the Diego Rivera mural
"The Making of a Fresco Showing the Building of a City" by Diego Rivera adorns the Diego Rivera Gallery at San Francisco Art Institute's 800 Chestnut St. main campus

Despite laying off scores of faculty, fomenting an exodus of students, and announcing it will not offer degree programs in Fall 2020 or Spring 2021, San Francisco Art Institute has steadfastly maintained it is not “closing.” 

The San Francisco Art Institute is not closing its doors,” read a June 30 email from school trustee Doug Hall to students, faculty, alumni, and others. “In early July a process will be announced that allows community input as we begin the interesting and positive process of restructuring and reorganizing SFAI into the vital place it was and can be again.” 

That goal ostensibly became more difficult — though not yet impossible — earlier this month when Boston Private & Trust Company moved to foreclose upon the 150-year-old institution’s crown jewel, its Chestnut Street campus building, which serves as collateral for a hefty loan.   

The “Notice of Default and Election to Sell Under Deed of Trust” was filed on July 8 on behalf of Boston Private by Peak Foreclosure Services, Inc. In a separate document also filed on July 8, Peak Foreclosure Services was inserted as a “substitute trustee” for the school. 

The Notice of Default lists the sum of the Art Institute’s “past-due payments plus permitted costs and expenses” as $19,069,631.48 as of July 2. The document lists the school’s “breach” as “the failure to pay the principal balance, which became due on 04/01/2020 together” with other costs and expenses. 

No sale date of the property may be set until three months after the July 8 date of the notice of default. 

SFAI Notice of Default by Julian Mark on Scribd

Both interim Chief Operating Officer Mark Kushner and Board of Trustees chair Pam Rorke Levy last week insisted to Mission Local that the San Francisco Art Institute had not missed a payment. Both acknowledged, however, that the school had been in “technical default” for months; its deed of trust with Boston Private required certain amounts of cash reserves and other such measures it had not been able to maintain. 

Questions today to Kushner and Rorke and the school’s attorney from Keller Benvenutti Kim — a San Francisco firm specializing in “corporate bankruptcy, restructuring, and crisis management” — were deferred to the following statement: 

Like many educational and arts organizations worldwide, SFAI has been deeply affected by the COVID-19 pandemic.  The pandemic has affected nearly every aspect of our operations, and we have had to take painful steps to cut costs and preserve resources.  These steps have had a single goal: enabling SFAI to continue to provide world-class fine-arts education in San Francisco, as it has for over a century.  We are in active discussions with our current lender, as well as with potential sources of additional funding, with that same goal in mind.  We expect these discussions to continue over the course of the summer.  We are grateful for the community’s overwhelming support through the current adversity, and hopeful that SFAI will emerge from it an even stronger organization.

The pandemic has been a disaster for educational institutions large and small; the San Francisco Department of Public Health on July 7 informed all “institutes of higher education” that in-person instruction is not allowed — a move with dire educational consequences, and which will cost instructors their jobs. 

The San Francisco Art Institute, however, was already facing a crisis of its own making — crushing debt on a $16 million loan the institute secured in 2016 to finance its ambitious expansion into Fort Mason — and an $18 million 2017 refinancing. 

“One of the major issues facing the institute is debt,” Hall wrote on June 30. “Personally, I was shocked to learn the extent of it. It would be inappropriate at the moment to provide many details about the fiscal health of the school since it changes almost daily.”  

On July 1, 2016, the school put up as collateral its “real property” to obtain a loan from Shanghai Commercial Bank. The University of California Regents are also listed as grantors on these forms. The UC Regents have served as “remainder trustees” of the school dating back to an 1893 agreement between UC and benefactor Edward Searles. 

Thanks to this 19th-century pact, if the Art Institute were to cease to be, its real properties — and debt — would fall to the UC Regents. 

Our messages for the Regents, querying what their plans would be for the school have not been answered.   

The hefty loan was secured to finance the school’s expansion into space at Fort Mason. Five years ago, the school’s enrollment was pushing 700, and this move was sold as necessary. But the student body has shrunk precipitously since then, and is now under 300 — a disaster for a school that’s 85 percent tuition-dependent and now saddled with crushing debt and a half-century remaining on its waterfront lease. 

“The loan was very badly done. We over-collateralized,” Levy said last week. “With our big enrollment, the amount we spent on Fort Mason was very justifiable. If the board at that time had people advising us, we would’ve known we were on top of a demographic trend” — and that enrollment would fall at institutes of higher education nationwide, and is predicted to continue to drop. 

In a complaint sent earlier this year to state Attorney General Xavier Becerra, the SEIU 1021, which represents 69 adjunct faculty members who have been laid off, accused the school and its trustees of “conflicts of interest, self-dealing, and breaches of duty of care and loyalty.” 

Elizabeth Travelslight, one of the 69 laid-off adjunct faculty members and the union’s chapter president, lamented her colleagues losing their jobs — “and these were very special jobs at a very special cultural institution.” 

She is unsure what comes next, or what to expect from the school, the bank, or, quite possibly, the UC Regents. 

“Both the Board of Trustees and the UC Regents deal with problems as administrators, not as people who do the actual work this institution is meant to do,” she said. “Which is teach.”


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Managing Editor/Columnist. Joe was born in San Francisco, raised in the Bay Area, and attended U.C. Berkeley. He never left.

“Your humble narrator” was a writer and columnist for SF Weekly from 2007 to 2015, and a senior editor at San Francisco Magazine from 2015 to 2017. You may also have read his work in the Guardian (U.S. and U.K.); San Francisco Public Press; San Francisco Chronicle; San Francisco Examiner; Dallas Morning News; and elsewhere.

He resides in the Excelsior with his wife and three (!) kids, 4.3 miles from his birthplace and 5,474 from hers.

The Northern California branch of the Society of Professional Journalists named Eskenazi the 2019 Journalist of the Year.

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  1. This wonderful place on a hill gave energy to many students including me. It teaches “creativity” so now use it to get that school back on its feet. The millionaires who study there should help the cause. That institution is San Francisco at its best. I attended the school in the 60’s and if the school closes than close San Francisco.

  2. “If the board at that time had people advising us, we would’ve known we were on top of a demographic trend” says Levy.

    Um, why didn’t you and the board take responsibility for getting the right advisors? Sounds like somebody is trying to avoid blame for negligence and incompetence.

  3. Hiring a slick charter-school huckster with a history of hopscotching from one flailing project to another to run the place doesn’t seem like the savviest of moves. The charter school sector is ever the master of hype, but hype is not going to benefit SFAI.

    1. Doug Hall was one of my teachers when I was a undergrad. student at SFAI. He along with Bay Area conceptualists and video Artists expanded the powerful medium from infancy to its stronghold today rich with historic relevance – Paul Koss,,Howard Fried,Sharon Grace and Tony Labat transitioned the small Performance /Video Dept. into what is now New Genres Dept. historic distinct feature legacy . Doug Hall chaired the New Genres Dept. for many years while producing media / video /installation art shown in museums/ galleries here in the US and around the world – as is the standard practice of all faculty at SFAI- they are informed working ARTISTS who often wear many hats in order to support the form and the functionality of the profession and the institution.

  4. An exemplary San Francisco crown jewel.
    May I posit – national crown jewel – right up there with Rhode Island.
    OK – let’s assume mistakes were made.
    Most likely dealing with Boston Private in the first place.

    From their website:

    “$2.1 billion of cash, high-quality unpledged investment securities, and borrowing capacity from the Federal Home Loan Bank”

    So for 20 mil pizza money they can’t restructure the debt of one of our country’s top art institutes.

    The pox on them.
    Or that other thing ,,, you know ….

    1. Last time we were here?

      Feinstein’s hubbie, Dick Blum at exclusive contract to see 6 billion in Post Office property.

      He took home $360 million dollars.


  5. Campers,

    Betting here is that CB Richard Ellis will get the commission on the sale.

    RIP Rob Eshelman, Matt Gonzalez’s Chief of Staff back in the day.

    He was Adjunct Professor at Columbia in NYC.

    Heart attack after meal on his birthday.