Getty to borrow for Malibu renovation
Officials of the J. Paul Getty Trust said Wednesday they will borrow $275 million to pay for the long-planned renovation and expansion of the Getty Villa in Pacific Palisades.
The Getty, a nonprofit organization, can’t legally issue its own bonds, as a corporation or municipality would. To borrow the $275 million it will partner with a state agency, the California Infrastructure and Economic Development Bank. The development bank will issue the tax-exempt bonds starting in mid-May, but it will be up to the Getty to make all payments and the taxpayers will not be on the hook as backers of the bonds.
The museum, which is expected to reopen in 2005, will house the Getty’s collection of Greek and Roman antiquities. It will include a new 450-seat outdoor amphitheater, a restaurant, and two parking structures that will accommodate 560 cars.
In 1999, the project was estimated to cost $150 million, but new construction at the site, above Pacific Coast Highway, has been delayed by a lawsuit filed by the villa’s neighbors. They feared the expanded facility would create unacceptable noise and traffic congestion.
In February, the state Supreme Court refused to take up the neighbors’ final appeal after the Getty won its case in appellate court. John Murdock, attorney for the neighbors, said Wednesday that further negotiations with the Getty ensued, and “the parties have resolved all their differences and the matter is concluded for now.”
Along with inflation, delays caused by fighting the lawsuit have contributed to the near-doubling of the project’s cost, said Bradley Wells, vice president of finance and administration for the Getty Trust.
Construction bids “anticipated a certain time frame in a certain sequence” that has been thrown out of whack, resulting in higher costs, Wells said. The lawsuit only stopped new construction on the site; the Getty has gone forward since 2000 with renovations on the villa.
The Getty had a $4.4-billion endowment at the end of 2002. Wells said it decided to borrow -- as it did in building the hilltop Getty Center in Brentwood that opened in 1997 -- so that it could preserve as much money as possible for its programs and operations, while paying the cost of new construction over an expected 30-year term. Getty officials estimate that it will cost $30 million a year to operate the reopened villa and pay down its construction debt, on top of average annual expenses of about $285 million for the Getty Center.
This is a good time to borrow a big sum, Wells said: “I don’t want to anticipate what the interest rate will be, but rates are at 41-year lows. We expect them to be very favorable.”
Murdock said the neighbors will still be watching closely for any violation of the conditional use permit the city issued in 1999; neither he nor Getty officials would discuss any of the terms agreed to in recent negotiations.
