THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Wednesday, December 21, 1994 TAG: 9412210292
SECTION: LOCAL PAGE: B1 EDITION: FINAL
SOURCE: BY ALEX MARSHALL, STAFF WRITER
DATELINE: NORFOLK LENGTH: Long : 101 lines
Just six months after Nauticus opened, the City Council narrowly agreed Tuesday night to lend the downtown waterfront attraction $5.2 million so it can pay its bills.
The 20 speakers at a public hearing at City Hall split on the value of big downtown redevelopment projects such as Nauticus, which cost $52 million.
Business leaders said Nauticus, a combination theme park and museum on the Elizabeth River, is creating jobs and pumping money into the city's economy. Civic league leaders and city employees said such projects take away money that could be spent on neighborhoods or on improving city salaries and working conditions.
The $5.2 million loan will have little immediate impact on the average citizen. The city will borrow the money through 20-yearbonds, and Nauticus is scheduled to pay most of it back.
But the action increases the debt for which taxpayers ultimately are responsible, should Nauticus fail to meet its bills. It also raises questions about whether the project will be a boost or drag on the city's economy in the long term.
After two hours of testimony and debate, the council approved the loan, 4-3. All opposing votes were from members who were elected under the ward system that came into effect in 1992 - Herbert Collins, Randy Wright and Paul Riddick.
The council also agreed to allow the project's annual tax revenues - this year an estimated $600,000 - to be applied against its debt service rather than go to the city coffers.
``It's a little late to say `I told you so,' '' said Eloise LaBeau, president of the Norfolk Federation of Civic Leagues. ``We realize we must bail out Nauticus this time, but we will fight you tooth and nail before we do it again.''
``Let's get back to basics,'' said James Janata, an East Ocean View resident and civic leader. ``A city's primary purpose is public safety and public education. We're not against downtown development, but don't be such hogs about it.''
Council members voting for the loan, including Mason Andrews, said projects such as Nauticus are investments that, if successful, will produce money for the whole city.
``It's not $5 million taken away from the police department,'' Andrews said. ``It's $5 million that will eventually produce revenue for the police department.''
Cities such as Hampton and Virginia Beach, Andrews said, actually subsidize major exhibits because they believe the projects benefit the community. Virginia Beach contributes $1 million annually to keep its Virginia Marine Science Museum operating.
``Of course, when you make an investment, there's always a risk, and this one is probably closer to the line than we would desire,'' Andrews said.
About 450,000 people are expected to attend Nauticus by year's end, officials said. Nauticus officials estimate 575,000 will attend next year. This still falls short of the 750,000 visitors originally considered necessary to make the project break even.
The $5.2 million will pay off the cost of attractions added in the months before the project opened last summer. It also includes some cost overruns in construction. Nauticus officials had hoped to pay for both through operating revenues.
Business leaders favoring the extra money said Nauticus has earned the city national attention and brought in tourists, both of which were its major goals. At the beginning of the public hearing, Nauticus President Mike Bartlett played a video that showed ``Today,'' ``Good Morning America'' and several other national television shows featuring Nauticus.
The Greater Norfolk Corporation, the Downtown Norfolk Council, and restaurant- and hotel-owners supported the loans. The director of Waterside, the festival marketplace next to Nauticus, said visitors to the facility had boosted his business 20 percent over business the previous year.
Nauticus supporters stressed that the new loans did not mean the project was a failure, only that it had not covered some unexpectedly high costs incurred in its first year of operation.
In another effort to improve Norfolk's tourism draw, the City Council approved $540,000 to help fund the expansion of the Virginia Zoological Park at Lafayette Park on Granby Street.
The initial phase will take three to five years and is estimated to cost $15 million. The council has pledged to match what the zoo raises through private fund raising. Riddick voted against the money.
While dealing with Nauticus and the zoo, the City Council also scrambled to keep another downtown project on track.
Mayor Paul Fraim said the state must honor its commitment to financially support the construction of a downtown campus of Tidewater Community College.
``At this point, `No' is not an acceptable answer,'' Fraim said. ``We have cleared buildings and begun renovating buildings. We relied on the word of the commonwealth.''
Gov. George F. Allen has proposed cutting the $1.25 million the city would receive in 1995-96 as well as the annual $1.3 million in rent payments from the state. ILLUSTRATION: Staff photo by BILL TIERNAN/
Norfolk City Councilman Herbert Collins, left, and City Manager
James B. Oliver Jr. listen to speakers before a vote on the loan.
KEYWORDS: NAUTICUS by CNB