TAMPA — A new report on the Museum of Science and Industry paints a bleak portrait of its finances.
MOSI owed its vendors, including the IMAX company, more than $1 million as of September. The $70,000 limit on the museum's credit card was often overdrawn, but staffers still used it to pay for Starbucks, Chipotle and meals at pricey restaurants like Ocean Prime. Hillsborough County officials said MOSI's revenue projections were far too optimistic.
Also problematic is how the museum chose to deal with its money troubles. In January, MOSI officials took out a $400,000 loan at 4.25 percent interest without getting advance approval from — or even informing — the county, which appears to be a violation of an agreement between the two. The museum could have borrowed from a county reserve fund at no interest.
These issues were discovered by county budget staff, which embedded in the museum's financial department from Aug. 19 to Sept. 3. The 64-page "site review,'' obtained by the Tampa Bay Times through a records request, was used internally by the county and was not provided to MOSI staff until the Times inquired about it.
MOSI president and CEO Molly Demeulenaere acknowledged to the Times that she did not seek prior approval for the $400,000 loan and should have. MOSI converted a portion of its line of credit with Republic Bank into a $400,000, five-year loan to pay back vendors, she said.
A 2013 agreement with Hillsborough allowed MOSI to pull up to $700,000 from a $1.2 million county-controlled reserve fund. Under that deal, the museum needed to get an okay from the county, which owns the museum building and the land beneath it, before taking on new debt.
Demeulenaere said she was unaware of the agreement when she took out the loan. She first joined MOSI in 2012 as vice president of development and became interim president in August 2014. The interim title was lifted in June.
"If I had known that agreement was there then of course I would have" gotten approval, she said.
County Administrator Mike Merrill said Demeulenaere should not have taken out such a large debt as an interim leader.
"I don't think that's appropriate, given the circumstances," Merrill said.
He also said it was questionable for MOSI to borrow from a private bank when the museum could tap into county reserves.
"It's a good question," Demeulenaere said. "The long and the short of it is, I walked into MOSI in August and had all of the debt that came with that position so I had to make some decisions.
"One of the decisions I thought was important was not to utilize our line of credit with the county as an ongoing stop-gap."
But less than a year later, Demeulenaere asked Merrill for $400,000 to cover payroll and other operational expenses. Merrill tentatively approved the loan, but only if MOSI met 14 stringent conditions, such as ceding budget oversight to the county. Merrill said red flags raised by the site review were the basis for the tough terms.
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This week, the MOSI board voted to reject those terms.
One of the conditions was to address within 90 days the problems outlined in the review. While a summary highlighted several, such as checks to vendors that were cut but not mailed and poor budgeting practices, the full draft unveiled deeper issues.
Hillsborough's budget director, Tom Fesler, said the report was preliminary and "includes certain opinions and findings that have not all been fully vetted."
Nevertheless, it's a startling portrait of the institution, the largest science museum in the Southeast. And it comes at a critical juncture. MOSI leaders are weighing a move to Tampa Bay Lightning owner Jeff Vinik's downtown redevelopment.
Even if the museum remains on Fowler Avenue in north Tampa, the county has ambitious plans to redevelop the area around the University of South Florida. MOSI could be a key piece of that effort.
When MOSI took out the $400,000 private loan in January, it owed vendors $685,000. And though the loan was earmarked for paying them, the backlog continued to grow. In September it passed $1 million, and $306,000 of that was outstanding for more than 90 days. IMAX was owed $135,000.
At one point, some vendors stopped performing services, the report said.
In September, MOSI was close to exhausting its $250,000 letter of credit with Republic Bank. That expires in January, according to the review. Over the past five years, payments and withdrawals from that account often coincided with when the museum received county funding.
County staff also noted that the MOSI credit card through PNC Bank reached its $70,000 limit several times during their review. When the card was maxed out, a partial payment was made so it could still be used. PNC is owed $20,000 in past-due payments.
The credit card is frequently swiped for small purchases at restaurants like Starbucks, Chipotle, Jimmy John's and Chick-Fil-A, but also at more expensive establishments like Seasons 52 and Ocean Prime.
Those types of expenses were tracked as fundraising purchases. Demeulenaere said her staff is constantly meeting with potential donors, which is when those costs are incurred.
"As fundraising happens, those costs do happen as well," Demeulenaere said. "We have very close oversight, and I feel 100 percent confident that there isn't any misuse of the MOSI credit card with my staff."
In rejecting the terms of the county's loan, the MOSI board has elected to raise the money themselves to keep the museum afloat. The board voted to increase 2016 fundraising goals from $3 million to $3.4 million — nearly double the contributions MOSI collected in 2015.
The county review expressed concern that such ambitious thresholds were not obtainable. The review notes MOSI failed to meet even pared-back revenue goals, and finished the year with a $365,000 deficit. Its annual budget is roughly $10 million.
Unrealistic budgets were a common problem under Demeulenaere's predecessor, Wit Ostrenko, according to a 2014 audit of the museum ordered by the county. That review also found bad bookkeeping, deteriorating conditions and underwhelming fundraising efforts.
But the current situation also has parallels to Demeulenaere's time as executive director of Sarasota's Gulfcoast Wonder and Imagination Zone.
The museum closed its doors soon after she left to join MOSI in 2012. Her successor said Demeulenaere had taken out a $50,000 line of credit without board approval to cover payroll, the Times reported this summer. Stakeholders said she hid the depths of the museum's struggles and used earmarked grants for basic operating expenses.
Merrill said he didn't think "anything in the report shocked" him, but he was adamant MOSI must move on from plugging holes to a long-term plan.
"It might be somewhat unfair to lay it all on Molly," Merrill said, "but the CEO needs to make sure they have the right competency level in their financial staff, and they're taking steps to do that."
MOSI now reports its finances to the county every month.
Demeulenaere said MOSI's long-term debt hangs over day-to-day operations, but she expressed confidence that the museum is on the right track.
"It's no secret that cash flow has been a problem with MOSI for a long time," she said, "which is why we're trying to look toward a final solution, which is garnering community support and moving past this.
"In 90 days this is going to be a very different conversation."