Bond rating falls a notch

The Baltimore Sun

The National Aquarium took a hit yesterday when Moody's Investors Service downgraded its bond rating, voicing concerns about the attraction's depleted cash reserves - particularly as a multimillion-dollar aquatic center project looms on the horizon.

Moody's knocked the aquarium from an "A2" rating to an "A3," a move that would make it more expensive to borrow money.

"The negative outlook reflects our concerns over [the aquarium's] thin levels of liquid financial resources and undertaking of [a] major new capital project," Moody's wrote.

Aquarium officials played down Moody's assessment, saying that the attraction remains in a solid financial situation.

"Nobody wants to have their rating downgraded, but the fact is this is still a good rating," said David M. Pittinger, the aquarium's executive director. "The important thing is to put it in perspective. We are operating in the black."

The aquarium has been one of Baltimore's top attractions for a quarter-century. Perched in the Inner Harbor, it boasts a collection of more than 10,500 specimens and 560 species.

However, the heavily anticipated Animal Planet Australia: Wild Extremes exhibit, which opened eight months late and over budget at the end of 2005, didn't draw the attendance officials had hoped and left the aquarium dipping into its cash reserves to pay more than $20 million in cost overruns.

Exactly a year ago, the aquarium fired 13 employees and trimmed its budget in other ways, in an attempt to cut $2 million from its annual spending and help make up the difference.

Moody's criticized the aquarium for dipping deep into foundation's reserves to pay for the Australia exhibit, which was initially budgeted at $61.7 million but wound up costing $83.1 million. The aquarium's current debt is $33 million, according to Moody's.

Pittinger said $21 million is in the foundation account, down from a high of about $49 million in 1999. He said the aquarium is determined to rebuild the fund and will put a couple of million dollars back in this year.

"We're planning to allow the foundation to build back up again with operations and fundraising," he said.

Moody's also called the aquarium's fundraising numbers "relatively low compared to other cultural institutions."

Pittinger said the aquarium is working on that by hiring a new development officer and planning to launch a major campaign next year.

The aquarium also is working to build the Center for Aquatic Life and Conservation on 20 acres on the Middle Branch. The $53 million project, which will include a park, a conservation area and a place to "retire" animals, is not expected to open until 2013, even though 2008 was once the projection.

Moody's worries that the aquarium doesn't have money on hand for the center and hopes that the organization will have more oversight on the project to avoid the "pitfalls" of the Australia exhibit construction.

Pittinger said the aquarium has no plans to borrow money for the aquatic center and has commitments for about $21 million in contributions.

"Yes it has taken a while," he said, "but we've taking the time to do it right."

Officials with the Association of Zoos and Aquariums, an accreditation agency, are not concerned about the aquarium's financial viability.

"This is a strong operation that's been there for 25 years," said spokesman Steve Feldman. "This is probably part of that natural cycle."

Likewise, the Moody's report didn't worry Baltimore's tourism and downtown boosters.

"I don't think anyone has to worry about the aquarium falling into some kind of downward financial spiral," said Downtown Partnership spokesman Mike Evitts.

"A ratings-house assessment is so far removed from the experience of the general public. In many ways, that's the aquarium's bottom line."

Though aquarium attendance figures are inching up, Pittinger said he would like to boost them. In 2005, 1.4 million people visited the aquarium, and 1.6 million bought tickets last year, he said.

The aquarium remains one of Baltimore's most popular attractions, said Nancy Hinds, spokeswoman for the Baltimore Area Convention and Visitors Association.

"When people come to Baltimore, they almost always go to the aquarium as one of their stops," she said.

"If they have financial or bond rating challenges right now, I have no doubt that they'll get over them, and they'll be fine."

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