Corcoran Could Clip Its New Wing
Chairman Says Ailing Gallery Can't Afford Frank Gehry's Showpiece

By Bob Thompson and Jacqueline Trescott
Washington Post Staff Writers
Friday, May 20, 2005

The Corcoran Gallery of Art's chairman said yesterday that the 136-year-old institution is in such serious financial straits that it should suspend efforts to build its much-heralded new wing, for which architect Frank Gehry has already completed a design, and replace its longtime director.

The suspension of the Gehry effort could come as early as Monday, when the board is scheduled to discuss a new strategic plan for the Corcoran. "In the foreseeable future, there's no choice," board of trustees Chairman John T. "Til" Hazel said, citing broad financial difficulties facing the Washington landmark, which includes both the museum and the Corcoran College of Art and Design.

Hazel said he and fellow trustee Paul Corddry approached President and Director David C. Levy earlier this week and suggested he offer his resignation.

Levy declined. The heart of the disagreement, he said, was that "I believe this city and region can support the campaign to get that building built, and they don't." He said Hazel and Corddry had approached him "without full consultation of the board leadership." But Levy, who has led the Corcoran since 1991, also said he would step aside if a bitter fight developed over his leadership.

"I'm not going to be a spoiler," he said. "I have too much respect for this institution."

The Corcoran announced its plan for the Gehry wing with great fanfare in June 1999. It was a bold stroke for a museum with a severe identity problem, and one that faced tremendous competition from larger, better-funded public entities such as the National Gallery and the Smithsonian Institution.

The hope was that adding a wing by the celebrated Gehry -- whose undulating, titanium-skinned Guggenheim Museum in Bilbao, Spain, had grabbed so much attention that people began referring to "the Bilbao effect" -- would turn the old, gray Corcoran, with its small but choice collection of primarily 19th-century American art, into a must-see destination. It would raise the museum's visibility and attendance while doubling, Levy said, as "maybe the greatest piece we have in our collection."

Six years later, the Gehry dream shows little sign of becoming reality. Fundraising has stalled. A $40 million pledge from the District of Columbia last July was expected to spur other major contributions. So far, it has not.

Close to $95 million has been pledged for the Campaign for the Corcoran (which includes elements other than construction of the Gehry wing). Almost half of that, however, is contingent on the construction of the wing being either launched or completed (including the District's $40 million). So far, $17 million has been spent on construction plans (with the bulk of that going to Gehry) and $5 million more on fundraising costs. Meanwhile, Hazel said, building cost estimates have risen from an unrealistic $60 million to $200 million.

In large part, Levy and Hazel agree, the Corcoran has been victimized by what Levy called -- in what sounds like an understatement -- "a serious run of bad luck."

First, the so-called new economy bubble burst, ending a euphoric period in which, Levy said, Internet entrepreneurs "were making money in options that looked like they were playing Monopoly."

Two important early contributions to the Campaign for the Corcoran came from AOL executives Robert W. Pittman and Barry M. Schuler, who jointly pledged $30 million in February 2001. The Corcoran has received only $2 million of Schuler's $15 million pledge and doesn't expect more to be forthcoming. More importantly, hopes have dimmed for additional large contributions from new-economy entrepreneurs.

Then came the Sept. 11, 2001, attacks. Those hurt all Washington museums, but the Corcoran, being across the street from the White House, was particularly affected. "We've had our neighborhood kind of closed down," Levy said. Among other things, tour buses are no longer allowed near the museum.

In May 2003, the Corcoran board elected a new chairman, Otto Ruesch, who shortly thereafter was found to have pancreatic cancer. Ruesch died in October 2004. Hazel, who had been his vice chairman, blames himself for not doing more during this period; he said he was aware that the Corcoran was in serious financial trouble but was reluctant to intervene.

When he became board chairman himself, however, Hazel, who made his fortune as a Northern Virginia developer, learned that the Corcoran's problems went beyond bad luck. Among the categories of concern he cited were:

· Operating deficits: After having 20 years of financial records assembled and analyzed, Hazel was startled to find that in 17 of those years, the Corcoran had operated in the red. (In two of the three years it did not, losses were avoided only because of one-time events: a sudden, unanticipated gift and an accounting adjustment). The board had approved a fiscal 2005 deficit of $800,000, but Hazel learned that it had risen to $1,450,000. Hearing that the projected deficit for fiscal 2006 was $2.1 million, he said, "was a shocker."

In the mid-'90s, Hazel said, some "violins" that had been donated to the Corcoran were sold for $17 million. Money from the sale was used to cover operating deficits, and it is now gone. (The sale, in fact, included a variety of stringed instruments; none was part of the Corcoran's collection, so their sale was the equivalent of selling donated stocks.)

· Fundraising for the Gehry wing: Hazel said he has no criticism of the original decision to build the dramatic new addition. It offered "a great opportunity," he said, and "with a bit of luck, we could have been off and running." But "the problem is it didn't work," and the institution needs to come to terms with that.

· Necessary repairs on the existing building: The Campaign for the Corcoran was intended to raise money for significant repairs to the original Corcoran, as well as for new construction. If the Gehry project is suspended, however, that leaves the question of how to pay for these repairs. Hazel estimates their cost at $40 million. To use funds raised for the Gehry project, he said, would require seeking permission from donors who had thought they were contributing toward something new and different.

· Erosion of the donor base: When Hazel became chairman, he began asking friends in the Washington business community if they might have interest in supporting the Corcoran. He was disappointed by the lack of enthusiasm he encountered. With Levy's concurrence, he then hired a consulting firm, John Brown Limited, to survey the Corcoran's donor base. The consultants' report, he said, confirmed his own sense that "support for the Corcoran was essentially superficial."

Hazel and the trustees appointed four task forces, made up largely of members of the museum's and the college's separate boards of overseers, to consider the Corcoran's future. He also recruited Corddry, a retired businessman who Hazel knew had experience with organizations in trouble, to revitalize what had been "a defunct strategic planning committee."

Last Monday, the task forces reported their findings to that committee. Next Monday, the committee will submit its recommendations about a new strategic plan to the full board. It is at that meeting that the fate of the Gehry wing, and perhaps that of David Levy, will be addressed.

Asked for his views five days before the meeting, Levy took issue with Hazel's judgment that the Gehry wing is unrealistic for "the foreseeable future." It can still be built, he argued, though adjustments will have to be made.

"We have a lot of money that we've raised, but it's not enough," he said, "and we have an impending emergency with this building. So if I had it my way, I would turn the Gehry project inside out." In other words: He would ask the donors' permission to do the repairs to the old building first, rather than as part of the new wing's construction -- and then keep raising money toward the Gehry dream.

One of the differences between his vision and Hazel's, Levy said, was that the board chairman sees the museum "as a business" and, as such, thinks "it ought to have a business plan, to use his word, that shows you how it's going to deal with itself financially. And I would say that a museum is more like a church than a business. Because if its constituency doesn't come in and support it, it really has no future."

Hazel didn't quarrel with that. He just said, "Either way, you've got to have support."

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