The D.C. government is weighing whether to give $40 million to the Corcoran Gallery of Art to help fund an addition by famed architect Frank Gehry, whose works in other cities have become instant landmarks.
Mayor Anthony A. Williams (D) and D.C. Council member Jack Evans (D-Ward 2) have proposed subsidizing the construction with a loan that would be paid back out of property and sales tax revenue from hotels, restaurants and other attractions downtown.
The approach would be a twist on the economic development tool known as "tax increment financing," which normally involves a loan to a project being paid back with a portion of the tax revenue the project generates.
Because the $200 million addition and renovation project that includes the Gehry wing is not expected to produce enough sales tax to repay the loan, Williams and Evans have embraced the idea of using tax revenue generated at attractions within a mile or so of the nonprofit museum, at 17th Street and New York Avenue NW. They say the revenue will increase after the addition -- which will have ribbonlike steel walls -- is finished, because of the number of people drawn to what will be the only Gehry-designed public attraction on the East Coast.
"People will come to Washington, D.C., to see this building," Evans, chairman of the council's Finance and Revenue Committee, said during a public roundtable discussion yesterday on the proposal. "People who . . . would not come here to see the Lincoln Memorial, they're coming to see this building."
Williams has made funding of the arts a priority in the last two years. The city has allocated millions to a second Shakespeare Theatre stage downtown and an expansion of Arena Stage in Southwest Washington.
The Corcoran turned to the city for help after a four-year-old fundraising campaign stalled at about $67 million. Museum officials, who had hoped to begin construction last year, said a commitment of city financing would help stimulate $35 million in contributions from private donors and make it easier for the museum to borrow $60 million on its own. The city subsidy is contingent on the museum's raising the rest of the money. The addition is likely to be completed in 2009 at the earliest, officials said at the hearing. Gehry's Walt Disney Concert Hall in Los Angeles also received some public subsidy.
Evans said the committee will vote on the proposal within the next week. If approved by the committee, the proposal would be presented to the full council July 13, along with a tax increment subsidy for the proposed redevelopment of Skyland Shopping Center in Southeast.
Two community activists spoke against the Corcoran subsidy yesterday, saying that cultural projects should be funded through the District's capital budget, if at all, and that other museums will line up for similar handouts.
"We're setting a dangerous precedent here," said Debby Hanrahan, a member of the Statehood Green Party and a consistent opponent of public financing for private projects. "Every worthwhile project that we would all love to have will think they can come to us."
Ed Lazere, executive director of the D.C. Fiscal Policy Institute, said tax increment financing should be used only to jump-start projects in blighted neighborhoods. Using future tax revenue to repay a loan to the Corcoran, Lazere said, "clearly would be taking away revenues from other programs that could be receiving D.C. support."
The Corcoran funding also was criticized by council member Jim Graham (D-Ward 1), who is not on the committee but is seeking tax increment financing for DC USA, a shopping center proposed for his ward.
The application for financing for DC USA was denied by D.C. Chief Financial Officer Natwar M. Gandhi two years ago, mostly because the developers did not have other financing lined up and were not putting much equity into the project. Yesterday, Graham told a city official who spoke in support of the Corcoran subsidy that DC USA would generate far more tax revenue and, therefore, should be approved as well. The official, John Ross, an aide to Gandhi, said the Corcoran project involved less risk.
As part of the expansion, the Corcoran plans to buy and renovate the abandoned Randall School, off South Capitol Street. The school will provide classroom space for the Corcoran's adult education and art college programs and will house some exhibits during the 30-month construction of the addition.