United Way Backs Away from Jersey City Museum Purchase; Foreclosure is ‘Imminent’By Jon Whiten • Apr 22nd, 2011 • Category: Arts, Featured, News
The United Way of Hudson County no longer plans to purchase the Jersey City Museum building and the museum’s Montgomery Street headquarters is facing “imminent” foreclosure by Sovereign Bank, according to a memo obtained by JCI. In addition, two of the museum’s board members have resigned in recent months as a result of the turmoil.
According to the memo, sent last week by corporation counsel Bill Matsikoudis to museum board members James Kobak and Mark Rodrick, “the planned sale to United Way has been aborted and foreclosure by Sovereign Bank is imminent.”
Though the deal between the two nonprofits was said to be in “the final stages” last month when the city authorized awarding the United Way $212,415 in federal funds towards the purchase of the museum building, since then it has fallen apart and the museum is once again scrambling to stave off foreclosure, according to several sources. (The federal funds will not be awarded if the building purchase does not occur.)
“The United Way deal is dead,” one City Hall source says. The reasons why remain unclear, and when reached Thursday, United Way president Dan Altilio declined to comment.
But regardless of how the deal fell apart, if the museum cannot get out from underneath the crippling debt of its building, the prospects for its survival look bleak. The museum moved into the building in 2001, taking on a reported $11 million debt in the process. Previously, it was housed within the main branch of the Jersey City Free Public Library.
That debt was most recently refinanced by Sovereign Bank, through the New Jersey Economic Development Authority (EDA), in 2008. At that point, $2.7 million of debt was still on the books in a new 25-year fixed-rate loan that would be readjusted every 10 years, according to the EDA. Internal Revenue Service filings show that the overall liability on that loan grew by nearly $200,000 in fiscal years 2008 and 2009, ballooning to $2.98 million from $2.78 million.
In other words, the debt was growing faster than the museum could pay it down, a situation that has likely been compounded by the fact that the museum has had no revenue-generating programming or events for the last year (save for last summer’s successful mini-golf fundraiser spearheaded by developers Eric and Paul Silverman).
Meanwhile two of the museum’s 12 board members, including its secretary, have resigned in recent months, according to Jersey City officials, who found out only when they sent a memo to each listed board member and the two responded by saying they had already quit.
Secretary Michael Royce, who is the executive director of the New York Foundation for the Arts, and John Bell, who works for Bank of America, have left the board.
The ongoing problems with the museum continue to have Cultural Affairs staffers and administration officials concerned, and the city is continuing to press museum leadership for a full accounting of the permanent collection — a request first made in early January that has still not been fulfilled.
City spokesperson Jennifer Morrill says the museum met with several city officials at the Montgomery Street headquarters earlier this month.
“City officials were able to confirm that the building is secure, utilities are on, and part of the collection was viewed,” she says. But with foreclosure bearing down, city officials are looking to take control in order to protect the work in the permanent collection. In his memo, which was sent after the meeting, Matsikoudis once again addressed the need for the city to have a full inventory of the museum’s works.
“We are demanding that the museum provide the city with an accurate inventory of all art work that is within the possession of the museum,” he wrote. “The city of Jersey City will be making arrangements for the temporary storage of this art work. Please confirm that the museum will cooperate with the city in its endeavor to acquire this art work, which is now in jeopardy due to the museum’s precarious financial state.”
Morrill says a meeting is scheduled for next week “so the city can continue its discussions with representatives of the museum.”
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