LeMay Museum - Stretching the Rules for Federal Subsidies?
Last night, Bloomberg.com released a special report about a little-known Federal subsidy program called “New Markets”. This program is intended to incentivize investors to finance beneficial projects in under-privileged areas. New Markets was initiated in 2000, and $16 billion of tax payer dollars have been spent on a wide range of its projects, many of which are shining examples of “shot in the arm” economics in areas fitting the required poverty statistics. Others, the article points out, seem highly suspect.
One of the highly suspect uses of the New Markets subsidy listed by Bloomberg.com is Tacoma’s own proposed LeMay car museum. The article points out two key problems with the project’s qualification: Apparently, New Markets funds are not to be used for galleries. Of course, a loophole was found to circumvent the restriction. Next, the poverty statistics of the area do not seem to fit the intent of the program:
As a result of the deal, federal taxpayers will pick up 39 percent of the cost of erecting a $34 million shrine housing 500 of LeMay’s cars in a mostly commercial tract with a 24 percent individual poverty rate.
Michael Engel, who manages a Veterans of Foreign Wars hall six blocks from the proposed museum, says the federal subsidy is a wasteful public gift to a wealthy family that can afford to finance most of the development.
“It’s a bunch of garbage,” he says. “I don’t think it’s right.”
New York-based nonprofit National Development Council; Trammel Crow Co., a subsidiary of CB Richard Ellis Group Inc. of Los Angeles, the world’s biggest real-estate-services firm; and U.S. Bancorp put the deal together, project records show.
Those investors collected a total of $1.5 million in fees from the project, according to the records. In addition, Trammel Crow and the council are scheduled to get $665,400 in future fees for monitoring finances.
You can read the rest of the article for yourself here Rich Take From Poor as U.S. Subsidy Law Funds Luxury Hotels
What do you think? Does the projected economic benefit of the LeMay museum ultimately fulfill the goals of the New Market project? Should federal funds be used to support that growth? Is the museum the most effective way to achieve the desired growth for the area? This article certainly raises a lot of interesting questions.
38 comments
M Mofo from the Hood February 8, 2011
Did Michael Engel really say, “It’s a bunch of garbage?”
R RR Anderson February 8, 2011
SHIFT HAPPENS!
M Mofo from the Hood February 8, 2011
No poor people were displaced prior to the groundbreaking of the LeMay Musuem.
D David Madeira February 8, 2011
All: I hate to correct Exit 133 and Bloomberg, but their facts are simply wrong. Taxpayers will not and have not funded a third of this project. The New Market Tax Credit program brings about 20% of the funding to complete the Museum which is not family-owned but an IRS qualified not for profit museum. We raised over $25,000,000 in private gift support to build the museum in Tacoma during tough economic times and were glad to have government help in completing it. The more than $30,000,000 spent on construction in Tacoma is a boon to the economy providing many jobs at a time when Tacoma is struggling and unemployment is at record levels. Once open, this public museum will bring over 425,000 visitors a year to our City—visitors who will spend their money in shops, restaurants and hotels, once again helping our economy. The economic boon to our City will be huge. So, I’m grateful that the NMTC tax credit program brought us the funds to complete the project and bring jobs to our City.
R RR Anderson February 8, 2011
David Madeira makes a good point. Building America’s love affair with Car Museum is a lot like making sausage. Think about the end product and don’t ask any questions.
P Peter Peter February 8, 2011
@David Madeira
Is the $13.3 million in tax credits an incorrect figure? I’m not sure if the gist of the article would be any different if that $13.3 million is 39% or 20% of the total cost.
Then, neither Exit133 nor Bloomberg seems to state that the museum is “family owned” as you assert.
I don’t think the rest of your comment is disputed by any of the sources. So what facts are wrong?
R RR Anderson February 8, 2011
he’s on the phone with their public relations people… he’ll get back to you.
E Erik B. February 8, 2011
Tacoma is one of the demographically poorest city on the west coast.
The Dome District and downtown generally is one of the poorest in the city.
If there was ever an area in Washington State that needed re-vitalization, it is the Dome District.
Take drive through there on a weekend or walk through the nearly vacant Freighthouse Square.
Yes, a lot of people COULD start pouring money into the Dome District but they have chosen other cities. Like other areas of Tacoma, the Dome District has had tons of proposals for development and very few of them have occurred.
Right now, parking garages and surface level parking lots are one of the largest uses of land.
E Erik B. February 8, 2011
Hmmm. Sure would be nice to use those funding sources to renovate the Winthrop Hotel back into a working hotel.
D Daniel February 8, 2011
@11
This is probably my favorite thing you’ve ever written.
R RR Anderson February 8, 2011
YES!! use the funds to help poor people to kick out the poor people in the Winthrop to turn it back into a luxury hotel so there is a better chance rich people will rent out the convention center! IF we timed it right it could have been used for the 2012 Republican National Convention! Cindy McCain could have been sleeping in the Winthrop!!! oh brave new Hyper-Cynical Alternate Tacoma Reality!
D Daniel February 8, 2011
RR – the poor will be shipped off to makeshift housing at Cascadia. The utilities are in place, mostly. Win win.
Y You're Welcome February 8, 2011
Section 8 is a joke. Nobody who actually needs the help knows how to scam the system and get the housing they actually need. We should just call it what is: Government housing for con artists supported by the hard working middle class.
Did you know there is a 3-year waiting list for Salishan? Are kidding me? You have to dedicate your life to being low-income for at-least 3-years just to move in. Get a job!!! And we should totally renovate the Winthrop back into a hotel.
R RR Anderson February 8, 2011
dude, what do you call rich people who suck up public money SPECIFICALLY earmarked to help POOR PEOPLE? con artists? vampires?
I like your idea of winthrop resident motivation.. tell the legally blind guy with the mental disability GET A JOB!!!
Maybe we can recycle the logging camp into a concentration camp for these people in wheelchairs who don’t get jobs no matter how hard we shout at them… HECK Even comes with cattle cars!
You have to be a certain caliber of slime to take alms for the poor and build a parking garage for pampered automobiles.
This story is public relation kryptonite.
T tacoma1 February 8, 2011
As one of the local pro transit, anti-car bloggers here, I really like the Lemay Museum project.
I’m all for the revitalization of the dome district.
I’m all for honoring and glorifying american manufacturing, enginuity and days gone by.
And the museum itself is built in a transit friendly part of our city. Too much of past Pierce County land use planning decisions have been made with suburban sprawl seemingly as the ultimate goal. For a vibrant downtown core, we need to build more in downtown Tacoma.
Thank you David Madeira for your hard work.
R RR Anderson February 8, 2011
laundering money through loopholes and shell corporations isn’t for the faint of heart.
L low bar February 8, 2011
i wish the grand cinema could get some of that tax money and buy the WSHM. the grand was able to expand its entrance i think thats saying people are gobbling up what ever the grand is selling. so why not just move the grand downtown and then really have reason to call it grand.
M Mofo from the Hood February 8, 2011
Mr. Anderson @16, recently I read that Camp 6 out at Pt. Defiance may be open for your final solution as a relocation center for displaced poor people currently residing at the Winthrop Hotel Apts.
Maybe a forced labor compound out at Camp 6 would benefit Tacoma. Imagine a 24-hour TAGRO factory. Or long wooden picnic tables filled with entitlement program old folks put to work rebuilding car batteries to power City-owned electric vehicles. But just because we can do something doesn’t mean that we should or that we would even want to.
Anyway, a lot of poor people among other folks dream about having money enough to buy a car—-a stylish reflection of one’s personality.
The LeMay Museum: Is it reflecting art or life?
N notme February 9, 2011
The LeMay project has been a black hole for so long. I hope it is a success because we’re stuck with it now. I doubt the $25 million raised figure claimed by Maderia is honest. Subtract the value of the public property and the financial contribution of the LeMay family (not counting the cars, but the actual contribtuion to the cost of the facility) from that $25 million and then tell us what you really raised after all these years. And stop blaming the tough economic climate. This project has supposedly been raising money since long before the economy tanked.
R RR Anderson February 9, 2011
Mofo, the people can dream about having a luxury automobile and a full belly at the same time.
Camp 6 International Hobo Museum !
+ + +
Banks, lawyers and consultants who siphon off fees from tax payer grants set up to help impoverished communities need not dream.
A artifacts February 9, 2011
This all seems like Tacoma’s version of the Detroit/enimem Super Bowl commercial and I’m not sure why.
Something about gas guzzling cars in a museum that I really like tho
C CSF February 9, 2011
New Market Tax Credits are great. Look at what they have done for the SoDo.
For those who are not familiar with NMTC, the wealthy, or more often corporations pay their taxes by purchasing tax credits from not-for-profit organizations. This allows the not-for-profits to finance a project that would otherwise NOT get done. The Non-Profit gets up-front cash by selling future tax credits; Net Present Value for the finance geeks. For example the bank will only loan you 50% of a projects value, you have 30% but need the other 20% to build the low income housing, or to repair the derilict building. Sell the tax credits and away you go…now you can build the next great tourist trap.
Personally I cannot think of a better way to pay my taxes. DC and Olympia will not be looking out for Tacoma, and if I can pay my taxes by directly helping out my community, that is going local.
M Mofo from the Hood February 10, 2011
I think to put this conspiracy theory into perspective we can first agree that it is not spun by the apostles of Ralph Nader who bemoaned safety issues of Chevrolet Corvairs; but rather it is the apostles of Noam Chomsky, merely experts in their particular discipline such as imaginative theory generation.
Despite what anyone says, Corvairs were a great car and I’m looking forward to seeing one on display at the great new LeMay Museum.
*Disclaimer: No poor people were displaced because of the writing of this comment.
L low bar February 10, 2011
i’m just glad they are building the structure because when people fail to give a shit about whats inside it like whats inside the WSHM, and le may has to sell the place, it can always be made into something better by someone with money AND brains
L Look@bigpicture February 10, 2011
Yes don’t use existing tax credits to help rennovate a run-down part of downtown that might help bring a little tourism to support the starving downtown businesses and put local contractors back to work. Perhaps we should give another tax credit to the top 1% instead? I’m sure that’s the best use, it’ll “trickle down”, right?
R RR Anderson February 10, 2011
building a museum downtown is good yes. but do we have to get sneaky with dummy orgs and use money set aside to help poor people to do it? Aren’t the banks, consultants and lawyers sucking out their fees from these funds the 1% who don’t need any help?
If folks are cool with that then fine. At least we’ll get another cool glo-worm building for the Tacoma skyline postcard.
R RR Anderson February 10, 2011
as a cartoonist I welcome another under-performing modern-art structure downtown. convention center, WSHM, MOG, TAM… they are all fun to draw.
J John Hathaway February 10, 2011
Good job Exit133.
Just sent your blog to the City Manager, the entire City Council and Rob McNair-Huff for comment.
John Hathaway
Publisher
The New Takhoman
http://www.thenewtakhoman.com
J John Hathaway February 10, 2011
“No poor people were displaced prior to the groundbreaking of the LeMay Museum”, said Mofo from the Hood.
But the were, I believe, prior to the groundbreaking of the Tacoma dome!
E Eric LeMay February 13, 2011
Just for the record, and I can attest as someone there from the beginning, the LeMay America’s Car Museum is it’s own non-profit, just as David Madeira points out.
Although it has received some funding from members of the LeMay family over the last 15 years since it incorporated, giant pains have been made to make it sink or swim on it’s own four wheels. That said, you’ll also see that there is a completely revamped Marymount Event Center being run by the LeMay Family Collection (http://www.lemaymarymount.org/). I haven’t been involved with the actual museum for several years, but I will tell you how hard it was even back in 1996 to raise money for this thing, and, personally, I think it’s impressive they found a way to get it done when bank money got so tight…but I say that more as a spectator than anything these days. God knows, the money before 2007 was tough to get pledged and that last percentage is always the hardest.
There are a ton of lessons from other private collections of all sorts of things that tried to become museums and failed because the “owners of the stuff” tried to manage or “skew” the giving. Those lessons were drilled into our heads from day one. I hope it becomes a museum about art, technology, science, culture and the future…but I’m as wait-and-see as the next person (on a bunch of fronts). The thing I always believed, pushing and shoving it towards downtown and not at Marymount originally, was that it really fits Tacoma better. I still believe that.
I’ll be honest, the more I drive by it and see it growing out of that parking lot that we proposed 15 years ago, I get really, really nervous in a way that can sometimes temper my excitement. These things are HARD to get built, and even harder to keep open. There were, and still are, no delusions of grandeur about it. It’s ambitious to the point of some transportation museum professionals as late as 2005 said “it will never get built, let alone ever work.”
I suggest the time right now is not to get too caught up in “how” the sausage got made, and enjoy the meal. Personally, fundraising and the practically 24-7 processes of publicity and fundraising for 10 years broke me. It’s really, really hard. I walked away from it. I completely admire the board members, family, staff and others who kept sticking with it. It’s almost a small miracle Tacoma is getting what they’re getting.
E Eric LeMay February 13, 2011
And yes…I know how to use “it’s” and “its.” Relying too much on the bloody Mac underline when I quick-scanned it. :-0
L low bar February 14, 2011
translated: this is not the museum you are looking to criticize
R RR Anderson February 14, 2011
Once you unbuckle your moral safety-belt anything is possible!
S Squid February 16, 2011
Eric, walking away from the project when you did was a stroke of genius on your part. Having cobbled together a leveraged funding package that would make Rube Goldberg proud, watch David Madeira burn rubber outta here once the operating deficits start to pile up.
Peter Donnelly once said “you can’t make a car wash out of a museum” but this might be the one exception that proves the rule.
Jury still out on whether MOG becomes the world’s largest BBQ joint. It’s only a few hundred cords of hickory short… I love museums but they do not represent an economic development strategy.
E Erik B. February 16, 2011
Lemay grows each day from the deadness of the Dome District!
R RR Anderson February 16, 2011
you got LeMay using special low income neighborhood federal grants
you got Reconciliation Park using state Highway money
and
you got Davita parkinglots using not-for-private-use state Russel money
I AM ASHAMED TO BE A LEADER OF THIS COMMUNITY!
S Steven February 16, 2011
Mr. LaMay, Mr. Madeira
Thank you for your posts. It’s good to have different prospectives here. I for one am looking forward to the museum and hope it is a big success.
Steven
E Erik B. February 16, 2011
LeMay is placing a large building on an vacant surface level parking lot in Tacoma that will have humans working in it.
We need more of these. More buildings occupied by humans and less parking lots.
Perhaps will we will even get lucky ad draw in a few people from outside of the grid in Tacoma.