DERRY - Citing growing debt and diminishing sponsorships, the Children's Metamorphosis museum announced yesterday that it will close its doors after 16 years in operation.

The museum's landlord, Derry Depot Square Holdings LLC, started the legal eviction process earlier this week. The museum is expected to close its doors Aug. 31.

Established in 1991, "the Met" moved from its original North Londonderry home to Derry in 2002, leasing a 4,200-square-foot space at 6 West Broadway from Derry Depot Square Holdings, the for-profit arm of the Derry Economic Development Corp.

But museum Executive Director Tracy LaPlante said the relocation to Derry and renovations to the space required a "significant and still unpaid" bank loan. And while many nonprofit children's museums enjoy free or subsidized rent, she said the Met did not.

LaPlante said she and the museum's board members are not totally closed to the idea of continuing with a museum at some point in the future, but there is a large debt to consider before going forward.

"Someone may have a space for us, or would like to help us lessen our debt," she said.

LaPlante said declining corporate sponsorships and exhibit support also played a key role in the museum's demise.

Because of this, she said the Met fell way behind in paying its rent. After multiple grace periods and extended negotiations between Derry Depot Square Holdings and the museum board dating back to July 2006, LaPlante said the legal eviction process began when the museum received the formal document on Tuesday.

"We hate to disappoint the thousands of kids who enjoy the Met, and we'll miss our role as a promising tenant in downtown Derry," LaPlante said. "But Depot Square Holdings has been more than fair. Short of some miraculous new source of funding, or some other sudden solution, we really see no choice but to close the Met for good."

Initially, the move to downtown Derry proved hugely successful for the museum, as membership grew from 300 to a peak of 800 families. More than 30,000 visitors come to the museum on an annual basis from all over New Hampshire and Massachusetts.

But fundraising events like the annual gala and silent auction and sponsorship opportunities didn't make the cut as expenses got too high and not enough money was coming in, she said.

Jack Dowd, the executive director of Derry Economic Development Corp., said the Met was charged around $3,000 a month to rent the space - well below market value. The museum also rented an office for $600 a month, he said.

Although the Met made payments as it could, he said for the past six months it was never more than $1,000.

"We've been well aware and tried to hold their hand for the past year," Dowd said. "They were great for the downtown."

Longtime Met staffers Christine Santamaria and Gail Maas reflected on the museum's demise yesterday.

"It will be hard," Santamaria said. "The regulars and everyone who comes here, how do you tell them?"

Maas, the Met's artist-in-residence, will leave her legacy on the museum's walls in colorful murals of smiling tugboats and animals.

"It's been a good 16 years," she said.

With the announced closing, LaPlante said the museum and seven-member staff needs to decide what to do with all of the exhibits and the animals living there.

Gina Gulino-Payne, director of the Greater Derry/Londonderry Chamber of Commerce, said she was disappointed to hear of the museum's troubles.

She said it is a "travesty" to lose a business in town, especially one that helps bring revenue and exposure to the community.

"When they (the Met) go, it's one more empty business," Gulino-Payne said. "And so many people worked so hard on that museum."

Dowd said he doesn't expect to have any problems filling the space once the museum is gone, but he wouldn't say if anyone has expressed an interest.

LaPlante said she expects an outcry of support and surprise once museum families and friends find out what is happening.

"Those kids who have spent a great deal of time with us will be saddened," she said. "There will be a lot of disappointed kids and staff."

Refunds of the Met's annual $75 membership fees are not possible, but LaPlante said museum members will receive a free upgrade to membership in the Association for Children's Museums, which gives them free access to hundreds of sites around the country.

Families and groups with Party Room and program reservations already booked after Aug. 31 will get a refund, she said. All scheduled programs and activities will continue right up until the end of August.

Members can check the museum's Web site at www.childrensmet.org or call 425-2560 for updates and additional information.

Staff writer Courtney Paquette contributed to this report.