(June 21, 2009) -- LBReport.com has learned that the LB Museum of Art Foundation has sent a mass emailing to its members and email/newsletter subscribers, seeking support for itself prior to a June 23, 3:30 p.m. closed-City Council session on the Foundation.
The emailing comes as the City Council faces the prospect of paying $3 million (city floated debt bond principle for museum facility expansion) that taxpayers weren't supposed to pay because the Foundation said nearly a decade ago that it would pay the sum from its fundraising.
While that sum remains unpaid, the Council continues to pay the Foundation a six figure annual sum -- $569,000 in the current fiscal year -- under a contract with the privately-run entity to manage/operate the publicly-owned facility at 2300 Ocean Blvd.
Photo source: City of LB website
[Note: The LB Museum of Art at 2300 E. Ocean Blvd. is unrelated to the Museum of Latin American Art on Alamitos Ave.]
As previously reported by LBReport.com, the item as agendized for June 23 at 3:30 p.m. is:
SPECIAL MEETING
1. Opportunity for public comment.
2. Mayor and Council adjourn to closed session.
a. Pursuant to Section 54956.8 of the California Government Code
regarding a conference with the City's real property negotiator:
1. Property: 2300 E. Ocean Boulevard
Long Beach, CA
City's Negotiator: Patrick H. West, City Manager
Negotiating Parties: City of Long Beach and Long Beach
Museum of Art Foundation
Under Negotiation: Terms and Conditions of Lease
As previously reported by LBReport.com, the Museum Foundation, a not-for-profit entity with salaried employees, hasn't paid a $3 million principle sum on a 1999 Council-approved city-floated debt bond that the Foundation said it would pay via fundraising so LB taxpayers wouldn't pay. City Hall let the Foundation use the bond proceeds to expand the city-owned facility at 2300 Ocean Blvd., which was done.
The Museum Foundation, which replaced its former management with new management a few years ago, has made interest payments...but says it can't pay the $3 million sum as it previously said it could and would.
As a result, LB taxpayers -- who face a $40-$50 million FY10 deficit (spending exceeding revenue) with the prospect of service cuts and fee increases...on top of previous fee increases, "cost recovery" (for previously covered items) and furloughs/reduced service -- could end up paying the $3 million sum by Sept. 1...unless the Council takes measures (that it hasn't taken for nearly ten years) to ensure taxpayers don't pay that sum.
City management was advised of the Foundation's unpaid $3 million sum in the first half of 2006 under former City Auditor Gary Burroughs; the item was put on the "consent calendar" (no public discussion) and received and filed. LBReport.com reported the story in detail in 2007.
In 2008, City Auditor Laura Doud's office released an audit report on the Museum Foundation, noting the $3 million payment was approaching in Sept. 2009, also reported in detail by LBReport.com.
In September 2008, the City Council approved City Hall's current FY09 budget forwarded by city management and Mayor Bob Foster, which includes a $3 million sum to pay the debt bond. Asked about this in Sept. 2008 by Councilman Patrick O'Donnell, City Manager Pat West indicated that although the sum is budgeted, city management didn't intend to have LB taxpayers pay it and was working to ensure that didn't happen.
On May 26, 2009, LBReport.com attended a meeting of the Council's Budget Oversight Committee in which an item not specifically on the Art Museum included a city management matrix which indicated management was attempting to obtain financing for the sum...and we asked about it at the speaker's podium. Management replied that it had since been determined that the financing option would be too costly, and despite management's best efforts there is no plan in place to protect taxpayers from the $3 million payout that taxpayers weren't supposed to pay.
LBReport.com reported this...and on June 5, 2009 the Foundation sent a letter to LB Mayor Bob Foster (not publicly copied to Councilmembers who have the voting power to decide the matter) that offered to give City Hall a share of part of a physical facility that the Foundation claims it own...but leaves taxpayers exposed for the $3 million payout. To view the Museum Foundation's letter in full, click here.
LBReport.com has also learned and reported that while the $3 million hasn't been paid to LB taxpayers, taxpayers are paying the Foundation a six figure annual sum -- roughly $569,000 each year during the past several years -- to manage/operate the city-owned museum under a contract with City Hall. LBReport.com editorialized on the matter in an editorial we entitled "Chumps." To view our editorial, click here.
LBReport.com has also published a CounterPoint on the issue, click here.
The Council's Budget Oversight Committee (chair DeLong, vice chair O'Donnell, member S. Lowenthal) discussed the Art Museum Foundation in early 2008. At that meeting, Committee members Delong and O'Donnell both indicated to management that [paraphrase] they did not want the city's General Fund to end up paying the $3 million sum. O'Donnell described the $3 million General Fund sum as a threat to public safety.
Under state law, Tuesday's closed Council session item is preceded by an opportunity for public comment.
