Another Big Deal in Long Beach
Four years is a long time in most life situations. In four years, a child can learn to walk, talk, and become a social being. A stand of bamboo can grow 20 feet. The governor of California can serve out a complete term, and a pair of flies can generate several billion offspring.
But in the glacial pace of planning, four years is the blink of an eye. That's why the completion of the Long Beach Aquarium of the Pacific in the City of Long Beach is such a notable accomplishment. After a public investment of $185 million on construction and other improvements, the aquarium opened in June to large crowds, and is currently accommodating up to 10,000 people a day. The facility created permanent jobs for 200 people. More remarkably, everything seems to have gone according to plan, on time and slightly under budget. Even so, it is uncertain whether how much of the Long Beach experience, if any of it, can be replicated elsewhere.
To understand the momentum behind the aquarium, one must first understand Long Beach, which is one of the most pro-growth, self-promoting cities in the state. The city, of course, is home to the nation's busiest harbor (when combined with the neighboring Port of Los Angeles). The city has invested heavily in its downtown area, and promoted a row of high-rise buildings on Ocean Avenue, the city's main street. And the city has tried repeatedly to soften the image of its rough-edged waterfront as a place of trucks, tankers, and broken-nosed sailors. In particular, the city has built (and expanded) a convention center on the water, while attempting to buttress that investment with lukewarm attractions, such as the Queen Mary cruise ship and the now-departed Spruce Goose aircraft display.
After being turned down for a Disney theme park in 1992, the city decided in 1994 that it wanted an aquarium on Queensway Bay, and things began to move rapidly at that point. At first, the city courted corporations and at least one entertainment figure to make a private contribution toward the aquarium. A few months later, Kajima USA, the U.S. arm of the Japanese construction giant, arrived on the scene, and the project took a new direction.
Kajima had just completed an aquarium in Tampa Bay, Fla., and wanted to do another project. (Kajima is currently pursuing at least three other aquarium projects.) The developer proposed an unorthodox arrangement, which the city eventually accepted: Kajima would build the project as a merchant developer. The executive architect would be Hellmuth Obata Kassabaum, the St. Louis-based firm in which Kajima has a 40% interest. (The San Francisco-based firm of Esherick, Homsey & Davis, designer of the much-admired Monterey Bay Aquarium was the design architect.) The construction would be done by a joint venture of Kajima and Turner Construction of Los Angeles. In other words, Kajima offered the city a "vertically integrated," design-build package.
The city signed off on the deal in late 1994 and a 20-month construction schedule started in spring 1995. Motivating the speed, in part, was competition, recalls Paternoster, who pointed out that several communities - including neighboring San Pedro ( the harbor area of the City of Los Angeles), Ventura County and Santa Barbara - were all considering aquariums. (Santa Barbara is moving forward with its project.)
To fund the project, the city created a non-profit corporation, known as Aquarium of the Pacific, which issued $117.5 million in tax-free revenue bonds. In addition, the city spent another $14 million in roadway improvements, including a $7.4 million ISTEA "demonstration project", $3.18 in state gas tax revenues, $1.1 million in SB 821 money [WHAT'S THAT?] and about $800,000 from the city's gas and water departments. The city obtained another $40 million from HUD Section 108 economic development loan guarantee.
Long Beach used the HUD money to build the Rainbow Harbor and other waterfront improvements, including a 5.4-acre wetlands mitigation. The $13.4 million parking structure was financed by U.S. Economic Development Administration, the U.S. General Services Administration and the aquarium bond proceeds; while a $1.675 million boat launch was paid for by state DBAW funds and a portion of the Tidelands Fund, which is funded by the Port of Long Beach.
Even though Long Beach did not put up hard money for the aquarium, the city did help back up the bonds. In the event of a revenue shortfall at the aquarium, the city agreed to make the bond payments from the a portion of the hotel tax revenues that normally go to pay off a $35 million debt to the Long Beach Harbor Commission. To help out, the harbor commission agreed to take second position on the debt.
To make the Kajima's lucrative arrangement palatable to the city, the developer agreed to assume interest payments on the bonds, in the event that the construction went over budget. The "carrot," on the other hand, was a promise that any unspent construction money would be split between the aquarium and the developer, 60-40. (There was, in fact, a surplus, which helped pay for landscaping near the aquarium.) Overall, "Kajima came out very well," said Bob Paternoster, the director of the Queensway Bay project, in an interview.
The Queensway Bay specific plan calls for waterfront-oriented retail. For a site directly across the street from the aquarium, the city is currently negotiating with a developer to build 500,000 square feet of restaurants and a 16-screen multiplex (we should have seen that coming). City officials hope that the sales tax from the new construction will throw off about $4 million annually in sales tax, possessary-interest tax and ground-lease revenues - enough to offset anticipated $3 million in interest that the city needs to pay on the $40 million Section 108 loan.
Given the high interest in aquariums among California communities, a number of California cities are probably watching Long Beach closely. Yet Paternoster suggests that the city's experience in aquarium-building "may not be easily duplicated elsewhere." Long Beach had a number of advantages, including an existing site with supporting uses and a specific plan already in place. In addition, not every city would have been willing to cut such a sweeping deal with a developer, without going through a conventional RFP and multiple-bid process. Still, that unusual move bought Long Beach a lot of time, in terms of process and in construction, and enabled the city to take the lead in the regional aquarium race. Other communities did little more than stare at the drawing board, in the time it took Long Beach to blink its eyes.