Fresno museum may face final loan deadline

Fresno council plan sets June 30 for $15m payment.

Published online on Friday, Jan. 23, 2009

The Fresno Metropolitan Museum would face a final deadline of June 30 to repay a city-backed $15 million loan needed to finish its renovation, or risk losing its property, according to a proposed resolution to the City Council.

Officials for the city and the Met, however, expressed optimism that a long-term financing package will be obtained before the deadline.

The council will consider the item Tuesday.

Met officials are seeking a third extension on paying back the money because credit markets continue to be tight.

The museum borrowed the money after costs on its major revamp soared from nearly $15 million to $28 million.

The City Council in July 2007 agreed to guarantee the short-term loan from United Security Bank, with the understanding the museum would secure permanent financing to reimburse the loan.

The staff report -- which describes this arrangement as the "third and final extension" -- includes language about the worst-case scenario: If the Met defaults on the loan, the city would have to buy the loan and could then take ownership of museum properties and other assets.

Dana Thorpe, the museum's executive director, said Friday that museum officials are working closely with city and bank representatives to nail down a package.

"We are very optimistic it will be positively resolved," Thorpe said. Earlier in the week, she said they had learned of some possible financing options, despite the tight credit market.

Thorpe said the Met has been making interest payments on the loan. But museum officials also are contending with the state's much-delayed budget: The museum is waiting to be reimbursed $1.1 million in bond money promised for its renovation project from the California Cultural and Historic Endowment.

It's the nation's credit crises that have stymied the museum's ability to get permanent financing, which Met officials have hoped to do by issuing bonds. The credit crunch stalled the Met's plans last year, when its first extension was coming due Sept. 30.

Gary Watahira, deputy city manager, said this is a final deadline but that city officials believe a plan will be in place before June 30.

He said there will be ways to work out a solution, though some options may not be as attractive as others.

Dennis Woods, president and chief executive of United Security Bank, could not be reached for comment Friday.

The Met, at Van Ness Avenue and Calaveras Street, closed to the public in June 2005 to undertake a major upgrade of the historic 1922 building that once housed The Fresno Bee. The project was supposed to take one year.

But unexpected problems, such as seismic issues and larger-than-expected amounts of lead and asbestos, plagued the project and forced Met officials to seek assistance from the city.

The museum reopened Nov. 13, 2008. Since then, nearly 50,000 visitors have come through the doors. That figure includes the 28,000 who flocked to the free opening weekend.