Seattle Art Museum’s Faustian Bargain
Seven years ago, the trustees of the Seattle Art Museum were approached by Matt Griffin, a developer working for Washington Mutual. After months of negotiations, the museum agreed to a deal that would allow the bank to build a shiny new office tower as well as help the museum finance a four-floor expansion at no cost to taxpayers.
A Seattle Times article from April 2007 offers an ominous explanation of the arrangement:
This was a business deal, not an act of charity.
WaMu got to build its 42-floor office tower on a prime parcel of downtown land without competing against other buyers. The bank estimates it will save $15 million a year in rent by consolidating most of its 5,000 Seattle employees in the WaMu Center.
There were other advantages, too. By pairing with the museum, WaMu received special city zoning changes to boost the size of its office tower. The bank will rent an additional eight floors of space from SAM for up to 25 years with no annual rent increases.
At the time, SAM’s trustees said they were “thrilled with the deal, which allowed the museum to expand much sooner than they’d ever thought possible.” The expanded museum opened in early 2007 to rave reviews.
The honeymoon ended last September, when the United States Office of Thrift Supervision seized WaMu in what is now the largest bank failure in American history. Today the museum announced that JPMorgan Chase, the company that purchased WaMu’s banking subsidiaries, does not intend to pay the $5.8 million in annual gross income SAM was receiving from WaMu. (Jen Graves and Regina Hackett have the full scoop.) On the bright side, JPMorgan Chase is providing a one-time grant of $10 million to the beleaguered museum, a move that Regina calls a “silver lining for its dark cloud.”
Even though JP Morgan Chase wasn’t contractually obligated to pay anything at all, the bank has agreed to give the Seattle Art Museum $10 million spread out over five years. […]
SAM officials said last September that a change-of-control provision in Seattle Art Museum’s lease agreement with WaMu protected the museum in case the bank was sold. Turns out that agreement meant nothing in the event of a belly-up bank failure.
When all is said and done, it seems that what may have once looked like a too-good-to-be-true offer from a greedy financial institution turned out to be, well, too good to be true. In an ironic twist of fate, SAM has hired Matthew J. Griffin to help find a tenant for the space he once sold them on.
(At least the Seattle Art Museum is in good hands…I hear Matt Griffin’s a smooth talker!)