On Day LB Taxpayers Drained Of $3 Mil They Weren't Supposed To Pay, LB Museum of Art Mgm't Sends This Email To Supporters Re Today's Budget Oversight Committee Item & Tomorrow's Council Budget Session
(Aug. 31, 2009) -- On the day that LB taxpayers find themselves paying $3 million (principle on a 1999 debt bond used to expand the city-owned museum's physical facility) that City Hall told taxpayers at its inception that they wouldn't have to pay because a privately run "LB Museum of Art Foundation" would raise funds to pay it, and the City Council's "Budget Oversight Committee" is scheduled to discuss "Recommendation to review the Long Beach Museum of Art management fee for FY 10" (one of ten items, starting at 5 p.m.), LBReport.com has obtained the text of a mass emailing sent by Museum Foundation management to its supporters this morning.
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.]
In the public interest, LBReport.com provides the verbatim text of the LB Museum of Art Foundation's Aug. 31 emailing below (Aug. 31).
The Long Beach Museum of Art’s 2010 city funding will be a topic of discussion at Monday night’s Budget Oversight Committee meeting. The B.O.C. meeting is taking place TODAY, Monday, August 31st at 5:00 PM in City Council Chambers. The Museum is one of ten items that are currently on the agenda for the meeting. Your support will be very significant at this meeting and I encourage and thank everyone who can attend this important meeting. The annual support we receive from the City is very important for keeping a vital Museum. We all need to advocate on the Museum’s behalf.
The Museum’s property lease is also a topic of a Special Meeting prior to tomorrow’s regularly scheduled City Council meeting. There is time allowed for public comment prior to the Council adjourning to Closed Session. The other topics for discussion during the Closed Session are labor negotiations with Long Beach Police and Fire Fighters along with many other unions and associations. Chambers will be crowded and we need to arrive early to show our support for the Museum.
Sincerely,
Ron Nelson
Executive Director
Museum management also issued the following release to media outlets, reciting its version of events:
The 10 year Bond that the Long Beach Museum of Art was allotted by the City of Long Beach for improvements and the construction of the gallery building remains an issue of concern among the citizens of Long Beach, and for the Long Beach Museum of Art Foundation. Historically, it was orally represented to the Foundation that the Bond issued 10 years ago was the obligation of the Foundation, and the Foundation relied upon those oral representations when it offered the newly constructed Gallery Pavilion and $419,000 being held in a restricted account to the City in repayment of the Bond.
Recently, the Foundation received copies of all of the documents pertaining to the original bond agreement between the City of Long Beach and the Long Beach Museum of Art, which were drafted by the City of Long Beach in 1999. There are a total of five documents, including a Pledge Agreement between the City and the Foundation regarding the Bond. Upon review of the totality of the five documents, all of which are public record, the Foundation was stunned to learn that it had fully complied with the Pledge Agreement to the City of Long Beach, including paying for the origination and maintenance of the Bond over its 10 year life and paying the monthly interest payments. The Foundation also learned that in the first year of the Bond, one million dollars of those funds was immediately forgiven for the Foundation to use to improve the Museum property; to date, this information has not been released and the current Executive Director and Foundation Trustees only learned of this after review of the agreements as a whole. In reviewing each document, the Foundation learned that it had fulfilled its obligation. To date the City has asserted that the Foundation should pay the $3,060,000 but has not taken any definitive position one way or the other with respect to the scope of the Foundation’s contractual obligations. As of the date of this release, the Foundation owes approximately $150,000 pursuant to the Pledge Agreement. Further, there appears to be grave uncertainty as to the City’s funding or support, if any, for the Museum going forward.
Additionally, the amount to repay the Bond was allocated and approved in last year's City Budget. It must be stated that the funds allocated to repay the Bond are distinct and unrelated to funds allocated for safety. The full line items of the City Budget have not been publicly released; however, it is undisputed that the Bond Repayment amount was approved in last year's City Budget by the City Manager’s office and City Council[m1], and that the funds for the Long Beach Museum of Art and the funds for Police and Firefighters are in two different municipal pots.
As indicated in the Public Comment portion of a recent City Council meeting, the funds allocated to the Foundation by the City of Long Beach is used for educational programming and for the insurance, maintenance and proper storage of the City's Art Collection. This Collection cannot be sold to satisfy the City’s budget shortfall. The gift of these valuable art works comes with the condition from the grantors that the art works be publicly displayed and that they be properly cared for in perpetuity. Pursuant to the City Management Agreement with the Foundation, which remains in effect through 2025, the Foundation has fulfilled this obligation and maintains the City's collection to the professional standards that a fully-accredited Museum provides.
The Foundation is happy to provide the totality of each of the five agreements including the specific amortization of the Bond over the last 10 years, public record. If the Foundation is in error, it remains open to reviewing any additional documents and welcomes continued discussions regarding the Bond and the Pledge Agreement between the Foundation and the City of Long Beach.
As previously reported by LBReport.com, in a letter dated July 21, 2009 to City Manager Pat West, the LB Museum of Art Foundation said payment of roughly $158,000 (which it says it can pay) will fully satisfy the Foundation's obligation to the City, and indicates it intends to hold City Hall to a 1999 lease that lets the Foundation manage/operate the City-owned museum until 2024. [To view that letter in full, click here.]
As also previously reported by LBReport.com, the Foundation's stance was first revealed by Mayor Bob Foster during a July 30 City Hall news conference which unveiled his FY10 budget recommendations which include [written text (emphasis in original) from Mayor's office]:
Eliminate funding for the Long Beach Museum of Art In a letter sent this week, despite public comment and subsequent conversations to the contrary, the Museum Foundation Board notified the City Manager that they do not believe they are required to pay anything beyond $158,000 in relation to the $3 million bond payment agreed to in 1999. As a result, the City simply does not have sufficient funds to cover the Museum's $569,000 management fee for FY '10.
The $3 million sum stems from a 1999 City Council action (archival audio and documents below) that obligated city taxpayers to pay a $3 million debt bond, whose proceeds were used to expand the museum's facility, with assurances by the Foundation and city officials that Foundation fundraising would pay the $3 million sum so taxpayers wouldn't have to pay it.
For details on how the unpaid LBMA $3 million sum (with city taxpayer exposure) originated, LBReport.com has made archival audio available plus documents from that 1999 Council action. To access these, click here.
The unpaid $3 million sum was the subject of City Auditor reports in 2006 (under former Auditor Burroughs) and 2008 (under incumbent Auditor Doud). It was also discussed by the Council's Budget Oversight Committee in early 2008.
