To beat Republican tax changes, $54M Seattle Asian Art Museum upgrade deal can move forward

In a rush against time and the looming Republican evisceration of federal tax credits, the City of Seattle will enter into a 55-year lease for the continued operation of the Seattle Asian Art Museum and an agreement that paves the way for a needed $54 million upgrade of the 84-year-old building its calls home in Volunteer Park. The agreement will come even as the City Council parks committee shepherding the agreement is asking for more from the deal.

Park committee chair Debora Juarez outlined the next steps in the long process to move ahead on construction in a meeting Thursday as the clock ticks before the likely expiration of some $6 million in Historic Rehabilitation Tax Credit officials expect to utilize on the project. In the “ratify and confirm” procedure, the city will move ahead of the lease to beat the December 31st deadline — but Juarez and other members of the committee say they want to see much more from the Seattle Art Museum’s end of the agreement.

“It’s not that I’m not in your corner, I just want it to be done right,” Juarez told museum and city officials Thursday.


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Though public comment on the legislation to ultimately authorize the agreement was dominated by neighbors from the Protect Volunteer Park speaking against the SAAM project and expansion, Juarez and City Council President Bruce Harrell said they support the plan but want to see better documented and more quantified public benefits. After Protect Volunteer Park speakers questioned whether the building should be continued to be used as a home for the museum at all, Harrell said he believes the around $20 million in city money earmarked for the project will ultimately be a good investment in an environment where schools continue to cut arts education.

Financial terms of the lease agreement lay out an escalating payment plan.

SAAM is will also be “solely responsible for regular and routine maintenance of the building throughout the term of the lease.”

Though the city and the museum are authorized to enter into the new lease before the council committee will meet again, the legislative process will further shape public benefits such as free admission days and school programs at the museum. Technically a private project run by the Seattle Art Museum nonprofit, construction of the building’s expansion and new features including a climate control system will be done under the city’s Social Equity Program and Community Workforce Agreement as contractors are selected.

In 2018, the council will continue work on the legislation confirming the final agreement with SAM. It will also hold a January hearing on another bill required before construction can begin that will modify city code to allow the expansion of a museum within a city park. With those bills in place, construction on the project could begin as early as February.

With City Council set to pave way for construction, Seattle Asian Art Museum expansion planned to finally begin

With city council approval of the two bills, the Seattle Asian Art Museum should return in full glory — with 13,000 more square feet of space and with important climate control system and seismic upgrades — by October 2019.

UPDATE 12/12/17 10:00 AM: The Protect Volunteer Park group has posted an “important message” calling on Mayor Jenny Durkan to intervene in the “ratify and approve” framework for the new lease and stop City Hall from signing the new lease that will drain “our public wealth for generations, in exchange for a quick financial rush of $6 million in tax credits.” The full letter is below.

From: Protect Volunteer Park
To: Mayor Jenny Durkan
Seattle City Council
Parks Superintendent Jesús Aguirre
Deputy Parks Superintendent Christopher Williams
Date: December 11, 2017

Important Message from Protect Volunteer Park

Dear City of Seattle decision makers,

Based on the Parks Committee meeting on December 7, we understand that the City plans to rush to sign the Asian Art Museum lease before year-end, prior to Council’s votes on the two enabling ordinances CB 119150 and CB 119146. Council will then later vote to “ratify and approve certain prior acts”.

We appeal to you not to go forward with this plan, because the public costs strongly outweigh the public benefits.

This lease is a 55-year ironclad commitment to pay operating support payments to Seattle Art Museum (SAM), lease SAM a City-owned building for zero monetary rent, and for the City to remain liable for major capital repairs to the building.

The 55-year term secures historic preservation tax credits, which require that investors get an “ownership relationship”. A 55-year commitment is considered equivalent to an ownership relationship. In other words, the City is quite literally giving away the building.

The City is to receive nothing for giving the building away. To the contrary, astoundingly, the City is to pay $19 million for renovations for the benefit of SAM, its new effective owner. The City also takes on for 55 years the duty of making operating support payments to SAM, and funding all major capital repairs to the building, including all work on its historic facade. Together with the failure to charge any monetary rent, these provisions represent a cost to the City of millions of dollars per year, over the entire 55 year term.

This unbalanced deal is not in the public interest. City government does not owe SAM anything in exchange for SAM fulfilling its mission. SAM is already required to be operated for an educational purpose, as a 501(c)3 nonprofit corporation whose donors receive tax breaks.

City leaders say they want to resist President Trump. It takes money to resist a federal government that is threatening withdrawal of grants. This deal weakens the City by committing capital funds to a non-public purpose today, plus budgeted funds and property 55 years in advance. It drains our public wealth for generations, in exchange for a quick financial rush of $6 million in tax credits.

City leaders say they recognize the emergency of homelessness and housing unaffordability. It will take money to address this emergency. This deal greatly weakens the City’s ability to respond to true public needs.

Please do not give away historic parklands, real property, and money of present and future generations in this unfavorable deal. Instead, acknowledge that the City’s building in Volunteer Park must be managed in the public interest, and solicit financially balanced proposals from more than just one potential partner organization. The public should be involved, according to the terms of the Public Involvement Policy of the Department of Parks and Recreation.

For your convenience, here are links to more detailed comments we sent previously:
CB 119150 (lease): http://protectvolunteerpark.org/lease-comment/
CB 119146 (zoning): http://protectvolunteerpark.org/comment-zoning-bill/
Capital Spending:
http://protectvolunteerpark.org/comment-capital-spending/

Thank you for your consideration.

Best regards,

Jonathan Mark and the other members of Protect Volunteer Park
pvpinfo@protectvolunteerpark.org

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13 thoughts on “To beat Republican tax changes, $54M Seattle Asian Art Museum upgrade deal can move forward

  1. Comments from Protect Volunteer Park:

    CB 119150 (lease): http://protectvolunteerpark.org/lease-comment/

    CB 119146 (zoning): http://protectvolunteerpark.org/comment-zoning-bill/

    The irrevocable 55-year term of this agreement is motivated by the tax credits. Tax credits must be purchased by investors, who want to see an “ownership interest” or its near equivalent. So we are being asked to hand over public property into private hands. We think multiple proposals should be considered for the future of this building, but the City has never acknowledged that there is any possible alternative to this one deal.

    • The powers that be have decided what they want to do with the building. Good luck fighting it. SAM also basically appropriated a public park and then killed the waterfront streetcar without permission or public comment. They are similar to the stadiums and the port – not really accountable.

    • @Jonathan: Admit it, the only “proposal” your hand-wringing organization would have approved of is the “do nothing” option.

      This is everyone’s park. A couple of neighbors, with nothing better to do, should not dictate what happens with our parks. The expanded museum will be a great amenity to the park without negatively impacting the usage.

    • It is ridiculous that your group, or at least some of your members, want to evict SAAM from the building all together. What other use would you suggest? I can think of no better use than a world-class art museum.

    • A fair question from Bob. SAM has stated that because of the demands of modernity, SAM has become unable to continue occupying the building at its present size. Also, SAM states that it’s continued operation requires the City to sign an irrevocable 55-year deal committing to SAM’s continued use, with free rent, plus cash operating support.

      We think the City should be considering SAM’s proposal alongside other proposals which might have better public benefits or financial terms. If SAM’s proposal is the best, then fine. But don’t sign up for this 55-year subsidized deal without at least considering other options.

    • “We think the City should be considering SAM’s proposal alongside other proposals which might have better public benefits or financial terms”

      Like who? Are you actually aware of any, or just assuming there must be some?

    • We don’t know what proposals might be possible until we ask (i.e. put out an RFP). If we offer the terms that SAM gets (free rent plus operating support payments), I would imagine we might get quite a few good proposals. On the other hand, we might also attract proposals from organizations that are actually willing to pay to lease the building … a novel concept!

      I am surprised that the conservatives/libertarians on this blog are so willing to ignore the simple economics of the situation. This building is property of the City, a fact which SAM attempts to dismiss as an irrelevant technicality (SAM CEO Rorschach actually said in a presentation, “It’s our building”). It is not irrelevant, it is the heart of the matter. The public should be compensated for its use by a private tenant. If it is impossible for SAM to pay anything for the use of its facility, then SAM is so financially unstable that it won’t last long anyway.

      Adding insult to injury, this proposed deal keeps the City responsible for major capital repairs, while handing over the building into the equivalent of private ownership, with no revenue generated for the City to pay for those capital repairs (quite the opposite, the City is to pay money to the tenant, not receive money). And no way out of the deal for 55 years. What will SAM be like in 55 years? We have no way to know. This is a lousy deal and it is very fishy that the City refuses to acknowledge the possibility of any alternatives.

  2. Kudos to SAAM for continuing with this expansion. As a patron of SAM and as a non-neighbor of Volunteer Park, I support more people enjoying our neighborhood’s attractions.

    • It’s not ugly. The drawing makes it look so, but in reality it is a classic, beautiful Art Deco masterpiece. The new addition, I suppose, will have a more modern look, but it will be only a small part of the total building.

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