BALANCE SHEET BLOG – HOLLYWOOD, FL


Holocaust Documentation Center – Comments: 2010
December 30, 2010, 1:43 PM
Filed under: CRA Districts, Downtown, HDEC

December 30, 2010

Note:  The comments provided in this post respond to our earlier post on the Holocaust Documentation and Education Center here.

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Thank you for that very informative and well-researched article on the Holocaust Museum on Harrison Street. As a museum professional for over 30 years (curator, archivist, director/CEO, member of the American Association of Museums), I find the process of developing this museum highly unreasoned. The figures you mention that the leaders of the museum are asking for are startling, to say the least, for a city the size of Hollywood. I have visited Holocaust museums around the country, and many are housed in modest buildings, and work with modest budgets, yet are able to present the history and documents in educational and satisfactory formats. The subject of the Holocaust must be treated with great respect. Throwing huge amounts of money at an unfinished and inactive “museum” does not create confidence in its future.

In order for a museum to raise money, the management must reach out to those they believe are or will be their public, their supporters. For example, how did the Holocaust affect people of Hollywood, Florida in the 1930s and 1940s?  I assure you that an exhibition on this topic could be prepared by two or three professionals with modest funding.

Next, this museum’s leaders seem to hope to open with a huge bang in an expensive building. I know from experience that it is far better to start small, develop your audience, and use your audience support to raise funds to grow. There are unfortunately quite a number of expensive museum structures around the country that simply fail to bring in an audience, while there are other small, poor museum organizations with visionary leadership to which the public flocks–and the museum then grows.

To your questions I will add another: who is hiring the director/CEO, and who provides oversight for that position? The duties of a museum director are: creating and maintaining a budget; establishing one-, five- and ten-year plans and keeping the organization on schedule for both the plans and the budget. As the Holocaust museum is a non-profit organization, both its budget and the plans should be made available to the public. The business and professional backgrounds of all leaders, the CEO and the board members, should also be made available to the public.

Also, does the city of Hollywood wish to be the major donor to this museum? Do the taxpayers agree? It is generally far more successful if the museum has a base of private donors.

Again, as both a museum professional and a native of Hollywood, I have been wondering for some years what was going on with the Holocaust Museum. Thank you for your very informative article.

Joan Mickelson
aka Joan Mickelson Lukach
author of A Guide to Historic Hollywood


You have misled your readers, hopefully because of a lack of understanding. The Holocaust Documentation and Education Center is not asking for a $1.7 million grant.  It is asking for the CRA to take back the $1.7 million building and own it, and lease it to the Center for $1 a year, as the City and CRA have been doing with several other non-profits for decades.  If the Center fails to fulfill its mission, the CRA gets back a tremendously improved building, instead of the decrepit building it bought and turned over to the Center.

Apparently you prefer the empty stores on Harrison Street–and perhaps would like to see another Pole Dancing establishment like the one we now have next door to the Holocaust Center.  Sara and Laurie, I’m sure you noticed it when you visited the Center–you couldn’t have missed its hot pink striped front and pictures of scantily clad ladies.  If HDEC is foreclosed on by the CRA, you can try to get another similar establishment in its building.  After all, the building was previously a nightclub holding “fetish nights” when HDEC took it over.  It can be one again. Oh–I guess it would be impossible for us to expect you to spend your energies helping the Center raise the $360,000 needed to open instead of expending your energies, as usual, to try to tear it down.   I know you have a long history of seeing the glass half empty, but you can at least be honest with your readers and let them decide for themselves.  Please print this in its entirety, so another voice can be heard.

Mara S. Gulianti


HDEC wants its $1.7 million purchase money mortgage debt to be forgiven and it wants control of 2031 Harrison Street for 99 years at no cost. Whatever you want to call this transaction, it sounds like a freebie to us.

Mrs. Guilianti says the CRA will get title to a building in better shape than it was when the CRA bought it for HDEC. Think about this.

First, the building would be encumbered by a 99-year no-rent lease.

Second, the CRA would be paying the purchase price ($1.2 million) and absorbing loss of HDEC’s interest payments on that amount (over $500,000 as of 10/2010). Add in the CRA’s grants to HDEC for renovations ($550,000) and you’re asking Hollywood taxpayers to invest $2.2 million on this property. And don’t forget the CRA borrowed the original $1.2 million to buy the building and is still making payments on this loan. Does this sound like a good deal for Hollywood taxpayers? We don’t think so.

In addition, there’s the liability issue. We have been told that the police advised HDEC that parking spaces would have to be removed on Harrison Street and HDEC would need armed guards and a metal detection entry system to provide safety if a Holocaust museum is to open there. We recognize there are crazies and hate groups out there, and agree that special security would be necessary. But we question the advisability of CRA ownership of this building in light of the potential liability.

Mrs. Giulianti was mayor when the CRA bought the building and “sold” it to HDEC. If she thought a 99-year no-cost lease would be a better arrangement for the City of Hollywood, that should have been arranged back then. It was her administration that orchestrated the $1.2 million loan with six years of deferred payments. And it was her administration that converted the $500,000 loan to a grant.

Does it really make sense to justify the proposed give-away to HDEC on the basis of Harrison Street’s vacancies and night clubs? And as for pole dancing and “fetish clubs” downtown, it was Mrs. Giulianti’s administration that overruled the Police Chief’s objection to late night hours for the clubs. He knew there would be problems, and he turned out to be right.

Lastly, our article does not mention foreclosure. For one thing, HDEC has $1.5 million in its building fund according to its Executive Vice President. Why not use it to pay off the outstanding debt on 2031 Harrison now. Then HDEC can concentrate all its attention on a serious fund-raising program for its documentation and education projects.

Balance Sheet Editors


As your report indicates, the CRA does seem to have lost its core mission which is to stabilize and improve the infrastructure and public spaces within the CRA.  A CRA should consider financial support for private or independent non-profit ventures only when they can reasonably be demonstrated to be feasible and which clearly further the overall plan.   A CRA should generally be in the business of attracting good private (or independent non-profit) redevelopment, not financing it.  A rule should also be considered which prohibits loans from being converted to grants.

Henry Sniezek


It’s much too late to close the barn door:  The Holocaust Museum is in the wrong place.  While it is an essential institution with an invaluable educational program, it does not enhance the area or the desirability of nearby spaces.  If it occupied independent space, say, the ground floor(s) of The Radius, or a site on Tyler Street, or the for-sale Methodist Church site at Van Buren and Federal, or (some day) the Polk Street Post Office, it would have the same importance and accessibilty but not the same negative effect on the leasability of neighboring properties or on the celebratory spirit to which so much of Downtown Hollywood and its developers aspire.

Further subsidy to the Holocaust Museum, no matter how politically correct such accommodation may be, is just not feasible or fair to the taxpayers in these difficult times.  The Museum’s and its management’s failures in meeting obligations and representations is not a basis for additional support no matter how much we might like to support the Museum’s purpose and intentions.  Even if there were sound basis for further support, we just don’t have the money, and any unsound accommodation is, at the end of the day, PUBLIC MONEY.  We should certainly not be creating further liabilities for the city.  We are already terminally pregnant with litters of ill-conceived subsidies, abatements, and gimmies, each of which is difficult if not impossible to wean from the public trough.  The City should not allow itself to be the Rescuer of Last Resort.

Has anyone ever done a cost/benefit analysis of the CRA over the last 30 years?  Today’s pretty picture (and underlying financial failures) provide no justification for additional investment without a sound plan, and we don’t have one.

James Bullock


What are the “substantial ongoing payments owed the developers of The Radius and Hollywood Station”?

Christian Mulack

Answer to this question:

Radius – $200,000 this year, with four additional years

Radius – $850,000 between now and 2017 based on the value of the residential development

Hollywood Station (PB Capital) – $300,000 this year, with seven additional years

Balance Sheet Editors


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Holocaust Documentation Center: 2010
December 27, 2010, 12:45 PM
Filed under: CRA Districts, Downtown, HDEC

Downtown CRA…Stewardship Needed

July 2011 Update:  The CRA did not act on HDEC’s request to convert its loan to a grant.  The matter is likely to be reintroduced in some form, but we are told the parties are in ongoing discussions.  Meanwhile, the interest owed on the loan is increasing.

December 27, 2010

The Holocaust Documentation and Education Center (HDEC) is asking for a grant of $1.7 million from the downtown CRA plus a 99-year lease at $1.00 per year.  The CRA has already invested $550,000 in this project.  In addition, the CRA made a loan of $1.2 million to HDEC with no payment due from 2004 until October, 2010. It is this loan plus accrued interest of over $500,000 that HDEC seeks to have converted to a grant.

HDEC’s mission is valuable, and its survivor documentation program and educational outreach are exemplary. However, HDEC’s extensive financial obligations and the downtown CRA’s lack of discretionary funds require a more careful review of HDEC’s request than the early January date permits.

Accordingly, for the reasons set out in this article, we believe the matter should be continued until the City/CRA can establish some performance markers and a way to extricate itself from HDEC’s ongoing substantial financial obligations.

Downtown CRA

For the last decade at least, the guiding principle of the Downtown CRA has been to create mixed-use upscale condo buildings that were supposed to bring hundreds of new residents with disposable income to “live, work and play” downtown. Inviting and incentivizing HDEC to move to downtown Hollywood back in 2003-2004 was part of this same strategy. Taxpayers were told at the time that HDEC was to open a museum which would bring “visitors from all over the world” to downtown Hollywood.

All one has to do is walk along any downtown street to see that there are as many, even more, vacant stores and unsold housing units there today than existed when the CRA was first created over 30 years ago.  Obviously, the CRA’s approach has not worked.

Today the downtown CRA is broke. It must contribute to the cost of city services (police, fire, code, etc.). In addition, it has substantial debt obligations including four outstanding notes to Bank of America (BOA) totaling $23,921,310 — and substantial ongoing payments owed to downtown developers of the Radius and Hollywood Station. As a result, the downtown CRA has almost no money left for its core mission to remove slum and blight downtown.

Not only has a vibrant downtown eluded the city for 30 years but also Parkside, Highland Gardens/United Neighbors, and Royal Poinciana, the blighted residential neighborhoods within the CRA district, have been all but ignored as the CRA gave money to developers instead. Repeatedly we were told it was necessary to invest these funds in upscale development in order to reap the benefits of a healthy and prosperous downtown.  Hollywood taxpayers are the losers in this sad scenario.

HDEC-CRA Background

As an incentive to lure HDEC to Hollywood, the downtown CRA bought a blighted building at 2031 Harrison Street after stating that “a proposed museum project has expressed interest in occupying this location.” The CRA subsequently transferred the property to HDEC in 2004 with a $1.2 million loan to cover the purchase price. The CRA had to borrow the money from BOA in order to make this loan to HDEC and we are still making payments on the BOA loan. To help HDEC with building renovation, the CRA gave the organization a $50,000 grant and a $500,000 loan. When it came time to repay the $500,000, HDEC requested it be converted to a grant, and the CRA Board complied with this request.

While HDEC moved its offices into 2031 Harrison in 2007 (after 3 years of building renovation), it has never built the promised museum. Heeding hardship pleas from HDEC, the CRA allowed HDEC to defer any payments on the 2004 loan until 2007, and then modified its loan in 2007 to give HDEC three more years of payment deferral. But during this second deferral period, HDEC purchased a second building — 115 S. 21 Ave. — that was owned by a private party and located across the alley from 2031 Harrison. The price was $850,000, with interest-only payments on a $750,000 balloon mortgage due in 2013.

Now, HDEC is paying some $50,000 annually in interest payments on the second building, while paying nothing on its earlier loan from the CRA for the first building. Instead, it’s asking the CRA once again to convert the loan to a grant, just as it did with the earlier $500,000 loan. This is a much more expensive proposition for the CRA, since the original $1.2 million loan with accrued interest now totals over $1.7 million.

Meanwhile, there is no HDEC museum and no front entrance to add vibrancy to the Harrison streetscape. The building’s main entrance on Harrison Street is covered with what looks like black drapes on which are tacked photos of the Holocaust.  A small white paper pasted on the door informs visitors that the first floor is under construction and they should enter from the alley.

The first floor has been torn apart for structural repairs but is awaiting redesign and renovation when sufficient funds become available. The remaining floors house a small non-lending library, a recording studio, some study carrels, offices, and a multi-purpose space.

Questions

Before a well-reasoned decision can be made on this latest HDEC request, it is important to consider the following questions:

  1. Without a business plan, how can HDEC meet its commitments?
  2. Would CRA debt forgiveness and 99-year no-cost lease be a sound business decision for the CRA, given its over-stretched financial condition?
  3. Given the history of HDEC promises not fulfilled, how soon can we expect to see a first-class museum open and operating downtown?

Balance Sheet Editors Visit HDEC

Attempting to answer these questions, the Balance Sheet editors requested and were granted a guided tour of the HDEC building and a meeting with Rositta Kenigsberg, the organization’s Executive Vice President. In addition, we met with the educational outreach director. We were impressed with the organization’s Holocaust survivor documentation and its educational outreach to students and the community at large. We believe this work is important, even critical, to a healthy, unprejudiced community and something we can all be proud of and learn from.

What causes us concern, however, is what we came to understand about the organization’s speculative real estate ventures and lack of a credible business plan to achieve the substantial financial outlays these ventures require.

We learned the second building was purchased to expand HDEC with a whole new adjoining building that will display HDEC’s permanent collection of memorabilia plus a Holocaust railcar that HDEC has acquired. The idea calls for the railcar to be encased in bullet-proof glass in front of the new museum, on the east side of 21st Ave., just across from the railroad tracks. The new museum building is anticipated to cost some $26 million. HDEC’s capital campaign has resulted in about $5 million, most of that in pledges (some testamentary). We were told only $1.5 million of this is cash in hand.

We learned that the vacant first floor of 2031 Harrison is now slated for traveling exhibits. We were told $360,000 must be raised to renovate this floor for such exhibits — as Ms. Kenigsberg said, “just $10,000 from 36 donors.” This money has not yet been raised. Unspecified funds to run a traveling exhibit program (fees for use, transportation, set-up and take-down costs) are yet to be identified. Also yet to be raised are at least $21 million to build the new museum, an unspecified “six figure” amount to set up a security system, and $750,000 to pay off the balloon mortgage. Where all this money can be found, and what approaches HDEC has identified for this major fund-raising endeavor are at best unclear. One thing we did learn is that Ms. Kenigsberg has her eye on more money from the city. She told us she had learned from a HUD representative that HDEC could be an eligible expenditure under the HUD Neighborhood Stabilization Program and she had already contacted city staff about tapping into Hollywood’s NSP funds.

Recommendations

As a city we have provided over $2 million in loan and grant incentives for this project. It is time now for HDEC to repay what it owes the CRA for 2031 Harrison. The CRA simply cannot afford to write off $1.7 million. These funds need to be recaptured and recycled into projects that can assure us an active and vibrant downtown as quickly as possible, as was contemplated when the loan was first issued. It is a loan, not a grant, and so it should remain.

Finally, we strongly oppose the use of Hollywood’s NSP funds for downtown museum building, given the high number of foreclosed and abandoned homes in Hollywood’s residential neighborhoods so many of which need renovated, high-quality housing that ordinary working people can afford. Helping neighborhoods recover from the foreclosure disaster is the main purpose of the NSP program

We believe that HDEC’s financial profile is precarious at best and therefore the CRA should consider extricating itself from ongoing involvement with HDEC. In a spirit of fairness, we suggest establishing performance markers and a time line, placing the conversion of the loan to a grant on hold and revisiting it at a later date to see if HDEC has met these requirements.

We recommend a continuance of this agenda item so there is time to establish the performance markers and time line that we need in order to ensure a successful result.

Laurie Schecter
Marla Dumas
Sara Case

Note: Comments on this post are located here.

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