Facing a foreclosure and public sale of San Francisco Art Institute’s 95-year-old main campus, the Regents of the University of California in October quietly stepped in, bought the prestigious but troubled art school’s $19.7 million debt from a private bank, and will now serve as its landlord.
Internal documents indicate that the fate of the school’s famed — and extremely valuable — Diego Rivera mural is uncertain.
A series of documents obtained by Mission Local trace this notable chain of events.
In July, Boston Private Bank & Trust Company moved to foreclose on the 149-year-old art institution, with the earliest possible sale of the main campus at 800 Chestnut St. coming three months later. On Oct. 13, the date for a public sale on the City Hall steps was set for Nov. 19.
“Said property is being sold for the purpose of paying the obligations secured by said Deed of Trust, including fees and expenses of sale,” stated the Oct. 13 Notice of Trustee’s Sale.
“The total amount of the unpaid principal balance, interest thereon, together with reasonably estimated costs, expenses and advances … is $19,662,553.90.”
That public sale, slated for City Hall’s steps, would never take place. Instead, the UC Regents handled things in-house.
As recorded in an Oct. 30 “Deed in Lieu of Foreclosure,” Boston Private granted to the UC Regents “an absolute conveyance of title to the Property for a fair and adequate consideration, being the full satisfaction of all obligations secured by the Deed of Trust” — which would presumably be the aforementioned $19,662,553.90, the “obligations secured by said Deed of Trust,” or a figure near that.
In another Oct. 30 document, the Regents were recorded as the new trustee holding the school’s deed of trust. And, in yet another Oct. 30 document — signed by the Art Institute’s Board of Trustees chair Pam Rorke Levy and Lauren Friedman, the UC Office of the President’s executive director of Capital Asset Strategies — the art school is designated the tenant with the UC Regents serving as the landlord.
The lease expires in October 2023, but includes three subsequent one-year extension rights. The tenants have an option to buy the property based upon “terms and conditions in the lease,” which Mission Local has not obtained.
This apparent expenditure of nearly $20 million in public funds was undertaken without public fanfare by the University of California.
That’s notable, but the UC Regents’ involvement in this matter was not surprising. The Regents have served as “remainder trustees” of the school dating back to an 1893 agreement between UC and SFAI benefactor Edward Searles.
And, as Mission Local noted in July, when Boston Private moved to foreclose on SFAI, “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.”
Calls and emails to the UC Regents were returned by automated messages stating the office is on cessation until Jan. 4.
Calls to SFAI interim COO Mark Kushner and spokeswoman Nina Sazevich have not been returned. Pam Rorke Levy hung up the phone without answering questions.
San Francisco Art Institute, like so many colleges and universities, is reeling from the ongoing Covid-19 pandemic. But many of SFAI’s fiscal woes predate covid, and were self-induced.
The school’s crushing debt stems from a $16 million loan it secured in 2016 to finance an ambitious expansion into Fort Mason — and an $18 million 2017 refinancing.
On July 1, 2016, the school put up as collateral its “real property” — namely the 800 Chestnut St. site — to obtain a loan from Shanghai Commercial Bank.
The Oct. 13, 2020 Notice of Trustee’s Sale lists no fewer than 19 “Murals and Frescoes” on that property, with the star attraction being Diego Rivera’s 1931 mural Making of a Fresco Showing the Building of a City.
With SFAI heavily in debt to the UC Regents, the future of this valuable asset is in question.
A Dec. 23 letter to staff and faculty from school vice president and dean of academic affairs Jennifer Rissler stated that “all options to save SFAI” are on the table.
“A number of individuals have expressed concern about the Diego Rivera mural,” Rissler wrote.
“Last Thursday, the board received a presentation akin to what the faculty and [staff] received at their monthly open meeting from the Board Chair. The board voted … to continue exploring pathways and offers for endowing or selling the mural.”
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That, or “art”, he added.
I hope UC does annex SFAI. it’s been a great school and the building is one of my favs in the whole city. stunning blend of older courtyard, fountain and tower with 60s brutalist roof and sweeping deck (above great auditorium). one of the best (and mostly unknown) views in the city, with a rooftop cafe to boot.
I’m not sure what happened with ft mason–the first time I walked into that space I was stunned because it was so beautiful, and clearly so expensive. I hope at the very least they make more $ renting it out. as for the rivera mural, I think it would be insane to sell or move it. it totally belongs where it is.
I’d like to know more about the historic uc connection–I believe that the school started at the mark hopkins mansion and the site was willed to UC on behalf of what is now SFAI. I thought I read years ago that 800 chestnut was owned by UC.
art schools are funny places. I hope UC can help clean up the program and SFAI can find some new benefactors without selling out too much. I had friends who were students at black mountain, arguably america’s greatest art school/commune, but that only lasted 2 decades. a rich art school is pretty much an oxymoron. the academy of “art” is a perfect example (I taught there for a few years).
Might this building become part of the UC network? Maybe MFA ground zero?
Note that very large & stunning City College Rivera work was supposed to be moved across town to MOMA until CC theater work is done and then returned. This plan was before Covid; haven’t heard anything since. Risk is high of damage!
It is depressing that another Rivera masterpiece is at risk. This one is better known because the SFAI campus is easier for tourists to find-and has been open to the public.
The Chestnut Campus is so beautiful!
Thanks for the reporting and please follow up
I appreciate this article’s information as, for an unknown reason, it has been ignored in the larger press. My concern is that U.C. Regents are spending public funds to assist a private school. Obviously, there is the possibility for corruption in this process. The fact that U.C. is not disclosing information about its actions or motivations leads me to believe that this was not done in the publics best interest, nor can it be justified.
… ok so $20mil in megacapitalist terms is totally fundraisable by people putting their minds to it, especially in Silicone Valley EVEN during a pandemic! Yay for the old pals UC stepping in – does that mean we get a new board with folks whose minds seem more open to fundraising rather than this devastating shell game that’s been dragging on…?
Also, dang – how do you sell a mural?! Does that mean like rip it out of the walls and ship it elsewhere? C’mon!! I think the people truly invested in value and expansion beyond materialist gain can come up with better solutions to debt than the sale of the art literally bound up in the school!
Thanks, Joe, for this excellent article!
I graduated from SFAI in the early 70’s and moved to France in ’78.
Every time I returned to the Bay Area in the following decades, I made a point of visiting the school, having lunch at the cafeteria, admiring the Rivera and the latest student work.
SFAI is more than an art school, it’s a San Francisco landmark of inestimable value.
Your headline and ending suggest that the UC Regents intend to sell or demolish the fresco, but nothing in the article itself investigate this theme. If you’re going to suggest to allege some nefarious plan, please at least try to investigate it. Clickbait.
Sir or madam —
The headline says “sell.” You don’t demolish Diego Rivera murals.
The email I quoted in the story said that the board is looking to “sell or endow” the mural. That’s pretty straightforward.
Try reading the story again. And, this time, read it.
Best,
JE
“We” do not demolish Rivera murals.
https://www.youtube.com/watch?v=IbwukvgiQ00&ab_channel=%D7%A8%D7%93%D7%99%D7%95%D7%9E%D7%95%D7%A1%D7%99%D7%9B%D7%99%D7%A3Radio69FM
Marcos —
Yes, that famously happened long ago. And Van Gogh’s doctor used a gifted painting in his chicken coop. But, today, that’d be like lighting $50M on fire.
JE
The Art Institute owns a lot of housing what becomes of that?
I think your confusing SFAI with Art Institute of San Francisco. AI is a for-profit school that owns a ton of property in SF.
“steven Torry Rappolee”,
You’re confusing SFAI with the AAU.
Don’t confuse the legitimate institution of higher ed, The SF Art Institute with the for-profit diploma mill and real estate empire of the Academy of Art University [sic].
The Art Institute owns no housing. You’re confusing it with the Academy of ArtUniversity, which is a for-profit institution.
You may be confusing the SFAI with Academy of Art University which is a real estate scam masquerading as a school.
The San Francisco Art Institute does not own any housing.
You must be thinking of the Art Academy University – a for profit mega corp. This is a common mistake but it continues to cause confusion and hurt the school.
SFAI since 1871 in one form or another, first and, for a time, best. Who knows what is next?
Finally Joe, thanks for calling them out. I was a student there when all this went down and all I can say is… I’m still unclear how the school can withdrawal a majority of its students under the pretense it was closing and then continue to operate and even enroll new students.
I have had many negative interactions with Pam and Mark. I’m not sure what makes them qualified to run a historic art institution but since they have dee San Francisco pockets they get to do whatever they want at the expense of everyone else.
Joe,
How about you talk to somebody who knows something about buying distressed debt before it goes to public sale (auction?). Find out how much the price would be discounted off the total amount owed.
Assuming the price the UC paid is the full amount owed is pretty suspect and the tone of your writing seems to make the UC the bad guys when that might be far from the truth.
Hearing from some people who know what the entire transaction was and intentions are might make a better balanced story – try it for once.
Sir or madam —
You’re reading things into the story that aren’t there and not reading the things that are there.
Best,
JE
Oh no, rest assured, he clearly makes the bad guys SFAI’s board members and Mark Kushner… which that is exactly where the blame lies. Mark less, he is just a guy being paid an exorbitant amount to fix or protect the board members from their gross mismanagement. Now, to be clear there were some board members who left when this all went down who I do believe were loyal to the school. The ones who stayed claim to do it by the grace of their heart but the truth is the board had a fiduciary responsibility and failed and then concealed this knowledge for over a year.
The article calls out the right people. The next article should address the sale of the mural in depth. How truly problematic this sale is
Great peice. Can we get ML to cover national news too???
You’re kind, but we have no special expertise in national news.
JE
if that wasn’t meant to be a joke then I’m sorry fore laughing as hard as I did
What kind of people would put a Rivera mural into hock?
The same folks that sold the sfai muybridge collection. Hopefully UC will get a strong board with good financial experience.
The Muybridge work was sold in the 70’s to start the Performance/Video depart. Not the same Board of Trustees of today.
Marc,
Who’d do this kind of thing?
How about the 70 plus million who voted for Trump?
Warriors getting more intriguing every game.
h.
I am an MFA at SFAI, and an MBA from Wharton.
What I walked into was a classic business school case about failure.
More specifically, the current academic dean has been in place for a long time. Under her “guidance,” the tenured faculty had a hayride on whatever their weird interests were, versus what the students needed to know.
The most egregious departments were “Critical Thinking,” and “Art History.” Nothing was taught in “Critical Thinking” other than old Marxists from the 1970’s. Nothing about art criticism, or Pulitzer Prize winning art critics of the 20th century.
SFAI had a large influx of Chinese nationals who were not going to put up with the tired, third rate, intellectuals in these departments. They voted with their feet.
SFAI blames the cost of living, and the exodus of high net worth benefactors.
Rather, I have never seen a more mismanaged, and privileged, administration than this one.
Throw them all out, and start anew.
Very well put
So well said! Couldn’t agree more. I’m a BFA graduate from SFAI. Such a sham and has been poorly managed from as long as I can remember. They went through same debacle when they purchased the Gap building down the street in the 90s, only discover it needed to be retrofitted after the fact, and then sat empty for years until the Art Academy came along and bought it and made the necessary retrofit. What a joke and embarrassment. And don’t forget the horrible story and sad story of the president who committed suicide. The whole place reeks of corruption. Meanwhile, still paying off this debt! I agree, they all need to go!!
Ms Weber,
The elephant on the marble mantle here is that the Art Institute was always a Lefty school. Hell, Matt Gonzalez did some teaching there in one of those “weird” classes.
Then, few smart transactions of financier, F. Warren Hellman took control of it.
Bit of a Zionist, that one.
Dumped anyone teaching anything doing with Palestinian Rights.
Censored student publications.
Destroyed the school and spread-eagled it in the courtyard for the vultures who line up to grab juicy pieces …
A liver here.
A Diego Rivera there.
Thing is, it doesn’t really matter
As long as artists live, art can be replaced.
New art schools can be created.
And, incidentally, none of the people who pay 50 million for this art would allow the artist in their homes.
Did you know that Rivera painted that thing with a gun sticking out of his back pocket?
He was fresh up from Mexico where his friend, Leon Trotsky was killed by an assassin sent by Stalin.
I love Rivera and Max Beckman and Chagall but my favorite art experience?
Driving down an allwy in SF’s Mission District.
h.