To keep itself afloat, the Aquarium of the Pacific wants money from an account intended keep methane out of the lungs of Black and Brown kids.
EDITORIAL Tuesday March 9, 2021 City Council will vote on whether to approve a $5 Million cash flow “loan” to the Aquarium of the Pacific. If approved, the money will come from the Oil Field Abandonment Reserve. This reserve is a fund set aside for oil wells that bankrupt oil companies routinely leave unplugged all around Long Beach. As a result, our children are left holding the bag and inhaling methane gas.
But we’ll turn back to the environmental justice prong later. First, let’s address the fine print on the terms of the Aquarium “loan”.
The “Loan” Terms
The terms of the loan are very forgiving. City staff writes, “the Aquarium will repay the loan as soon as possible, based on its ability to repay.”
The loan would mature in 13 years, says the City.
But since the Aquarium doesn’t have a great track record for paying its bills, the elephant seal in the room is who’s really backing this so-called loan.
If you recall, the aquarium started out in life in the red. The year was 1998 and the City took out a $117 Million loan to build what it hoped would be a big tourist draw.
The idea was that with the Aquarium of the Pacific as bait, tourists would forget our naval shipyard past and spend their time and dollars frolicking on Long Beach’s waterfront.
That gamble put residents on the hook for a $117 Million bond. But the worst part is that the bait didn’t work.
A few years from opening, numbers dwindled as rumors spread of lousy food, crowded conditions and sleep inducing exhibits. Predictably, the Aquarium fell behind on its rent. Attendance was so bad that the city refinanced the debt to lower the Aquarium’s rent in 2001.
By 2007, things were turning around. The Aquarium brought in nearly $39 Million which was a 26% increase over 2006. Then in 2018, 1.7 million people visited the aquarium with revenues of $43.5 Million.
After bouncing back you would think that both the Aquarium and the City would have learned a lesson on the importance of saving for a rain day. Instead, in 2019 the Aquarium splurged on a new $53 Million high-def immersion theatre called “Pacific Visions”.
Now that the rainy day has arrived in the form of a world-wide pandemic, the Aquarium is back where it was nearly 20 years ago.
Here again, it’s not able to meet its rent to the City and of course requires a co-signer for lack of credit worthiness.
The City’s solution is simple and shifts all the risk back onto taxpayers. The loan is backed by the Tidelands Fund.
This is how it works in three easy steps:
The City will “loan” the Aquarium $5Million from reserves supposed to be set aside to keep oil wells from spewing methane into the air.
If it starts to look as if that fund to plug oil wells “will not have enough cash to fund immediate costs”
then the Tidelands Fund must advance repayment for the Aquarium.
To sweeten the pot, City Staff adds that this advance payment is triggered even if the Aquarium is meeting the terms of the loan. So, the Tidelands Fund is on the hook for the “loan” regardless of whether the Aquarium falls behind.
In other words, if between now and 2034 there isn’t enough money to plug oil wells then the Tidelands Fund pays the Aquarium’s debt.
This, combined with the low interest rate sounds more like a gift than a loan.
The Interest Rate
When, or if, the Aquarium pays the loan they have a sweetheart deal on the interest. The City Manager wants the interest based on a “ten-year treasury yield - fixed rate.”
That’s fancy talk for a measure used to set home mortgage rates. If you’ve been following the economy lately, you’re hardly surprised to learn that the 10-year treasury yield along with mortgage rates are at historic lows.
No doubt the Aquarium has its fins crossed in hopes that the City Manager can convince Council to fix the interest rate during our economic downturn.
The truth is, the sort of loan the City Manager is recommending Council approve is best used for single family home mortgages. This way if the owner defaults the lender has the home as collateral.
If the Aquarium defaults, Long Beach can’t very well put the fish out on the street and the Aquarium back on the market. Our homeless crisis is bad enough as it is.
The Aquarium is a commercial business. For goodness sake, the City staff’s own report requesting the $5 Million “loan” amount repeatedly refers to the Aquarium as the “Corporation”.
For commercial businesses and corporations, hard money loans - not mortgage type loans - are the industry standard.
But heavens forbid the city should be fiscally responsible or that it ask the Aquarium to be.
Money’s No Object
In case you haven’t been keeping track the Tidelands fund has been on quite the spending spree. It’s currently spending around $9Million on a concession stand, up to $60Million on a beachside aquatic center and now it’s first in line for $5Million to the Aquarium.
It’s fiscal responsibility and oversight that has some residents in an uproar about this agenda item.
As a condition of the loan, one would think the public would be able to take a look at the Aquarium’s books. No where, however, does City staff recommend Council take such a step to protect the public’s interest.
In other words, ‘give us your public dollars but keep your nose out of our private business’.
What about our Kids’ Health
If the dollars spent don’t make any sense to you, wait until you read how this agenda item impacts your family’s health.
Strangely, the City never mentions the environmental impact in any line of its five-page, single spaced, $5Million request.
So then what is the cost to our health and environment?
You see, when oil companies go out of business they typically go bankrupt. They abandon the wells unplugged, leave the City with the bill and residents inhaling methane.
In addition to methane, a greenhouse gas 84 times more potent at trapping heat than carbon dioxide over a 20 year period, abandoned oil and gas wells spew benzene, nitrogen oxides, carbon dioxide, and other pollutants. - Climate Nexus
All the more concerning in Long Beach, because Aside from Signal Hill Petroleum, our oil field is currently run entirely by more vulnerable and small independent oil companies.
According to a report completed by the California Council on Science and Technology not only are abandoned wells concentrated in Long Beach and Los Angeles but they can cost up to $1Million to plug and clean up.
The report says that the cost of sealing an orphaned oil well in Long Beach is “systematically high.”
Looking at the map below, you get an idea of the staggering cost involved in plugging our City’s numerous abandoned wells.
But the map reveals another dirty truth. The trail of abandoned wells are concentrated in densely populated and largely underserved areas of Long Beach. Districts 1, 6, 7 and some of 8 are the hardest hit. In these districts are the lungs of predominantly Black and Brown children already subject to overwhelming port pollution.
What Did They Know and When Did They Know It
It’s not as if Long Beach public officials had no idea about the health risk posed by the abandoned oil wells or that there’s not enough money set aside to fix the problem.
Only last year, former Long Beach Councilman and now Assemblyman Patrick O’Donnell introduced a bill to try and get ahead of this issue. In the bill, he asks the state to put aside hundreds of millions of dollars to help plug abandoned oil wells and the many more soon to grow in Long Beach.
O’Donnell pointed out then that regardless of whether the state had reached its $300 Million savings limit, there’s still an unfunded shortfall of $500 Million.
Thus, it seems rather irresponsible to loan $5Million from a fund already stretched thin to prop up a corporation with a history of bailouts.
Systemic Racism
In a turn of irony, the very Aquarium that is a symbol of environmental sustainability is in this case a shining example of our City’s challenge with systemic racism.
Let me show you how.
Again, its predominantly Black and Brown families that make their home within the perimeter of Long Beach’s oil fields. It is the Oil field Abatement Reserve that will loan the Aquarium many millions.
But, here comes the inequity.
If the Oil Field Abatement Reserves run low within 13 years - which is rather likely - the Tidelands Fund will pay the Aquarium’s loan in advance. This is the same Tidelands Fund to which kids living in underserved Districts are legally excluded from.
The Aquarium, however, because of its waterfront zip code, can access either the Oil Field Abatement Reserve in the “hood” or the Tidelands Fund on the coast to meet any of its economic needs. However, any institution in the 6th, 7th or 8th Districts would have the door slammed in their face if they were to even whisper a request for Tidelands Fund relief.
This wouldn't be the first time the Aquarium has benefited from the double standard of “Tidelands Fund Privilege” at the expense of underserved areas.
During the Port of Long Beach’s Middle Harbor project, North Long Beach residents put up millions to cover the Aquarium Bonds. These funds were never repaid and only recently has this area seen some measured success.
Again, while North Long Beach is free to spend its limited resources on the Aquarium, UpTown - as it is sometimes called - is never welcome to benefit from Tidelands Fund spending.
These events fit the classic definition of systemic racism and harkens back to redlining. Our City’s own Framework for Reconciliation reads, “historic patterns of inequity and exclusion were often created and maintained by public policies at the federal, state, and local levels.”
Oddly, the same City staff making this inequitable request, only months ago, facilitated the Framework for Reconciliation.
But on a scale of priorities it’s probably tough for a kid in the 6th or 9th District to compete with an adorable penguin.
And in any case, given our City’s apparent apathy, why bother rebranding what is clearly a gift as a “loan” when too few people in Long Beach will take the time to read the agenda item anyway?
No matter what the SCAQMD, CALEPA, or even the State legislature designates as overly polluted areas in Long Beach; Don't look for any relief from harmful pollution, because it will be deemed to have no significant impact on people or the environment.