Councilwoman Nancy Johnson and Councilman George Leage dissented.
Aquarium owners Dean and Bertha Tyler had applied for a new 10-year lease, but the council directed staff to request proposals for a new business to go into the Embarcadero site.
However, there are stipulations: the business must be visitor-serving and provide marine education or an aquarium-type setting. The council would also like any future proposed facility to be accredited by the Association of Zoos and Aquariums.
The decision does not preclude the Tylers from submitting their own proposal for future use of the site. The couple’s 50-year lease expires in 2018.
The couple declined to comment Wednesday.
The aquarium has been a city landmark for decades, albeit a controversial one at times, drawing about 200,000 visitors a year to the Embarcadero to see the seals, eels and other sea life.
More than 40 people addressed the council Tuesday during two hours of public comment, with both supporters and opponents of the existing business speaking.
Critics voiced concerns about the tanks used to house the aquarium’s seals, saying they are too small.
The Tylers had proposed making dock repairs and cosmetic upgrades to the building. They had also floated the idea of giving the city a greater percentage of the business’s proceeds that could be as much as $750,000 over the 10-year life of the lease.
In May, the city’s Harbor Advisory Board held a discussion about the aquarium. Most Morro Bay residents at the meeting and the harbor board members said they support the aquarium as a landmark business on the city’s waterfront but believe that the facility needs to be modernized.
Eric Endersby, the city’s harbor director, said he expects it will take up to nine months to put together the proposal details and seek City Council approval.
Interested parties will then have a chance to submit their applications. Those applications will be reviewed by an advisory panel and brought back to the City Council with a preference.