Teaming up to save a city’s premier attraction
Oct 31, 2011
In 1981, the mayor of Baltimore, donning a yellow and red striped Victorian-era bathing suit, hopped into the seal tank to kick off the grand opening of the National Aquarium in Baltimore. Since then, it has been the city’s premier attraction. Each year, the Aquarium draws an estimated 1.4 million visitors, making it Maryland’s largest paid tourist attraction, and generates roughly $220 million in revenue for the region, $6.8 million in state and local taxes, and 2,000 jobs.
But in 2009, as the Great Recession bitterly came to an end, the Aquarium faced a problem. The credit rating of the bank enhancing the credit of its variable rate demand bonds fell and, as a result, the interest rate on $14 million in outstanding debt jumped exorbitantly in two weeks. The rate increases threatened to disrupt the fundamental operations and future projects of one of Baltimore’s most cherished institutions.
“The bondholders were looking to the credit of the financial institution, not the credit of the Aquarium,” said Bruce S. Hoffberger, chief financial officer of the National Aquarium. “Since the bank’s credit rating slipped, we ended up having to pay higher interest rates than normal. We knew we had to move quickly. Time was of the essence.”
The Aquarium began searching for a new bank that would offer an array of services that big banks traditionally offer, such as loans, deposits, treasury management, credit cards, a line of credit and the ability to refinance the $14 million in variable rate demand bonds. An underlying critical factor in its search was the need for a bank that had a knack for building long-term relationships, similar to a small town bank.
“Given the environment, we knew it was going to be difficult to strike that balance,” Hoffberger said, “but it was crucial the Aquarium team felt empowered to make decisions with the confidence of long-term support.”
After interviewing half a dozen area banks in two months, the search ended after a discussion with Bank of America, which was able to meet both criteria of the Aquarium.
“The Aquarium goes beyond tourism,” said Janice Godwin, Senior Vice President of Bank of America in Baltimore. “It influences Baltimore’s economy, job market, education system and local conservation efforts. It was right in our sweet spot. It was a difficult credit climate and we stepped up because Baltimore believes in the Aquarium.”
With Bank of America’s support, Hoffberger could attend to other matters at the Aquarium, like keeping crowds pouring in to see 660 species of fish, amphibians, reptiles, birds and marine mammals ranging from the grey-headed flying fox to the menacing sand tiger shark. What’s more, the long-term support has allowed him to plan for future growth and see projects to completion, such as the Jellies Invasion: Oceans Out of Balance exhibit that occurred in 2010 and continues even today.
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