Helsinki and Supporting Foundation Propose New Plan for Establishing Guggenheim Helsinki Museum
The City Board of Helsinki will be presented next Monday with a new proposal for establishing a Guggenheim museum in Helsinki.
The City of Helsinki has prepared the proposal in cooperation with the Guggenheim Helsinki Supporting Foundation. For the City, proposal preparation has been led by Deputy Mayor Ritva Viljanen responsible for Cultural Affairs.
The preparation of a new proposal was undertaken after the Finnish Government announced in connection of the autumn budget talks that the Government would not finance the museum investment.
“Our goal was to find a feasible plan that would not place the full financial burden of the museum construction on the City of Helsinki and would keep the City of Helsinki’s responsibility for financing the same as it was with Government involvement,” Viljanen says.
“We have now found an approach to implement the museum project that allows us to present the matter to City decision-makers.”
City to invest 80 million in the construction
The estimated construction cost of the Guggenheim Helsinki museum is 130 million euros. The City of Helsinki would fund the construction with up to 80 million euros and the Guggenheim Helsinki Supporting Foundation with 15 million euros.
The City and the Supporting Foundation would establish a joint real estate company for the construction. The City would own 84 percent and the Supporting Foundation 16 percent of the company. This company would take a 35-million-euro loan for the construction. The loan payments, fees and interest amounting to 33 million euros in 20 years would be covered by the Guggenheim Helsinki Supporting Foundation with leases paid to the real estate company. The City would give a guarantee to the loan.
According to the new plan, the City of Helsinki would be the principal owner of the museum building and cover the cost of building maintenance but would not finance the museum’s operation in any other way.
The building maintenance cost would be about 6.5 million euros per year, comprising interest on invested capital, depreciation, internal leases for the site and building, and the real estate maintenance cost.
The museum operation would be financed by the Guggenheim Helsinki Supporting Foundation with its income, private funding, and the annual Government subsidy for museums. Private sources would also be used to cover the license and administrative fees paid to the Solomon R. Guggenheim Foundation, which would total 20 million U.S. dollars, that is, approximately 18.4 million euros, in 20 years. In addition, the Supporting Foundation would invest 15 million euros in the museum building and cover the total cost of the loan with lease payments.
The City’s role is now better defined and costs would be lower
In comparison with the earlier proposals, the City of Helsinki’s role is now better defined and the costs incurred by the City would be lower. In the new proposal, the City’s share of ownership in the museum building would be markedly larger than in the plan negotiated with the Government, although the investment sum would be the same.
Private funding secured by the Guggenheim Helsinki Supporting Foundation is now markedly higher than in earlier proposals, totaling 66.4 million euros.
Viljanen expresses her gratitude to the private sources for their strong support for the museum project.
“This is an exceptional project: no other cultural project in Helsinki has attracted this much private funding. Private money would cover no less than 66.4 million euros of the investment. I extend my heartfelt gratitude to the private sources of funding committed to the museum project, who make it possible for Helsinki to further this cause.”
A new assessment underscores the museum’s positive economic impact
According to an assessment made by the City of Helsinki, the museum would bring more tourism to Helsinki and would increase the annual spending by visitors by 16 million euros even by a conservative estimate.
During construction, the museum would increase the City’s tax income by 24 million euros per year and boost employment by about 1,200 man-years. The increase in tax income generated by the museum operation and tourism would be 7 million euros per year, and the impact on employment would be 400 man-years.
“It is important to make investments that generate income and increase tourism in the city, even in challenging economic times,” Deputy Mayor Viljanen affirms.
“The assessment of the museum’s impact made by the City proves that a cultural investment is a good way to boost employment and increase the City’s income.”
According to various surveys, Helsinki lags behind other Nordic capitals, according to such measures as hotel overnights.
“The Guggenheim museum would strengthen the international recognition of Finland and Helsinki, and it would improve our position as a tourism destination. The museum would make a valuable contribution to the art scene of the Helsinki metropolitan area. The area would obtain a center of contemporary art that would be exceptionally large even by international standards and would raise Helsinki’s profile as a city of art and design,” Viljanen says.
The proposal working group states that the museum would be a good investment, and it would benefit the metropolitan area and the larger region.
Cooperation with other museums and cultural players
In the course of the proposal preparation, the City of Helsinki has emphasized that the museum should be a public space open to citizens.
“The forefront of the museum is an open public waterfront area, and the inner courtyard and the avenue inside the museum complex are defined in the contract proposal as an open and free-of-charge city space,” Viljanen points out.
“The museum should maintain a gallery for ‘free art’ and even so create something new for the Helsinki art scene. Guggenheim Helsinki would work in close cooperation with other Helsinki museums, as a part of the local art museum scene. There would be cooperation with other art and cultural organizations both in Finland and internationally.”
The City of Helsinki proceeds with the matter so that the City Board will consider the new proposal and the attached proposal for a contract on project implementation at its meeting of Monday, November 7. The final decision on the matter will be made by the City Council, to which the contract proposal will be presented because of the importance of the matter.
If the City Council approves the museum project, the process to amend the detailed plan for the site would be carried out and a project plan be prepared in 2017–2019. Construction could begin no earlier than in 2019.
City Board agenda, in Finnish