Folk Art Museum’s Bad-News Day: Sale to MoMA Consummated, Disgraced Patron Sentenced

The flagship building of the American Folk Art Museum (with the red banner) on its last day. On left (behind the white "MoMA" fence) is the vacant lot where the Nouvel-designed MoMA/Hines tower may eventually rise. On the right is MoMA.

The financially struggling American Folk Art Museum (AFAM), which permanently closed its 53rd Street building to the public on July 8, closed its deal on Friday to sell the flagship facility to the Museum of Modern Art for $31.2 million. AFAM was given 90 days from the closing to clear out, making way for the MoMA Real Estate Juggernaut. It will continue to operate at what used to be its satellite facility, a much smaller space near Lincoln Center.

Meanwhile, on the very same day that AFAM relinquished ownership of its building, its former chairman and once preeminent patron, the fallen jewelry mogul and folk art collector Ralph Esmerian, was sentenced to six years in prison and slapped with a $20-million fine.

In her detailed report on Esmerian's case, Brook Mason of The Art Newspaper wrote:

At the sentencing, U.S. District Court Judge Denise Cote said that Esmerian "lived a life of fraud and deceit on a massive scale."

MoMA's right of first refusal to buy the property was incorporated into the prospectus for the $31.2 million in bonds issued by the Trust for Cultural Resources of the City of New York for the construction of AFAM's now 10-year-old building, designed by Tod Williams Billie Tsien.

But from a close reading of the prospectus, it appears that the procedures to be followed in order for MoMA to exercise its right of first refusal were not adhered to. Below is the relevant passage (second paragraph), as it appears in the prospectus for the bonds (on which AFAM has defaulted). The "Museum" to which this refers is AFAM:
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As you can see, the prospectus called for MoMA to get the chance to preempt another prospective purchaser, after that purchaser had successfully negotiated a contract for sale (which MoMA would then have to match, to acquire the property).

When I asked if MoMA had matched a third-party offer, Susan Flamm, AFAM's director of public relations, informed me:

Since the building was never on the market, there were no other offers.

But never marketing the building meant that AFAM never tested the waters to see whether it could have gotten a deal better than what it struck with MoMA.

According to the minutes of the May 18 meeting of the Trust for Cultural Resources, court permission and approval by the state Attorney General's office were required before this deal could go through.

You can read the entire bond prospectus here.

A MoMA spokesperson informed me that the right of first refusal actually originated much earlier than the time of the 2000 prospectus:

The 1979 deed between the Rockefeller Brothers Fund and the American Folk Art Museum (then the Museum of American Folk Art) stipulates that MoMA will have the right of first refusal on the property. No reason is explicitly stated.

What exactly does MoMA intend to do with its new trophy? An adjoining parcel, as CultureGrrl readers will remember, was bought from MoMA for $125 million by developer Hines for a planned (but stalled) Jean Nouvel-designed skyscraper.

I caught up with MoMA's director, Glenn Lowry, at the press preview for Talk to Me (to Nov. 7). Most of the tech dreck in that show didn't "talk to me," which I concede may be attributable to my having reached that crotchety age when innovations such as the already infamous Menstruation Machine (please don't ask!) come across not as ingenious but as inane or insane.

Glenn (unlike the exhibition) did talk to me, and what he said is that MoMA hasn't yet decided what to do with its new property. Undetermined is whether MoMA will knock the building down, gut it or keep it intact.

Lowry told me:

We acquired it because it was available. They [AFAM] were in trouble. They asked us to help out. I don't know if it's going to be part of the bigger Hines project, but at some point it's obviously going to be part of our overall campus. We acquired it to use it. How we're going to use it, we haven't even begun to think about.