbacks.
The council voted 6-1 Tuesday to take on the $2 million burden and to change its operating agreement with the museum. Both measures were the result of lengthy negotiations with nine local banks the GulfQuest board borrowed $5 million from in the early 2010s.
Those loans were obtained to help pay for additional exhibits as well as their installation, according to the city’s finance director, Paul Wesch. At the time, the GulfQuest board put the exhibits up as collateral, which means they could be seized if the board were to default on the loan.
While the board has made some payments, Wesch said GulfQuest has only paid around $100,000 on the principal of the loan to date. Under the agreement, the city will purchase the loan and pay a total of $2 million toward it over five years in $400,000 installments.
The deal would require the board to put up only $500,000 and pay all interest accrued throughout the life of the loan, but if all else falls into place, the nine banks that originally lent the money have agreed to forgive the remaining $2.4 million.
After prolonged financial struggles and low attendance numbers, the city took over GulfQuest in 2016, but under the new agreement, that role is more involved. The city would then take over the day-to-day operations to the tune of about $1 million a year.
Altogether, the city is expected to spend $1.4 million annually on GulfQuest over the next five years, but despite its financial struggles, Board Chairman Mike Lee said the museum has been generating around $350,000 a year and those numbers are expected to rise.
The board’s focus will now shift primarily to fundraising and upkeep of exhibits, Wesch said, but once the loans are paid off, Wesch said it should free additional monies for marketing.
“GulfQuest will emerge from this resolution much like some of the best museums in the country,” Wesch added. “Like our art museum, the city will operate the museum and the board would be free to raise money and take care of the exhibits.”
In addition to securing the museum’s future in Mobile, the city’s interest in taking on GulfQuest’s remaining debt is also rooted in making sure federal officials do not have reason to claw back $26 million in federal transportation grants that helped fund its construction.
Wesch said there is a legitimate concern the federal government could ask for those funds to be returned if GulfQuest was to cease operating as a maritime museum. Councilman Joel Daves, who chairs the council’s finance committee, agreed the risk was too great both financially and to the city’s reputation when pursuing future investment from local banks.
“If there were any really good solutions they would have been implemented long before now. What we have in front of us is a range of unattractive solutions, and my own position has always been that we need to avoid even the risk of the clawback of what’s now $26 million,” Daves said. “If you play Russian roulette, the likelihood there’s a bullet in the chamber when you pull the trigger is 16.666 percent. It’s relatively low, but the consequences are significant. I’m willing to pay $2 million over the next five years as insurance against having those clawbacks occur.”
While the motions to take over the debt and operation of GulfQuest passed, council members raised several questions about how GulfQuest will operate in the future and how they can justify throwing more money into a project that has been marred by negative headlines for years.
Former Mayor Mike Dow, who was named GulfQuest’s executive director earlier this year, told councilors the investment would pay dividends down the road because the museum has the opportunity to position itself at the center of a “regional tourism boom” in Mobile.
Specifically, Dow mentioned the potential impact of bringing in “high-speed ferries” or other waterborne transportation services to help connect Port City residents and others from the surrounding region to Mobile’s waterfront as other groups like the Coastal Alabama Partnership work to create more attractions to bring additional tourism into the area.
“It’s about having Mobile’s front porch, namely Cooper Riverside Park, properly filled with people that are down there enjoying themselves,” Dow said.
District 1 Councilman Fred Richardson also raised concerns about the lack of “diversity” on GulfQuest’s board of directors and made specific note that there are currently no women or minorities serving on the board. Dow said GulfQuest was currently working to address that.
Richardson also joined council members John Williams and Bess Rich in raising concerns about the current cost of visiting GulfQuest. Now that it is being operated with tax dollars, those councillors suggested a reduction in price or free admission for citizens should be considered.
“One of the biggest complaints I hear is that it’s very costly to get in the door,” Rich said. “Has there been any thought of lowering the admission price because now it’s going to become a full city museum and peoples’ tax dollars are going to be used to operate and run it?”
Both Dow and Wesch said nothing was off the table. However, Lee noted that any reduction in admission fees would reduce revenue and cause the city’s net revenue to go down.
In the end, a number of councilors expressed concerns about the origins of GulfQuest — with some even going out of their to note that they weren’t elected at the time. Others pointed out the irony that Dow, one of the project’s earliest champions, is not being asked to save it.
In explaining her opposition, Rich said that GulfQuest was funded and built without any input from citizens, which made it difficult for her to continue to put more taxpayer dollars into it now. She also said taking on the loan doesn’t address GulfQuest’s long-term problems.
“The plan before is not comprehensive since it only addresses paying the outstanding bank loans. Meanwhile, the citizens will continue to pay the $60 million bond issue that was secured long ago,” Rich said. “We are also not being honest with ourselves by delaying the realization that the GulfQuest project, as envisioned by its supporters, cant meet its financial obligations through admissions projects, and we may need to change its purpose sooner rather than later.”
This page is available to subscribers. Click here to sign in or get access.
It looks like you are opening this page from the Facebook App. This article needs to be opened in the browser.
iOS: Tap the three dots in the top right, then tap on "Open in Safari".
Android: Tap the Settings icon (it looks like three horizontal lines), then tap App Settings, then toggle the "Open links externally" setting to On (it should turn from gray to blue).