A Jacksonville nonprofit is making another attempt to dock a naval ship museum Downtown along the St. Johns River.
The Downtown Investment Authority board will consider a resolution Jan. 15 to enter a one-year development and licensing agreement with the Jacksonville Historic Naval Ship Association Inc. to relocate the USS Orleck DD-886 to Pier No. 1 at the Shipyards near TIAA Bank Field.
The agreement calls for two five-year renewal options if the nonprofit meets the terms of the agreement. Those terms were not included in the DIA’s Jan. 15 board packet.
The USS Orleck has been a working museum in Lake Charles, Louisiana, for the past 10 years. It is named after Lt. Joe Orleck and launched May 12, 1945. It’s primary service during the Vietnam War was in the 7th Fleet in the Pacific.
This is the second time in two years JHNSA has tried to bring a warship Downtown.
JHNSA spent years trying to bring the 437-foot USS Charles F. Adams to Jacksonville. It secured $2.8 million through donations, private capital, bank loans and state grants to refurbish the ship and move it Downtown.
The U.S. Navy decided not to donate the Adams and instead salvage the ship.
JHNSA President Daniel Bean told the DIA board Dec. 18 that the USS Orleck will come from another nonprofit organization and they won’t have to work through the federal government.
“With the help of Congressman (John) Rutherford, it became very apparent to us over a year ago that the inactive ships department of the U.S. Navy was not going to transfer possession of the USS Charles F. Adams,” Bean said.
“The Navy wasn’t going to transfer any ships to any city. They just didn’t bother to tell us that,” he said.
Bean said the nonprofit kept the $1 million grant from the state of Florida and is negotiating with donors and supporters to re-establish a $900,000 line of credit and $800,000 from personal loan guarantors to fund towing the USS Orleck.
JHNSA expects to spend $2.65 million to move the ship and operations.
The DIA approved a three-year economic development agreement in May 2018 with the nonprofit to dock the USS Adams at the Shipyards..
Bean hopes for similar success with DIA on an agreement for the Orleck.
Revenue estimates
JHNSA estimates 173,000 visitors per year, bringing $3 million to $4 million in direct revenue.
After expenses and estimated debt service payments, the nonprofit expects $870,000 in net profit by the end of 2020 to add to a reserve capital fund. By 2023, JHNSA projects net profit to grow to $1.904 million.
Revenue would come from tours, overnight stays, concessions and special events such as conventions and weddings, Bean said.
Bean said the financial model was created by 4P Group LLC of Wesley Chapel and income projections were based on a 2016 analysis of the USS North Carolina Battleship Museum in Wilmington, North Carolina.
DIA staff said the Naval Ship Association’s revenue projections are high. The DIA compared the nonprofit’s financial projections with three years of audited reports and IRS 990 tax forms from five other Naval ship museums in the U.S.
The financial success of those ship museums varies.
Records provided by DIA Contract and Regulatory Compliance Manager John Crescimbeni show that in its current location, USS Orleck Naval Museum Inc. reported a revenue loss of $15,493 after expenses in a three-year period from 2015-17.
Bean said the Jacksonville Shipyards site on the St. Johns River near two major interstates would make the Orleck visible to more than 100,000 vehicles per day.
He said the city’s naval heritage and status as the third-largest naval presence in the U.S. would help boost attendance and revenue.
Museums analyzed
Other warship museums were analyzed by the DIA.
The nonprofit Pacific Battleship Center in Los Angeles, home of the USS Iowa, reported $1.005 million in revenue after expenses from 2016-18.
Tax forms for the USS Turner Joy Naval Museum show from 2015-17 the destroyer in Bremerton, Washington, brought in $821,166 after expenses.
Bean said JHNSA plans to put $300,000 in escrow with the city to pay for towing away the USS Orleck if it does not perform financially.
The nonprofit also told DIA staff it would agree to reevaluate the cost of removing the USS Orleck from the Shipyards every two years, according to Bean, and plans to add funds to the account annually.
“The fact of the matter is, the DIA has done their due diligence. I think they see how other cities have done well with their numbers,” Bean said Jan. 10. “The city is protected in the event that we fail.”
Museum facilities
The nonprofit and DIA staff also are negotiating parking and complementary facilities for the museum. The DIA has discussed opening the Catherine Street right-of-way near the Shipyards for angled street parking.
JHNSA also has proposed a temporary Quonset hut for ticket-taking at the museum’s entrance. DIA CEO Lori Boyer said, as a Downtown attraction, there needs to be a high standard for appearance.
“If we are going to do it, I want this to be an attraction that’s going to be an asset to Downtown and adds to the image of Downtown,” Boyer said Dec. 18.
Pending DIA and City Council approval, the ship will be towed to a shipyard in Port Arthur, Texas, for a dry dock period for six to eight weeks.
There, Bean said the Orleck will be inspected to ensure the ship is structurally sound enough for the trip to Jacksonville and a 10-year docking at the Downtown Shipyards.
Bean also said there is value in the Orleck’s steel. Should the ship be unusable and need to be salvaged after inspection, an appraisal commissioned by JHNSA valued the Orleck’s materials at $2 million.
Bean said that would give the nonprofit a net gain of $1 million that could be used to pay off any remaining expenses of the city.
