Dec. 23 (Bloomberg) -- The board of the Los Angeles Museum of Contemporary Art, suffering from dwindling funds, accepted billionaire Eli Broad’s rescue plan and hired a chief executive officer to replace museum director Jeremy Strick.

Under the terms of the agreement, which allows MOCA to remain independent, the Eli and Edythe Broad Foundation will match as much as $15 million raised by the museum and provide exhibition support of $15 million over five years, MOCA and Broad’s foundation said today in a statement. MOCA’s board named as CEO Charles Young, chancellor emeritus of the University of California at Los Angeles.

“Today is a great day. It really is a rebirth of MOCA,” Broad, 75, said during a press conference at the museum today. The art collector and co-founder of the homebuilder now known as KB Home was the museum’s founding chairman three decades ago.

MOCA’s endowment under Strick peaked at $38.2 million in 2000 and fell to $19.8 million in 2007, after MOCA borrowed about $17.2 million from the endowment, according to the museum. The endowment is now “in the neighborhood” of $6 million, Broad said today in an interview. The museum’s operating budget is about $21 million in the current fiscal year, which runs through June 30, 2009.

Last month, Broad offered to invest $30 million in MOCA, saying at the time that it’s “vital” that the museum “keep its collection and continue its tradition of world-class exhibitions.” Then, a week ago, the Los Angeles County Museum of Art’s private board of trustees proposed a merger with MOCA.

$75 Million

Under the new agreement, the grants from Broad’s foundation along with MOCA Now, a fundraising initiative unveiled today, are part of a campaign intended to raise $75 million for the endowment and operating expenses, the museum said. MOCA will now operate with an annual budget of $13 million to $16 million in cash expenses. The museum may operate at a higher level if it has the cash income to do so.

“We are pleased that MOCA has worked to resolve its financial situation,” Michael Govan, chief executive officer of the county art museum, said today in a statement. “We hope we were able to broaden the discussion and offer our community support to help MOCA imagine its future.”

While the offer by the county art museum was a “thoughtful proposal,” Broad and MOCA’s board wanted to maintain the museum as a standalone institution, David G. Johnson, co-chairman of the museum’s board, said at today’s press conference. “I’m confident that independence was the right path.”

‘Happy to Look On’

MOCA said today that its board agreed to accept Strick’s resignation, and that Young will oversee the day-to-day operations of the museum.

“It’s a great time for the museum -- and for me to step aside,” Strick said in an interview. “I’m looking forward to a great future for MOCA, and I will be happy to look on.”

Young will work with an advisory committee that includes Joel Wachs, president of the Warhol Foundation in New York and former member of the Los Angeles City Council, and John Walsh, director emeritus of the J. Paul Getty Museum.

“Now there are many challenges we have to address,” Young said at the press conference. MOCA will have to search for “new ongoing sources of revenue” and find a new director, Young said, because he considers his position with the museum to be temporary. “The objective is clear: a successful MOCA today, in the near future, and beyond.”

Staying on Grand

MOCA’s collection is displayed in a building designed by Arata Isozaki on Grand Avenue near the Walt Disney Concert Hall, and at the Geffen Contemporary, a former warehouse building in the Little Tokyo section of downtown Los Angeles. Broad has been pushing for the revitalization of downtown Los Angeles for decades, and he required MOCA to stay at its Grand Avenue location as part of his agreement with the museum.

Broad founded Los Angeles-based KB Home, formerly known as Kaufman & Broad, with Donald Kaufman in 1957, and later founded retirement-fund company SunAmerica Inc., now part of American International Group Inc. Broad’s fortune is valued by Forbes magazine at $6.7 billion, making him the 48th-richest person in the U.S.

Broad also led efforts to add a contemporary art annex to the Los Angeles County Museum of Art. The $56 million Broad Contemporary Art Museum, which opened in February, includes 60,000 square feet (5,600 square meters) of gallery space on three floors. Broad is planning to build his own Los Angeles-area museum to display more than 2,000 contemporary photographs, paintings and sculptures in the collection of his Broad Art Foundation.

“If we do it, it’ll be three years from now,” Broad said of the planned facility, adding that MOCA, the county museum and Los Angeles’s other art museums will attract visitors to one another. “The more you have, one complements the other. Once you get a bigger critical mass, you do more in getting cultural tourists and others.”

To contact the reporter on this story: Daniel Taub in Los Angeles at dtaub@bloomberg.net.

Last Updated: December 23, 2008 16:52 EST