The former director of GulfQuest National Maritime Museum of the Gulf of Mexico is claiming the city owes the museum’s board $1.6 million based on a 2009 verbal agreement, and financial issues led to its closure Nov. 7.
Former GulfQuest executive director Tony Zodrow said in an interview Nov. 18 that if the agreement had been honored, the $60 million facility could still be open to the public.
Mayor Sandy Stimpson ultimately made the decision that due to its poor financial situation and lackluster attendance, GulfQuest would be taken over by the city and closed to the public, only 13 months after opening. GulfQuest, which was beset by years of construction delays, will only be open for special events and when the Carnival Fantasy cruise ship is in port. Upon the announcement, Zodrow resigned his position.
To illustrate the struggles the museum was having attracting visitors, the administration offered 500 free coupons for admission into GulfQuest to passengers on the first Fantasy cruise and only two took advantage, Stimpson and city spokesman George Talbot said in an interview this week.
Zodrow says some of the museum’s financial distress came after then-Mayor Sam Jones and former city attorney Larry Wettermark approached the museum’s board in late October 2009 to ask the nonprofit to assume $1.6 million of the city’s expense for construction management services provided by Hoar Program Management. Zodrow said GulfQuest complied, but the city never reimbursed the money.
“The city would be assuming an identical amount of money to cover the nonprofit’s expenses at a later date,” Zodrow said. “It was made clear to the board this was a loan agreement. It was also kind of made clear that there was an implication that construction wouldn’t continue unless the nonprofit agreed.”
According to minutes of the Oct. 27, 2009, board meeting provided by Zodrow, the deal was discussed in an executive session. The board unanimously approved a motion to “authorize the museum’s facilities committee to consider assuming responsibility for an additional contract with Hoar Program Management totaling $1.6 million … ” The minutes also reflect Jones, Wettermark and Jones’ Chief of Staff Al Stokes were in attendance.
With Hoar’s contract with the city set to expire and an assurance from Wettermark that the city would repay the money in “furniture, fixtures and equipment” (FF&E) costs, the board executed the $1.6 million contract on Jan. 13, 2010, Zodrow said.
There was no signed agreement, Zodrow said, adding he wasn’t sure if the City Council was told about it at the time. Despite the bailout from the board, the city always had control over the construction manager, he said.
“Hoar never reported to the nonprofit,” Zodrow said. “They were never working for the nonprofit. They were always working for the city.”
In January 2011, as the bidding process on the building construction approached, Zodrow said Wettermark took the position that the city would begin to repay the $1.6 million if those bids came in lower than Hoar estimates. Zodrow said the bids came in $3 million less than expected, but when pressed about the loan in April 2011, Zodrow claims Wettermark told then-board chairman E.B. Peebles the money was a “gift.”
Despite the reversal, the museum’s board, at its May 12, 2011, regular meeting, decided to keep paying monthly installments to Hoar, Zodrow said.
In an email provided by Zodrow last week, Wettermark wrote to Peebles about a reduction of $2.6 million needed in the construction budget “unless GulfQuest is going to assume the additional $1.6 [million] in Hoar’s fee.”
“Remember that the city is going to assume $1.6 [million] of what previously had been GulfQuest’s obligation for FF&E,” Wettermark wrote. “That will have to be included in the total amount attributed to construction in the city bond issue.”
Wettermark said the money was never considered a gift. He added the agreement established that any money left over from a $25 million bond issue for building construction would be returned to the museum for furniture, fixtures and equipment. Wettermark also said the bids came in “significantly lower” than $30 million, but were more than the amount of the bond issue.
In an email provided this week by Wettermark, Peebles wrote to Wettermark about the agreement, with Peebles revealing there would be a $1 million shortfall in the contract between the city and HOAR. He then wrote it was likely the entire bond issue would be used.
“Can there be an agreement between the city and GulfQuest that to the extent the $25 [million] is not used up in construction, the balance will go to FF&E?” Peebles asked.
Jones confirmed that there was never a loan agreement and that the board had asked for any money leftover from the bond issue to be put toward the $1.6 million debt. Jones said, however, the entire bond issue was used to pay for building construction.
GulfQuest board Chairman Mike Lee remembers Wettermark and Jones approaching the board about paying for an increase in the contract with Hoar. He said it was understood that the city would pay the money back at a later date. However, he added that the board was aware it wasn’t a formal agreement and was only a “handshake.”
Lee said the board never had any intention of suing the city over it. In fact, he added that by taking over the museum and the responsibility of some of the operating expenses, it could be argued the city was doing its part to make good on the loan.
The board and the current administration also have different views on the status of the $1.6 million, Zodrow said. In a related June 2016 letter to Zodrow, the city’s executive director of finance, Paul Wesch, wrote there is no record of the agreement.
“There is no corresponding entry in the city of Mobile’s financial records,” Wesch wrote. “There is no documentation in the possession of the city that would support a loan or other financial obligation of the city to the museum.”
Zodrow said Mayor Stimpson and the administration are aware of the $1.6 million agreement, adding that on several occasions the board was told the repayment would be introduced to the City Council. He said he doesn’t know what happened.
“Discussions were up and down and left and right,” Zodrow said. “They changed daily.”
During the discussions, the city offered to give GulfQuest anywhere from $2 million to $750,000 at one point, Zodrow said.
“We would’ve taken any amount,” he said. “We were so willing to work with the city that we were just going along for the ride.”
Stimpson said the administration did bring a funding request to the council, but the idea got a “lukewarm” reception.
Stimpson also acknowledged the city was aware of the $1.6 million and added that they didn’t just “blow it off.” He said the administration this summer tasked accounting firm Smith, Dukes & Buckalew to review the audited financials of the city and the GulfQuest board to see if there was any reference to a loan. Stimpson said the accountants found no evidence the city owed GulfQuest any money.
“ … From a legal standpoint, the operating agreement [between the city and GulfQuest] does not allude to any debt,” Stimpson said. “Once an operating agreement is signed it supersedes any verbal or any other previous written agreement.”
Other than a passing comment Zodrow made early in 2014, Wesch said the museum board didn’t mention the owed money until this summer.
Zodrow also said museum staff were also discouraged by the Stimpson administration from taking the issue public.
“We had the administration say, ‘if you go public, we’re not going to help you,’” he said.
The city’s confidentiality request was the subject of several emails between museum staff and board members, according to records provided by Zodrow. In one, Zodrow wrote to Lee “since the city leaked the story about GulfQuest not paying its utility bills and then drafted the prepared statement for the city’s and the museum’s use, we have been at an extreme disadvantage in handling any media inquiries about this situation.”
“Without being able to reference the $1.6 million agreement with the Jones administration, this will appear to the media and the public to be a case of mismanagement on the nonprofit’s part,” he wrote. “And if that sticks, it will do a lot of damage to the museum’s ability to attract attendance, raise donations, get corporate sponsors, book special events, etc.”
Stimpson admitted that the city did not want a “bad news story out there” while they were trying to figure out what the expenses would be. Wesch clarified, saying that they never told staff to keep it from the public, but told board members it might not be the best way to argue their position.
Zodrow claimed Mobile City Council members were apprised of the situation during discussions with Stimpson. He added that GulfQuest officials spoke individually to councilors at the administration’s suggestion about the money they believed the city owed.
Councilman John Williams says he met in his office with Zodrow and one other board member. He said they discussed the $1.6 million, but he told them a request for funding would have to come from Stimpson.
“When the current administration agrees it’s a commitment … it will bring it to us,” Williams said. “To date, none have done that.”
Zodrow also claims the city owes the board $492,000 for construction punch-list items it paid for from 2013 to 2015.
In a statement, Zodrow wrote that beyond acoustic panels, for which the city set aside $78,000, the board had to assume responsibility for a number of punch-list items from Ben Radcliff Construction. A “working group” of board members met regularly to discuss the progress.
“The group recognized the need to address this work, which added $492,232 to the nonprofit’s expenses to get the building ready in time for its public opening.”
If the nearly $2.1 million were paid back, the museum could still be open, Zodrow said.
“We’d have cash reserves adequate enough to pay for operations,” he said. “We’d have funding to pay off existing creditors.”
Including back utility payments to the city, GulfQuest owed its major creditors $1.8 million when the city took control of the museum.
Still, Zodrow says the money the city owed would have helped keep the museum from running out of marketing money by February or March of this year.
“If GulfQuest had those resources, we could’ve engaged in year-round marketing efforts, which would’ve helped attendance,” Zodrow said.
Despite basically running out of money, Zodrow said the board never stopped fundraising. He said board members had raised enough to “keep our nose above water,” and had pledged to donate themselves if the city at least paid some part of the $1.6 million to the museum.
Stimpson also confirmed that all but eight GulfQuest staff members had been fired. All of the employees retained by the city are considered “mission critical,” with three involved with maintenance of exhibits, Stimpson and Wesch said.
Zodrow claims he was going to be offered a job with the city earning the same GulfQuest salary, but resigned instead. He said he is currently looking for opportunities in the museum field after serving as executive director of GulfQuest for 11 years, only one in which it was open to the public.
Both the Stimpson administration and the GulfQuest board are focused on the future of the museum at this point. Stimpson said the city plans to open it back up to the public at some point. He added that further development of the riverfront would be key to the museum’s success.
Lee agreed, saying the board feels very good about the future of the museum. Both Lee and Stimpson mentioned the possibility of Carnival selling tickets to the museum in the future, as well.
“We feel very positive about the partnership with the city moving forward,” Lee said. “We see a path to making this successful.”