L.A. Agrees to Aid Financing Plan for Tolerance Museum

In an unusual use of tax-exempt financing, the Los Angeles City Council voted Wednesday to issue $16 million in certificates of participation to help the Simon Wiesenthal Center build a human rights museum and education complex adjacent to its property in West Los Angeles.

The certificates, which are similar to bonds, will allow the nonprofit center to begin construction of the $30-million Beit Hashoah Museum of Tolerance this summer rather than wait until it has raised enough money from private donors. The center has raised about $13 million, including a $5-million grant from the state in 1985, and has received pledges for an additional $6.5 million over the next five years.

The planned 36,000-square-foot granite and glass museum and accompanying 85,000-square-foot education complex have been billed as the largest exhibit in the world to document man’s intolerance of man. The new complex will be situated on a corner lot next to the existing Wiesenthal Center, the famed institution dedicated to studying the World War II Holocaust and named in honor of Vienna-based Nazi hunter Simon Wiesenthal.

The new museum will include displays on the Holocaust--its name, Beit Hashoah, means House of the Holocaust--as well as exhibits that examine human behavior and the roots of prejudice.

City officials said the financing arrangement will cost taxpayers nothing, since the city will act only as a so-called “conduit”--or middleman--by issuing the certificates on behalf of the center. As part of a complicated legal agreement, the city will actually purchase the museum property at the corner of Pico Boulevard and Roxbury Drive from the Wiesenthal Center and then immediately sell it back.

Under the agreement, the city will be required to make payments on the property only when the center makes its payments to the city, which will come from ongoing fund-raising efforts in the next seven years. In practical terms, since the two payments will be identical, the city will be forwarding the center’s money to the certificate holders, who have purchased an interest in the transaction.

The city is “not directly or indirectly liable for repayment” should the museum project fail, since the National Bank of Australia has agreed to back the project by providing a letter of credit, City Administrative Officer Keith Comrie said in a report to the City Council.

The City Council has approved similar financing arrangements for several hospitals, convalescent homes and other health care facilities; it issued $58 million in certificates in 1985 for a 10-story tower at the Hollywood Presbyterian Medical Center. But the Wiesenthal project is only one of a handful of non-medical facilities to take advantage of the financing mechanism.

David Brodsly, who oversees the arrangements for the City Administrative Office, said the city has played “conduit” for about $200 million in certificates of participation over the past three years. The financing is available under federal tax laws only to nonprofit groups that are open to the public and do not have a “religious mission,” he said. The organizations must also be financially secure enough to obtain the backing of a bank.