Today, the finance committee of the Olympia City Council will hear a presentation on the proposed funding plan for the Hands On Children's Museum, which is scheduled to break ground later this year. The complex agreement will go before the full council on April 20.
This is a key time in the $18 million project. Approval of the financial plan will allow the city to formally purchase the property from the Port of Olympia. “That will open the floodgates to major donors,” says Patty Belmonte, executive director of the museum. Once large donors and foundations know that the property is locked up and the financial plan is set, they will be much more amenable to making a pledge.
That’s why it’s imperative that the new members of the Olympia City Council get up to speed on the museum project, get their questions asked and answered. We encourage the full council to approve the plan when the issue is brought before them this month.
It’s a complex issue because of the number of players involved.
The port owns the property, but the city has agreed to purchase the land near the LOTT Alliance headquarters. The city will pay $2.7 million for the property.
The city’s total commitment to the museum project — including the $2.7 million for the land — is $8.9 million. Most of the money will come from the Public Facilities District account — a special district that enables municipalities like Olympia to be awarded state dollars for public projects such as parks and museums.
The city of Olympia has spent $1.3 million on architectural drawings, environmental engineering and predevelopment costs. The city plans to issue bonds for $6.5 million to $6.7 million, which will be repaid from PFD funds over the next 17-18 years.
The city hopes to call for bids to construct the shell of the museum later this spring and award the contract by summer, with construction to start — hopefully — in September.
The city will own the property and the building, then lease it back to the Hands On Children’s Museum for $1 a year in a long-term contract. The building can only be used for a museum.
That’s the city’s commitment.
The museum and its board of directors have agreed to a $9 million investment. The museum plans to spend $3.7 million on tenant improvements, $3.7 million to design and build the exhibits, another half million dollars on fixtures and equipment and about $1 million in administrative and personnel costs. The museum will move from 22 full-time positions and an annual operating budget of $1.1 million to a new two-and-a-half story, 28,000 square foot building with 36 employees and $2.2 million in annual operating costs.
The museum has $4.1 million in cash and pledges to put it toward the $18 million project. Belmonte said her goal is to raise an additional $3 million before the building opens late next year. “Right now we are exactly on schedule,” she said.
It is virtually impossible for big projects like this — projects that rely heavily on philanthropic fundraising — to cover all of the project’s expenses using a pay-as-you-go system. Many of the private funds are pledged over several years to allow donors to spread out their cash contributions. As a result, much of the private capital raised won’t actually be received until the project is complete. So, bridge loans are common necessity to “bridge” the timing gap.
The Hands On Children’s Museum and Thurston First Bank have partnered for that bridge loan.
Belmonte said she will have more firm numbers by the time the council takes final action, but she’s expecting a bridge loan between $2 million and $5 million. She applauds Thurston First Bank for stepping forward with an offer. “They’ve been absolutely terrific,” she said.
Jim Haley, president and CEO of Thurston First Bank, said, “As a community bank it’s one of our core responsibilities to improve the community. It’s a large part of what a community bank should be.”
The museum, he said, has a superb national reputation and the community has shown its support of the museum through its donations. “All that adds up to a highly successful project. The Hands On Children’s Museum and our community bank is an ideal partnership.”
Haley said the bank is “pulling out all the stops” to ensure that the bridge financing package works. “We’re proud to be a partner in this,” Haley said.
The bid climate is very attractive right now. Locking up land ownership and approving the carefully-crafted financial plan will bring more major donors to this outstanding project.
And, having a Thurston First Bank join the partnership makes this a true community undertaking.
We encourage the entire Olympia City Council to approve the financial package April 20. The new Hands On Children’s Museum is going to be an incredible community asset.