$1 Rent for Billionaire Broad
Welcome, Los Angeles, to your postrecessionary urban life. Prices are being hiked by the City Council for superfluous items like DWP power and trash pickup, the city is issuing $500 red-light camera tickets to increase revenue, and the mayor and council are slashing library service in poor neighborhoods.
But, while Angelenos were cobbling together the rent, City Councilwoman Jan Perry and others were involved in secret negotiations to lease billionaire Eli Broad a piece of choice, taxpayer-owned property next to Walt Disney Concert Hall for $1 a year.
All this unfolded as City Hall leaders, including Mayor Antonio Villaraigosa and Perry, who represents downtown, were advocating municipal austerity, transparency and shared sacrifice.
The deal, though praised in some quarters, is being attacked by civic activists and residents as a backroom scheme that rips off taxpayers to help a billionaire.
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But with the mayor and his team insisting, in the wake of the DWP rate-hike debacle, that they have decided to pursue a new era of "transparency," Los Angeles residents have yet to be told just how much is being given away to Broad.
Broad would use the land across from MOCA not just to display artwork but to build nonpublic space for his private foundations' administrative offices and storage needs — a controversial use of public land that has gone all but unmentioned by Villaraigosa and elected leaders.
Moreover, under the proposed deal, the recession-hit Community Redevelopment Agency — which Villaraigosa has pressured to move into a cheaper building — would apparently have to borrow $30 million to finance a 300-space parking facility Broad needs.
Yet less than a year ago, the CRA was holding a press conference about financial carnage due to state budget cuts.
The roughly 80,000-square-foot parcel downtown is owned by city taxpayers. Yet no taxpayers have been asked to weigh in.
In fact, there has been no transparency involving the deal. The Grand Avenue Authority, the key public committee that oversees the land in question, has all but ceased to function, oddly canceling almost all public meetings since negotiations with Broad began late last year.
The acreage being eyed for the museum was set to be used for luxury shops as part of the stalled Grand Avenue project. Along with sales taxes generated by "The Grand" luxury hotel and shops, lease money would have flowed from its developer, The Related Cos., into local public coffers.
The Broad deal reduces the payback from a roughly two-acre parcel — yet payback was a key justification, cited by Villaraigosa, Perry and others, for controversially transferring the taxpayer-owned land to developers in the first place.
The museum deal is so far along that in an April 16 scoop, the small, niche Architect's Newspaper revealed that Broad is already paying to revise an Environmental Impact Report about developing that part of Grand Avenue.
"Unbelievable," utters Westside activist Julie Inouye of the $1-a-year deal. "When somebody of his stature gets a 99-year-lease for a $1 a year, I think that's worth a discussion. Even if it's with all the best intentions, it cannot be a backroom deal. I'm pretty up on things. I've never even heard of this."
Whether L.A. taxpayers make this gift to Broad or not, he clearly plans to keep his art in the area. Broad was also in talks with Beverly Hills and Santa Monica, which both want his museum but do not face the economic crisis Los Angeles does.
The downtown L.A. site raises questions of propriety, beginning with whether a billionaire should get a major financial gift from Los Angeles taxpayers.
"That's ridiculous," says Daymond R. Johnson, a South Los Angeles activist. "It's not like they have an economic-hardship waiver that this person would ever qualify under."
He doesn't object to a museum, saying "it is for the public good." He visits the California African American Museum and the Japanese American National Museum with his kids. But Johnson, who represents his neighborhood council on budgetary issues, says, "That shouldn't determine or displace the fact that this individual has the means to pay" for land on which to build his foundation offices.
"It's a $1 billion foundation," observes Consumer Watchdog President Jamie Court, as he peruses the 2008 tax return for The Eli and Edythe Broad Foundation. "I don't know why he's squeezing a tax-starved city at a time when it has been laying off a huge number of its workforce.
"The [William J.] Clinton [Presidential] Library got $250,000 from [Broad]. You think he could spare that much in rent for the city he cares so much about during the greatest fiscal crisis of its history. I think he should reconsider."
But Broad, who made his first fortune as co-founder of Kaufman and Broad Homes, did not attain billionaire status by giving up more than necessary — even when the negotiations have been over art.
Broad caused waves and surprised many when he decided not to give his collection to LACMA after a long relationship with the county museum, for example. While he is widely regarded as a generous philanthropist, art-world insiders note that his generosity doesn't merely help worthy art institutions: His decisions also increase Broad's power.
Today, top artists won't criticize Broad openly, frightened that he won't purchase their works, a subtle form of boycott that can ruin careers. And art-world professionals, such as gallery workers, worry that if they displease Broad, they may lose their jobs or see art deals scuttled.
His "rather extraordinary collection ... would be great downtown," explains one art-world insider who insisted on anonymity because of Broad's influence on her profession. But, "he's the extreme negotiator. He's going to do what's personally most beneficial for him."
Among those benefits, Broad is widely seen as keen to get his name on buildings and structures.
"I don't think he ever intended to go to Beverly Hills, anymore than he intends to go to Santa Monica," says another art-world insider. "I think he's used [the cities] as a negotiating tool to get a favorable deal from L.A. What he really wants is city land for nothing."
He agrees that Broad's museum would be "terrific" downtown, but says it's clear that "what he needs is a place to store his collection with exhibition space."
Buttressing that view — that Broad's underlying plan is to wangle free land for his foundation's storage and offices — documents detailing his Santa Monica proposal show that he intended to use only one-third of the proposed Santa Monica museum to exhibit art. Two-thirds was slated for other uses by his foundation.
These and other revelations have left many community leaders, City Hall critics and everyday taxpayers uneasy. Talks between Los Angeles politicians and Broad are officially traceable to November, yet the public, five-member Grand Avenue Authority, which holds jurisdiction over land use in The Grand project area, has all but stopped functioning in public since that time.
The authority, which includes City Councilwoman Perry and Los Angeles County Supervisor Gloria Molina and three non-elected appointees, has canceled almost every scheduled meeting since late last year.
Ultimately, the Broad deal may be less about his hubris and more about the hubris of city and county politicians who insisted that downtown needed the Grand Avenue luxury project.
For years, several development experts warned that The Grand would require massive public subsidies. But Eli Broad convinced Villaraigosa, Perry, Molina and other key players that a five-star hotel and designer shops were essential complements to Walt Disney Concert Hall, MOCA and the Dorothy Chandler Pavilion.
City and county politicians embraced Broad's vision, approving big subsidies for The Grand, even as regular L.A. residents waited for City Hall to provide basic services, such as sidewalk repair.
As has become clear, The Grand was not financially viable. Construction of the condos, hotel and shops has no known start date and is three years behind. The developer, The Related Cos., has been granted numerous late-fee waivers. Yet Angelenos are being made to pay higher fees on everything from trash collection to electricity.
What is this museum proposal really about? It may be that politicians such as Villaraigosa and Perry see Broad's new plan as a glimmering exit strategy, a prize to deflect from the never-built, if unfortunately titled, The Grand.
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