Last week when I was on the road, I missed this story in the P-I about Seattle Art Museum, which is planning to borrow up to $10 million from its own endowment in order to cover its rent. Rent is about $4 million a year. The endowment is just shy of $100 million, says museum attorney Gerry Johnson. The museum has asked a court to approve its loan, but doesn't need that approval (the loan is allowed under the laws that govern the endowment; asking for the court's approval is just an attempt, in a scary situation, to demonstrate prudence on the part of the board of trustees).
Johnson says the museum plans to repay itself the money when the eight floors vacated by Washington Mutual in 2008 are rented, and also from a capital campaign the museum will start as soon as it seems feasible. About 75 percent of the space is already spoken for; Nordstrom's offices plan to move in at the start of 2011. But SAM still has to find renters for the rest of the space, and it's hard to say what market value will be given the economy, and cash flow has been a major problem since WaMu dropped out. The museum has made layoffs and cuts and is opening a big Picasso show in October.
The slog continues for the museum that projected itself into a bright future that changed drastically.
"The estimated total cost of this problem going back to when WaMu was seized by the FDIC is about $25 million all in," Johnson said. "They did get the $10 million from Chase—the gift—so it's in the neighborhood of $15 million that they're addressing. They have other sources for some of it, and other ways of addressing some of that need, but the up to $10 million [from the endowment] is meant to be a comfortable amount to allow them to address these needs until the space is fully rented and/or the capital campaign gets started."