Some fine print in the Broad museum deal

Eli Broad’s willingness to spend an estimated $100 million to build his downtown art museum has been a leading point in its favor, but the fine print of the deal approved earlier this month by L.A.’s Community Redevelopment Agency calls for Broad’s museum to eventually receive millions of public dollars as a kind of rebate on its construction cost.

The museum, tentatively named the Broad Collection, is on track to become the first structure built in the $3-billion Grand Avenue Project, a boulevard of condos, cultural sites, stores, offices and a hotel. The museum is a recent addition to the massive development plan that was approved in 2004, but hasn’t gotten off the ground amid a stalled economy.

Broad’s museum would receive the money bit by bit as the rest of the Grand Avenue Project is built. It would come from future revenue the Community Redevelopment Agency of Los Angeles expects to receive from the project’s developer, Related Cos., under CRA/LA’s longstanding policy of requiring all developers the agency does business with to pay 1% of their projects’ design and construction costs to create public artworks or support cultural facilities in the neighborhoods where they build.

The deal CRA/LA commissioners approved on July 15 identifies the Broad Collection, at Grand Avenue and 2nd Street, as the cultural facility that will fulfill a large chunk of Related Cos.’ percent-for-art obligations — if the Grand Avenue Project proceeds.

If the official $3-billion estimate for building the Grand Avenue project proves accurate, that 1% requirement would generate $30 million for arts and culture. The deal OK’d by redevelopment commissioners entitles the Broad museum to about a third of what Related would owe — about $10.5 million. Additionally, the Broad museum would receive 40% of the arts policy payments from another downtown parcel, not controlled by Related, that was supposed to be part of the 1980s California Plaza project but was never developed.

A spokeswoman for Broad said Wednesday that he would have no comment.

Just how much public money Broad’s museum would get — and how soon — would depend on two unpredictable factors: When will the economy loosen up enough for Related Cos. to secure financing so it can proceed with the rest of its plan? And as each building takes shape, what will be the actual design and construction costs on which its 1% for art contribution is calculated?

CRA/LA commissioners voted 4-0 two weeks ago to change the original 2004 Grand Avenue Project plan to include the Broad museum, but their decision must be ratified by the Los Angeles City Council, the county Board of Supervisors and a Joint Powers Authority of local and state officials before the museum can be built. The museum would house more than 2,000 contemporary artworks that the billionaire philanthropist and his wife, Edythe, have collected.

Under the rebate agreement, the Broad Collection would get 40 cents on each dollar paid to satisfy the 1% for art requirement on four of five downtown redevelopment parcels, and 20 cents on the dollar for the fifth site. The 20-cent share stems from that site’s arts policy revenue already having been largely committed to a different, as-yet-undetermined cultural facility called for in the original Grand Avenue plan.

The CRA/LA requires that developers ante up at least 40% of their arts obligation in cash, which is then spent as the agency sees fit for artworks or cultural facilities in that location. Developers typically choose to spend the other 60% commissioning artworks themselves, subject to CRA/LA approval, said Susan Gray, the redevelopment agency’s cultural planner. She said that CRA/LA determined that offsetting the Broad museum’s construction costs would be the “best option� for spending the cash generated from neighboring sites under the 1% for arts policy.

David Riccitiello, downtown regional administrator for CRA/LA, said there are two precedents for funneling a redevelopment project’s arts fees to a single museum. In the 1980s, the developers of California Plaza satisfied their 1% for art obligation with $23 million that paid the cost of building the Museum of Contemporary Art, which is across Grand Avenue from the proposed Broad museum site. In 2007, $10.4 million in 1% for arts fees from the L.A. Live project and an adjoining redevelopment site was used to build the Grammy Museum at L.A. Live.

Broad’s deal isn’t as sweet, Riccitiello said: His museum won’t get an upfront payment but a rebate that comes in piece by piece, depending on how future development proceeds.

The public discussion at the meeting in which redevelopment officials voted to add the museum to the Grand Avenue project included no mention of the reimbursement plan. The provision was made public in a single paragraph of a 10-page memo prepared by CRA/LA staffers; the memo, whose provisions the redevelopment commissioners voted to approve without detailed discussion, was available at the meeting and on the agency’s website.

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