Jan. 11 (Bloomberg) -- Billionaire Eli Broad, who has made revitalizing downtown Los Angeles his mission for more than a decade, aims to attract more tourists with a $130 million museum as the city struggles with job losses and a corporate exodus.
The Broad Art Foundation, which unveiled its architectural design last week and is scheduled to open in two years, will have about 100 permanent employees, Broad said. Development of the contemporary art museum next to the Walt Disney Concert Hall will create a total of 1,340 positions, most of them temporary construction jobs, according to the foundation.
“You throw another museum in there, is that really what we need?” said Joel Kotkin, a Los Angeles-based urban studies scholar and author of “The Next Hundred Million: America in 2050.” “You can build all the arts palaces and pleasure palaces and football stadiums you want, but you’re not going to have a vital L.A. region, and you’re not going to have a vital downtown, until you have increasing employment.”
There was no job growth last year in downtown Los Angeles, and unemployment in the city stands at 14.3 percent, higher than the national rate, according to the Los Angeles County Economic Development Corp. Broad said Los Angeles needs both a drop in unemployment and an emphasis on the arts.
“We always need more industry, we need more jobs, we all know that,” the 77-year-old Broad said during a Jan. 6 interview at the Museum of Contemporary Art, or MOCA, located across the street from where his building will be. “Any investment in Los Angeles is good for Los Angeles.”
Broad, a philanthropist and co-founder of KB Home, has for years been a proponent of reviving the 65-block downtown, home to government buildings, law firms and bank offices that empty out when the business day ends.
Broad raised funds for the Frank Gehry-designed Disney Hall on downtown’s Grand Avenue, which has lured locals and tourists downtown since its 2003 opening, and in 2008 pledged $30 million to MOCA, preventing its financial collapse. Downtown also has been helped by the Staples Center sports arena, the L.A. Live entertainment complex and new restaurants and bars.
Still, downtown’s revival has been slowed by the recession. A plan by New York-based developer Related Cos. for a residential-and-retail project on Grand Avenue, including a five-star Mandarin Oriental hotel, stalled in 2008, and third-quarter prices for condominiums were below 2004 levels, according to the Downtown Los Angeles Business Improvement District.
“Downtown needs a recovery in the economy, and no amount of near-term planning for development or getting buildings started can help this process,” said Nancy D. Sidhu, the Economic Development Corp.’s chief economist. Residential developments aren’t being built downtown because of oversupply, she said. “Broad provides an alternative use for that space.”
The downtown slowdown mirrors the trend throughout the region. Southern California home sales plunged 16 percent in November, research company MDA DataQuick said last month. Statewide unemployment was 12.4 percent in November, the latest month for which figures are available, according to California’s Employment Development Department. That’s higher than the 9.4 percent rate nationally last month.
Northrop Grumman Corp., the third-largest U.S. defense contractor, last year said it would move its headquarters to the Washington area from Los Angeles by mid-2011. In 2009, Hilton Worldwide relocated to McLean, Virginia, from Los Angeles County. The region’s biggest newspaper, the Los Angeles Times, was purchased in 2000 by Chicago-based Tribune Co., which has been under bankruptcy protection for the past two years.
New York Challenger
“We’ve been losing market share over the past decade in L.A. County,” said Kotkin, a fellow at Chapman University in Orange, California, who has written books about Los Angeles and other cities. “We need to start thinking of how to build up the basics -- manufacturing, helping the poor. L.A. used to be thought of as a challenger to New York. That’s certainly not the case anymore.”
Many developers still are betting on the continued resurgence of downtown. Marriott International Inc. last year opened a Ritz-Carlton, downtown Los Angeles’s first five-star hotel, and a JW Marriott as part of Anschutz Entertainment Group’s 4 million-square-foot (186,000-square-meter) L.A. Live.
The new Broad museum, designed by New York-based architectural firm Diller Scofidio + Renfro, will feature almost an acre of column-free exhibition space with walls made of an “airy, cellular exoskeleton structure” that will fill the block-long gallery with filtered natural daylight, according to the Broad Art Foundation. The museum will display artwork from the 2,000-piece Broad Collections, including pieces by Jean-Michel Basquiat, Damien Hirst and Robert Rauschenberg.
Eli Broad and his wife, Edythe, are endowing $200 million to the museum to cover its operating expenses. Broad’s net worth is $5.8 billion, ranking him 44th among the richest Americans, according to a September estimate by Forbes magazine. He made his fortune first as co-founder of homebuilder KB Home, formerly known as Kaufman & Broad, and then by starting SunAmerica Inc., an insurer bought by American International Group Inc. in 1998.
“We’ve made great progress,” Broad said of downtown’s revival. “If you go back 10 years, before you had Staples and L.A. Live and before you had Walt Disney Concert Hall and some other things, you’d only get 3 million people a year downtown. Now it’s about 13 million, 14 million, and growing rapidly.”
Sidhu, the Los Angeles economist, said Broad’s museum, combined with the nearby Museum of Contemporary Art, will add to the number of people visiting downtown annually -- and help bolster such local businesses as restaurants. Broad said his museum probably will attract 200,000 guests annually.
“Modern art people love this stuff,” Sidhu said. “They’ll be happy as clams having two there, and then they’ll stick around for lunch. The Broad should make a noticeable difference to the area.”
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