R. Mark Davis and Albert T. Klyberg / Photos by Richard McCaffrey

The Heritage Harbor Museum, a planned $59 million showcase of Rhode Island's ethnic and industrial history, passed a big checkpoint on November 5 when voters approved the use of $5 million in bonds. But even as the museum seems to be on a roll after more than a decade of ups and downs, some observers wonder if the project can succeed financially.

A key question is whether the museum will attract at least 300,000 people in annual attendance, the number projected by Heritage Harbor's management. Ticket revenue is critical because the museum -- slated to open in the fall of 2005 -- has few other large sources of income.

Since Heritage Harbor is still in the works, it lacks the kind of big endowment that mature museums typically rely on to subsidize day-to-day operations which aren't covered by admissions and other revenues.

Further, museum officials are banking on ticket revenue to repay a $9 million federal loan to the City of Providence for the museum, by tacking a $2 surcharge onto ticket prices. Low attendance would mean less surcharge revenue, which could leave financially strapped Providence responsible for the difference.

Most of the project's skeptics declined to speak on the record, in part because they support Heritage Harbor and don't want to undermine it, or they don't want to rile the state's tight-knit museum community. But Ward Seven councilman John J. Igliozzi is openly doubtful about the prospects. "I think the Heritage Harbor idea -- the concept of having a museum paying homage to the many different backgrounds of Rhode Islanders and what they went through coming here -- is a wonderful concept," Igliozzi says. "But at this point in time, its proposal doesn't seem to be grounded in financial reality."

Among Igliozzi's concerns: whether the attendance projections will hold up; whether the proposed ticket prices -- $11 for adults and $7 for children -- are too high; and whether enough jobs will be created to meet the demands of the federal loan.

Meanwhile, city planners are advising the city council to ask Heritage Harbor for more information before seeking the $9 million loan from the US Department of Housing and Urban Development. Samuel J. Shamoon, Providence's director of planning and development, says officials want details on attendance and other projections, as well as more information about the worth of the museum building, the former Narragansett Electric Co. power plant on South Street, which would be used as collateral for the loan.

There are other difficulties facing the museum:

* Two unique exhibits -- a full-scale replica of the kind of sailing ship used by early Portuguese explorers, and a triple-decker house, typical of the homes of thousands of immigrants -- could be missing or only partially built when the museum opens.

* Two organizations -- the Rhode Island Historical Society and the Providence Jewelry Museum -- have yet to sign "participation agreements" spelling out the relationship between the Heritage Harbor organization and the 19 partner groups that helped create it. The historical society's delay is particularly noteworthy because it led the early development of Heritage Harbor, and had been designated at one point as the museum's "managing partner."

The historical society's former director, Albert T. Klyberg, is regarded as the visionary most responsible for the museum project (he now is Heritage Harbor's director of museum and program). Asked why the historical society hasn't signed on, its current executive director, Bernard P. Fishman, recently said that the group hadn't had a chance to thoroughly explore the draft agreement. Further, Fishman says the historical society is experiencing its own financial difficulties -- it recently laid off some staff members -- and is developing a new strategic plan. Fishman says the society doesn't want to make such commitments until the plan is in place.

A spokesman for the Jewelry Museum could not be reached to explain why it hasn't yet signed the agreement.

R. Mark Davis, a former chief executive of Renew the Earth and chief operating officer of the Earth Conservation Corps, has been executive director of Heritage Harbor since May 2001. Davis says he hopes to have both the historical society and the jewelry museum on board by the first of the year, joining the 17 other groups that have already approved the agreement. And Davis is unflustered in rebutting the criticisms, saying any large project like Heritage Harbor is bound to draw barbs.

The museum's plans, including attendance projections, are conservative and have been approved by a variety of consultants, he says. For example, the attendance figures are based on a sophisticated analysis of 74 museums across the country. Telephone polls and focus groups have indicated even more promise, Davis says.

Millions of dollars already have been raised, he says, with $4 million spent so far to preserve the exterior of the former Narragansett Electric power plant. The next step is to create the actual exhibits. A $14 million state bond issue -- $5 million of which will go to Heritage Harbor -- won with 56 percent of the vote last month.

"With the passage of the bond issue, it's much more prominent in peoples' minds, we see more and more people responding more favorably with their donations," Davis says. And an outside consulting firm recently conducted an "excitement audit" to see if the museum's attractions can pull in the projected crowds at the proposed ticket prices. "Do we have the combination of elements that people will pay to come to?" Davis asked. The answer, he says, is "yes."

John J. Igliozzi

HERITAGE HARBOR is poised to be a unique museum, in part because it attempts to include the post-Civil War period as a part of history overshadowed by the more typical focus of museums on Colonial and Revolutionary War events.

The planning goes back as far as 1984, when Klyberg approached a number of different groups and museums, many of them small, to see if they could join forces. Nineteen groups formed the original coalition, including the Muslim Heritage Council, the Rhode Island Black Heritage Society, the Rhode Island Jewish Historical Association, the Rhode Island Indian Council, and the Rhode Island Irish Famine Memorial Committee.

The museum is now operating with a staff of 15, using funds from grants and private donors, Davis said. The nonprofit company operates from offices at 222 Richmond St., a block away from the museum site.

There have been setbacks. In 2000, voters narrowly rejected a $25 million bond issue. But there have been successes, including financial backing from corporations, such as Verizon, Textron, Nortek, Fleet, the Providence Journal Company, and other sources like the Rhode Island Foundation. Narragansett Electric donated the museum structure, and the Smithsonian Institution has approved Heritage Harbor as part of its affiliates program, which makes available 142 million artifacts for display.

"What Heritage Harbor has been able to do is bring people around the table," says M. Drake Patten, executive director of the Rhode Island Committee for the Humanities. "They didn't start off as good buddies, but now they are meeting and have a relationship."

An important exhibit will be a "Cultural Crossroads" in which ethnic groups jointly exhibit their stories, something that Klyberg says is unusual in museum depictions. "It's not going to be a run of state fair booths," he says. Instead, by integrating the stories of the groups, Heritage Harbor will show how they formed a Rhode Island community.

The groups will get a strength-in-numbers boost. For example, the 10-year-old Providence Jewelry Museum is currently housed in a hard-to-find location on Cranston's Spectacle Street, in an unused portion of the Technic Inc. chemical plant. Designed to explain the importance of the jewelry industry, the museum's 1000 samples of jewelry and 50 production machines are seen only by appointment.

Heritage Harbor exhibits will use techniques that are part "fun house" and part high-tech, Klyberg says, allowing visitors to solve a historical puzzle or see how Rhode Islanders created devices from steam engines to clips that fasten ballpoint pens to shirt pockets.

Davis and Klyberg say the completed exhibit space will be so large that it will be hard for visitors to see everything in just a day. This is just one of the reason why proponents expect the museum to attract 300,000 visitors the first year, and more in each succeeding year.

But critics wonder whether predictions are too high. "My concern is what they're putting forward in attendance is not based in reality," says Igliozzi, the Providence councilman.

Long-established museums, such as Mystic Seaport Museum, near New London, Connecticut, have taken years to build up a similar level of attendance, Igliozzi says. Further, he notes that Heritage Harbor has discussed a wide range of projections. Some figures cited by Heritage Harbor indicated that attendance could be as high as 600,000, while others are just half that.

One of the earliest estimates came in a 1999 business plan compiled for Heritage Harbor by Kunkel Strategic Services of Warwick. An "econometric model," based on the experiences of 74 museums, predicted 320,000 attendees the first year and 376,000 by year three. Davis says the attendance issue has been studied and restudied, and the museum has stuck with the most conservative figures.

Edward H. Able Jr., president and chief executive officer of the American Association of Museums in Washington, DC, whose members include 3000 of the nation's 11,000 museums, says there's no simple way to predict the success of a new museum. Able wouldn't comment on Heritage Harbor's prospects. But he notes that museums in high-population areas, surrounded by other attractions, do well.

Heritage Harbor is within easy reach of Boston and its mega-attractions, including the Boston Museum of Science. Figures supplied by Davis say the science museum pulls in 1.7 million visitors a year; Mystic Aquarium & Institute for Exploration in nearby Connecticut draws 900,000; and Mystic Seaport, 425,000 (a seaport official says the figure is closer to 350,000).

In Rhode Island, one of the most popular attractions is The Breakers mansion in Newport, the ornate 70-room former summer home of the Vanderbilt family.

Trudy Coxe, chief executive officer of the Preservation Society of Newport County, which operates The Breakers and similar showplace mansions, says The Breakers' attendance ranges between 400,000 and 450,000 annually. She credits longstanding efforts by the preservation society and Newport's distinction as a well-known destination. "Newport has panache," Coxe says. "Everybody has heard of Newport, even if they don't know what state it's in."

Coxe and Phillip M. Johnston, director of another major attraction, the Rhode Island School of Design Museum of Art, (with about 100,000 visitors) wouldn't speculate on Heritage Harbor's potential, although they believe other attractions would benefit from a successful new museum.

One instance where lower than expected attendance has hurt is the Museum of Work and Culture in Woonsocket, run by the Rhode Island Historical Society.

Fishman, who became executive director of the historical society in April, says he understands that planners originally thought the Woonsocket museum might attract 80,000 visitors annually, then lowered that to 30,000. The actual number has been about 14,000, he says.

The Woonsocket museum has run deficits ranging between $15,000 and $80,000 a year, with the current loss about $50,000. The City of Woonsocket has increased its support of the museum to roughly $35,000 a year, which represents both cash contributions and payment of utilities, Fishman says.

Attendance expectations also exceeded results at the Mystic Aquarium in Connecticut. Planners hoped for about 1.1 million visitors after a $52 million addition opened about 21/2 years ago, says Lisa Jaccoma, vice president and director of public affairs, but the figure turned out to be 800,000. This figure is increasing, however, with attendance of 900,000 this year and more expected next, Jaccoma says. The increases have been "hard fought," developed in part by making sure there are a continuing series of new and changing exhibits to keep up public interest.

Advertising and other marketing tools are increasingly important to nonprofit museums, regardless of the excellence and breadth of their historic or artistic collections and programs, says Peter Glankoff, spokesman for the Mystic Seaport. "What they forget to do is remember that they are competing with everything, including soccer -- they tend to forget it's about marketing," he says.

In fact, Davis and Klyberg say a marketing component has long been part of Heritage Harbor's business plan. Budget plans have earmarked $400,000 for marketing, nearly 10 percent of first-year expenses.

But some observers think Heritage Harbor could be heading into rough waters. "I think 300,000 is a very ambitious number," says one expert. "I think to expect they are going to attract 300,000 ticket buyers is . . . whew."

THE ATTENDANCE numbers are important since Heritage Harbor will be depending on money collected at the door to provide at least 50 to 60 percent of its annual budget.

Recent budget estimates indicate that Heritage Harbor expects to collect about $2.7 million from visitors, including money from the $2 per-ticket surcharge for the federal loan. Spending estimates are about $4.6 million.

The American Association of Museums' Able says that depending on admissions for 60 percent of operating costs is on the high side nationally -- but not unknown. He says the range is wide -- between 5 and 60 percent. And Jaccoma says the Mystic Aquarium depends on ticket revenue for 90 percent of its budget.

Another important expense to be supported from ticket sales will be the envisioned $9 million loan from the US Department of Housing and Urban Development, to be borrowed on Heritage Harbor's behalf by the City of Providence. A related $2 million "brownfield" grant from the federal government, to encourage reuse of the former power plant site that will house Heritage Harbor, could be used toward the loan. But low attendance would cut into income from the $2 per-ticket surcharge.

The museum's ability to pay the loan is one of the issues that worry observers like Igliozzi, and it's one of the issues raised by the planning department in suggesting that more study be given to the museum's projections. In the worst case, overall failure of the museum, the former Narragansett Electric building itself would be used to back the loan. Davis says a new appraisal by Peter M. Scotti Associates shows the building is worth $7 million and that the estimated value upon completion of the project will be $29.1 million.

But the worth of the museum as collateral isn't Heritage Harbor only cushion for paying its debt, Davis says. The museum's financial advisors say enough money will be coming in from various sources -- including the museum's gift shop, space rented for special events, and restaurants -- to enable payback even if annual attendance is only half of the 300,000 prediction.

The critics say another potential problem is how the surcharge will bring ticket prices to $11 for adults, $7 for children, and $8 for senior citizens.

Igliozzi said the museum's own Kunkel report indicated that an Opinion Dynamics Corporation telephone poll in 1998 warned against going beyond the $7.50 admission level. "The response to a $9 price was very negative, which seems to indicate a `price point break' at the $7.50 level," the report says.

But another study included in the Kunkel report, based on focus groups conducted by Acadia Consulting Group of Providence, found adults willing to pay $10 to $12. Davis also cites a much more recent analysis of the museum's potential drawing power, the so-called "excitement audit" by Economic Research Associates, which was asked to estimate whether the museum's exhibits and prices would attract crowds.

Davis says Heritage Harbor has done a comparison of 11 "competing attractions," and found that its proposed $11 adult rate would be 18 percent below the average, and the children's rate 12 percent lower. For example, the survey listed Mystic Aquarium prices at $16; the Boston Museum of Science, $12; and Roger Williams Park Zoo, $7.

Mystic Aquarium's Jaccoma said that she thinks that Heritage Harbor's $11 ticket price is "within striking distance -- I think it's not an obscene number." What's important, Jaccoma says, is whether visitors think they got a good experience for what they paid.

Another question is whether Heritage Harbor will have a large enough endowment -- money raised by donors that can provide steady investment income.

Davis said Heritage Harbor wants a $4 million endowment, although little has been raised so far. He said other institutions -- like the Boston Science Museum (with an endowment of nearly $82 million), and Preservation Society of Newport County ($27 million) -- have much more because they've been around much longer. A recent business plan estimated a $2 million endowment will be available by opening day, and Davis says slightly more than $1 million might be enough.

Another disputed figure is how many jobs Heritage Harbor will create. Igliozzi says HUD loan requirements say there should be at least 180 jobs. But he says an early estimate was for 51 jobs.

Davis said that the current job projection is for the equivalent of 180 jobs, including nine executives, 17 managers and technicians, and 164 other workers, ranging from clerks to "costumed exhibit interpreters."

As Heritage Harbor has advanced its plans over the years, one of the most dramatic of the proposed exhibits has been a full-scale model of a Portuguese explorer's ship, a so-called caravel. In 1999, the Portuguese government and the Luso-American Development Foundation donated $500,000.

But little money has been raised since those funds were announced. Davis and an official of the Portuguese Cultural Foundation say that plans for intensive fund-raising are only now being made. But Peter Calvet, executive director of the foundation, says the project is going forward, and efforts are underway to collect $2 million to complete the project.

Calvet says the ship is an important exhibit. "It is a universal symbol, it's not just a Portuguese boat," he says. The ship represents a surge in exploration centuries ago, he says, when the peoples of the earth realized there were countries and places beyond their own.

Will the ship be ready for opening day?

"It's not really 100 percent decided," Calvet says. "We in the Portuguese Cultural Foundation are doing everything we can to make sure it's part of Phase One. We are just one group. We have our own limits, and it's not our final call." One possibility may be to have construction ongoing as the museum opens, which might be an added attraction, with visitors able to see the vessel actually taking shape.

Another early signature piece has been a triple-decker house. Davis said the prospects for having that in place in the first phase "are not as strong as for the caravel."

Davis said that the museum will take shape in phases, and when finished, will use space equivalent to four football fields. "One of the concepts that people have a hard time grasping is that this major world class museum is not going to be built all at once -- it will be build in stages," he says.

He added that when Heritage Harbor does open, visitors will find a unique and wide array of attractions, ranging from the Smithsonian exhibits to the Rhode Island ethnic displays. "Our key elements are going to make it a financial success from the very beginning," Davis says.

Brian C. Jones can be reached brijudy@ids.net.

Issue Date: December 6 - 12, 2002