Story 06: The Big MoveStory | Print | eMail | Related Media | Archives
My Year in Real Estate
Written by Mike Spock
The implication for us when MOT began to fall behind was that we would be in trouble with both the bondholders and the Feds unless The Children's Museum moved in and covered MOT's bets. Of course we were stretched thin in just meeting our own obligations. There was a clause in the bond agreement that if either of us took a hike, even if the other was more current in their bond payments, both would be in default. If the bond holders chose to, they could call in their loan bonds, and we would probably have to sell Museum Wharf. At least MOT could return to the Lars Anderson carriage house, but of course we had already sold our old home, which at that very moment was under construction as high-end condos. After more than sixteen years of careful planning, site selection, money raising, delayed gratification, the move, and huge amounts of hard work, we were in danger of becoming homeless.
In the near panic of envisioning selling their collection, moving, or even possibly going out of business, MOT's board, staff, and Duncan became evasive and part of the problem rather than our collaborators and part of the solution. It was hard to get straightforward answers.
Even before MOT imploded, our associate director Phyl O'Connell, all of the division managers, a succession of board treasurers, and our banks had their realistic concerns as well. We had worked for years exquisitely fine-tuning our downtown operating budgets to make sure we were not overly optimistic in our attendance projections—and therefore in our income projections—and of course unrealistically low in our cost projections. We even budgeted, for the first time in many years, a small but significant deficit to account for the fact that we probably needed to overstaff a little until we had at least a year under our belts. The deficit gave us time (and money) to solve unexpected problems while we figured out workarounds that would bring the budget back into balance in the first downtown year, plus one. But we certainly didn't budget a two-times Museum Wharf operating cost, and we had to figure out a way to meet those really scary and unanticipated bills before we had to use our operating lines of credit and the good will of our bond holders.
The Trawlers Restaurant closed its doors, leaving the ten members of our two boards, who had been willing to invest $10,000 apiece in the fish restaurant, holding the bag and two bays on the first floor vacant.
I was now in the real estate business—big time. With an office space rental broker, we put the top two floors and two bays on the first floor on the market. Months passed without a nibble until an engineering firm made an offer to lease one floor. But since we had no capacity to finance bringing the space up to first class office standards (we had already mortgaged our future in buying and renovating our museums) the terms the engineers were prepared to offer were so onerous (low rent, endless opportunities to renew their lease) that we would never get either the space back or much help in meeting the bond payments. I brought the deal to Ben Schore, a member of our board that had spent his life making money in commercial real estate. What would Ben do in these circumstances? He said that personally he would walk away from bad deals like this, as he had done more than once in his own business, but in this case he could not feel comfortable offering the same advice to a nonprofit like The Children's Museum. The situations were just not comparable. When, in the our interview, I recalled a memory of his answer from thirty years earlier, he said,
We said no to the engineers. After a nail-biting, lost-sleep year, the new Computer Museum, with backing from the Digital Equipment Corporation, eventually picked up the unclaimed space and took their share of servicing the Museum Wharf bonds and operating costs for the next decade and a half. Eventually the Computer Museum and its collection moved to Silicon Valley, the Museum of Science absorbed the hands-on exhibits, and then sold its interest in Museum Wharf to The Children's Museum. Taking its pick of the remaining bays while renting the top floors as an operating endowment, the Children's Museum, for the first time, could begin to plan for an expansion beyond the original warehouse shell.
Next: Part 5: Looking Back - How Did It Work Out?