Financing the Museum and its Expansion

Here we examine the existing financial relationship between the City of Seattle and Seattle Art Museum, and the financing of the proposed museum expansion into Volunteer Park. Some of these financial arrangements have been in place for 83 years. We suggest that they be reevaluated in the light of modern priorities and equity standards.

Free Rent, Parking, Utilities and Housekeeping

The Asian Art Museum building and Volunteer Park are both property of the City of Seattle. Seattle Art Museum (SAM) uses this building for free, with free parking also provided for museum visitors in Volunteer Park. The City of Seattle additionally provides free utilities, housekeeping staff, and engineering staff for the building, spending over $200,000/year on this support for SAM. The dollar value of the free rent and free parking are hard to estimate, but $2 million/year might be in the ballpark.

(Sources: City auditor’s report (PDF) documents the free rent, see footnote 26. Other City support reported by Jen Graves for The Stranger.)

SAM officials sometimes say that SAM donated the building to the city, and therefore SAM’s extraordinarily generous lease agreement does not represent a public subsidy for SAM. This is unreasonable. The donation of the building was 83 years ago in 1933. Seattle city property should be managed in the public interest, not out of an attempt to repay the philanthropy of rich people generations ago. As time passes, the original capital cost becomes less important than what the City has been continuously spending to maintain the building, grounds, parking facilities, and operations support for its non-paying tenant.

$45 million Bond Guarantee Downtown

The City of Seattle has guaranteed repayment of the bonds used to build SAM’s downtown building. This debt amounted to $45.3 million in 2014 when it was refinanced (Bloomberg). The refinanced bonds still have a City guarantee, although 8 of the building’s 12 floors were not in museum use, having been leased until 2031 to Nordstrom, Inc. for office space.

This City debt guarantee counts against the city’s debt limit set by state law, thus competing with other City priorities. An expert described the guarantee as being worth millions of dollars (Seattle Times).

Financing the Museum Expansion Project

Now we come to the proposed renovation and expansion project at Asian Art Museum.

In 2007 the City Council provided $2 million to SAM to design the museum renovations. This replaced a previous $2 million allocation to Olympic Sculpture Park, which had turned out not to be needed.

In 2008, Seattle voters approved the Parks and Green Spaces Levy which provided $9 million for “Renovations to the Seattle Asian Art Museum including seismic and HVAC upgrades”.

In the current proposals the financing breaks down as follows (source (PDF)):

$19.0M Requested from the City of Seattle
$2.0M in original funding from Seattle for Design and Planning
$5.0M in estimated Historic Rehabilitation Tax Credits
$1.5M Requested from Washington State Building for the Arts
$1.4M From King County
$20.1M in Private Contributions
$49M – TOTAL

How did $9 million become $19 million?

You will note that the voters approved $9 million (in addition to the design funding) but the City’s contribution is now listed as $19 million. How did the City end up allocating the extra $10 million? Here is how it breaks down, as far as we can figure out:

  • $2 million (2014-09-15): City Council redirects the $9 million to other purposes but promises $11 million in the future when SAM is financially ready to do the project. Why $11 million in the future and not $9 million? Ordinance 124571 says “City and SAM came to an informal understanding that the City would contribute $11 million toward completing the project”. No further explanation is offered.
  • $3 million (2016-09-16): Mayor Ed Murray’s budget proposal (passed by City Council) spent $14 million for renovations instead of $11 million. We cannot find any statement from city officials explaining this $3 million addition to the spending previously agreed. Published statements from SAM officials hint at the backroom process involved. On 2016-07-18 SAM COO Richard Beckerman was reported in Capitol Hill Times saying the City’s contribution would be $13-$14 million. SAM CEO Kimerly Rorschach was quoted by The Stranger on 09-10 expecting the City would add funding for a new escalator but the cost was not yet known. This may refer to the proposed North Addition.
  • $5 million (2016-09-16): Added as future spending in Ed Murray’s budget proposal, specifically to pay for the museum building expansion. Capitol Hill Seattle reported that the Council cut $850,000 from this request and transferred it to capital projects at other cultural organizations.

So that explains where the extra $10 million came from. Or maybe it is an extra $9,150,000 after the change by City Council.

If anyone can supply any of the missing information above, or has other information to add, we invite you to contact us at pvpinfo@protectvolunteerpark.org .