Oklahoma Aquarium feeling economic effects of COVID-19
COVID-19 has run rough shot over businesses since early March and the Oklahoma Aquarium is also feeling the effects.
The Oklahoma Aquarium is not funded by any sales tax that is collected by the City of Jenks. The facility is funded through gate admissions, memberships, and events throughout the year. It has an annual budget of around $6 million.
With the pandemic hitting the nation in mid-February and early March, The Jenks Aquarium Authority made the decision to close the facility’s doors March 16.
“With the way the aquarium’s finances work, there is a busy season from March through the end of August,” Jenks City Manager Chris Shrout said. “It is typically in that time frame the aquarium is collecting its most revenue. Usually, when September hits, everyone is back in school and there is less guests coming into the facility, so September through February is typically the slow season.”
The timing of when COVID-19 hit has made it difficult on the popular Jenks attraction.
“COVID-19 really hit a bad time for the aquarium because it was closed the second half of March and all of April,” Shrout said. “It re-opened in mid-May and what we have seen since the re-opening is about a 40% decline in number of guests coming through the door, which means revenue has declined about 40%.”
The decline in revenue is presenting challenges for aquarium and city staff.
“It is a big challenge,” Shrout said. “The aquarium has cash in the bank, but obviously a limited amount. The quicker we can come out of this pandemic and people feel more comfortable coming and visiting the aquarium, the better because there are 10,000 animals we have to keep alive regardless of how many guests are walking through the doors. That’s where the majority of the expenses are.”
Heating and cooling a 75,000 square-foot facility with 10,000 animals, who eat every day and paying employees to manage those animals during a global pandemic, such as the one that is taking place can make life difficult.
“I don’t think anybody has an understanding of how long this pandemic is going to last, but I think at the minimum, we believe it is going to affect the aquarium’s finances for at least another six months,” Shrout said. “Because of that, it looks like we will be dealing with a 40% decline in attendance for the next year and possibly beyond that. Then, when the pandemic is over, you have to get those people back through the door. You have to remind them the facility is there, and it is an opportunity to learn about marine life around the world right here in your backyard of Jenks.”
The Oklahoma Aquarium is trying to do its part in making people feel safe to come to the facility. Not only is social distancing being enforced, the aquarium made masks a requirement Aug. 10 to enter the facility.
“There is no silver bullet to take care of this revenue/expense issue other than let’s do everything we can to make people feel safe and then get those customers back,” Shrout said. “We have all sorts of precautions in place. We have hired people to just go around and clean everything throughout the day. The employees are required to wear masks and our guests are now required to wear masks. If there is anything we can do to make people feel safe, we are going to do it. We also believe by issuing a mask requirement, we could potentially attract more guests because people will feel more comfortable.”
COVID-19 also came at a time when the Oklahoma Aquarium was projected to become completely self-sustaining.
The annual debt payments for the facility are around $1.3 million. Those payments go toward paying back revenue bonds that were issued to build the facility. Those revenue bonds have been refinanced over time with the last time being in 2014.
“We refinanced those in 2014 to reduce the payment and get a better interest rate,” Shrout said. “If there is not another refinancing, those revenue bonds will be paid off in 2034. For the first 15 years, the debt on the aquarium was in large part paid for by the original Vision 2025 sales tax. $923,000 would come from the Vision 2025 tax, but that tax expired in 2015, which left the aquarium with an extra $923,000 required to pay the debt annually.”
Prior to that tax expiring, city leadership needed to identify another way to fund the debt payment. As a part of the debt refinancing, it was negotiated with the new power plant in the City of Jenks that its industrial water sales would have a 25% markup cost and that 25% surcharge was identified to pay any short fall on the amount of revenue generated by the aquarium verses the operating expenses and debt payments.
“The first year we needed that industrial water plant money, it was a $400,000 transfer,” Shrout said. “I was then charged by the City Council and by the Oklahoma Aquarium Board to see if the aquarium could be self-sustainable and pay the debt without requiring a transfer from the industrial water sales. Since 2016, we have been focused on keeping expenses in line and increasing revenue by increasing the number of people that can visit the facility.”
Mission accomplished for Shrout and city and aquarium staff. Following the $400,000 transfer four years ago, three years ago, the transfer was $320,000, and two years ago, it was $75,000.
“We have reduced it from $923,000 under Vision 2025 tax to $400,000 to $320,000 to $75,000,” Shrout said. “The aquarium’s revenue has increased enough, and expenses were kept in check, so there was only a $75,000 transfer needed to cover that debt two years ago.”
The facility was well on its way to becoming completely self-sustaining. However, with COVID-19 affecting the attendance and revenue in 2020 for the Oklahoma Aquarium, it is yet to be determined how it will impact the subsidy amount needed, if any, from the industrial water sales going forward.