By ARTHUR L. MACK
MOBILE — Despite some hesitation, the Mobile City Council on Tuesday voted 6-1 to take on $2 million in debt owed by the GulfQuest Museum, as well as approving a forbearance agreement and a second operating agreement.
The $2 million in debt was a portion of $5 million owed by GulfQuest to banks that it wasn’t able to pay back. As such, under the agreement, the banks agreed to forgive $2.5 million, allowing the Gulf Quest Foundation to pay back $500,000 and the city of Mobile to pay the remaining $2 million over a five-year period ($400,000 a year).
GulfQuest will also be a city department, meaning the city will continue to be responsible for payroll and operating costs. The city took over the staffing in 2016 after GulfQuest was briefly shut down because of money lost from poor attendance.
“We’re excited, (because) this moves the museum forward,” said Mike Lee, chairman of the Maritime Museum board of directors. “I think that the plan that the city came up with for this a good plan, financially. It’s a sound move, because as Joel mentioned, you’re avoiding $26 million or more in problems for $2 million over five years.
“It was also not mentioned that all income from the museum is being turned over to the city, so that will almost wipe out right out of the blocks the $400,000 every year, and it will generate more. It will actually give a positive cash flow to the city toward some of the other expenses. It’s a really good deal from a business standpoint, and I think that the mayor and the council did the right thing.”
While the majority of councilmembers voted in favor of taking on the debt, there were still some concerns. Councilman CJ Small, while supporting the resolution, said there were other pressing issues that had yet to be taken care of, namely funding for repairs of Ladd-Peebles Stadium. Councilman Fred Richardson said it would take a stronger effort to ensure more people were aware of GulfQuest, as well as a more diverse board of directors.
Councilwoman Bess Rich, the only no vote, told the Call News she was concerned the matter did not go before the citizens in the form of a referendum.
“Anything that’s not a basic city service, if you’re going to put in the capital and it’s going to come from the public, that’s what cities do,” she said.
Before the vote, Rich was concerned about the council taking on even more responsibility.
“It’s troubling that the council has been put into a position to take on GulfQuest,” she said. “I’m concerned that the financial plan is not comprehensive. The city will be asked to pay $400,000 a year for the next five years. How much longer do we have to pour money into this fantasy? How much is enough? I can’t support this because I don’t feel that we’re being honest with ourselves.”
But city finance director Paul Wesch said the passing of the resolutions ultimately allowing the city to take on the $2 million was a wise move.
“The one thing that was in front of us was the fact that the $5 million loan that has been paid down to $4.9 million,” he said. “It matured some time ago. The nine banks involved acted as one and extended it numerous times and now they’re at their limit. So they were not going to extend it again, and it called in the question, ‘What is the future of GulfQuest?’
“The risks involved (with the loan purchase) are many. If GulfQuest fails — if they close, then the city defaults just under $27 million worth of FTA grants. The way FTA grants work, the purpose has to be completed by the grantee. If GulfQuest fails, the purpose of the grants would fail and the city would be called upon to pay back those grants to the federal government.
“We would also have to acknowledge on future grant applications that we have defaulted on a federal grant. That could impair the chances of the city being able to get future grants. In addition, if the banks were to default, they could seize their collateral (the exhibits inside GulfQuest). Without the exhibits, you don’t have a museum.”
When asked if there would ever be any guarantees that GulfQuest would get to the point where it wouldn’t have to come back and ask the city for more money, Lee said, “I don’t know. The museum has been operating out of its own income, and it’s not in financial trouble at this time. The whole point of this process was to make long-term advances where we could start putting some money towards promotion as opposed to so much money going into interest. The entire transaction was aimed at eliminating long-term debt so we could spend that money to bring in more visitors.”