As a cash crisis threatened to sink the Frost Museum of Science at the end of 2015, at least one fiscal bright spot twinkled on the horizon: a $1 million payment due from the non-profit’s top private benefactors.
But the installment from Patricia and Phillip Frost’s $35 million naming pledge did not arrive on time. Instead, the billionaire couple delayed the payment for five weeks, until they were poised to oust the troubled museum’s board on Feb. 10.
The tardy $1 million, described in a Feb. 9 letter from the couple to museum administrators, would not have not have made a dent in the institution’s current financial crisis. Caught short on private donations, the 65-year-old local institution now needs about $85 million to finish what has been pared down to a $305 million project, and it is relying on Miami-Dade to cover about half of the shortfall.
But the delayed payment helps illustrate how the Frosts used financial leverage to impose their will over the troubled museum, which is leaving its smaller Coconut Grove home for a four-acre complex on Miami’s new Museum Park. On Feb. 10, the museum replaced its 40-member board with new directors in exchange for the Frosts lending $11 million to keep construction crews on the job through April.
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As part of the short-term package to plug a $13 million hole in the construction budget, the Frosts also agreed to pay the delayed $1 million plus advance another $1.3 million not due until March 31.
“For decades Pat and Phil Frost have been very generous benefactors to our community in many significant causes,” read a statement by Cesar Alvarez, a top Miami lawyer who was picked by the Frosts as the new board chair. The Frosts “have generously agreed to make certain additional financial accommodations to help get the Museum back on track.”
The Feb. 9 letter contained new details about the Frosts’ second pledge to the museum — this one for $10 million to sponsor the museum’s signature planetarium.
Any pettiness and misunderstandings need to be swept aside. Whatever is happening they are small things in relation to the overall goal that needs to be achieved.
Jack Falk, trustee for the Batchelor Foundation
While the pledge was publicly announced last spring, the Frosts apparently did not sign the paperwork tied to the gift until the day they wrote the letter. It refers to the “Initial Pledge” of $35 million being dated March 21, 2011, but the $10 million “Planetarium Pledge” has a date of Feb. 9, 2016. There was no mention of when that pledge would be paid.
Museum administrators declined to comment for this story, or detail how much the Frosts and other donors have paid. Dr. Frost forwarded a set of emailed questions to Alvarez, a partner at the Greenberg Traurig lawfirm in Miami
The Miami Herald obtained the Feb. 9 letter through a records request to Miami-Dade County. In addition to filling in some of the back story behind the recent board shake-up, it provides new contrasts between the extended timetable of the Frosts’ largesse toward the museum that bears their name and the steady infusion of cash by its top donor, Miami-Dade County.
More than 10 years ago Miami-Dade committed $165 million for the Frost in borrowed money tied to property taxes, a bond sale authorized by the 2004 Building Better Communities ballot initiative. The county budget office said Monday that more than $158 million has been paid to the four-year building project slated to finish by the end of 2016. Now Mayor Carlos Gimenez is assembling support for delivering another $45 million borrowed from hotel taxes to make up for a shortfall in private dollars.
“It has to get done. It has to open,” Gimenez said in a recent meeting with the Miami Herald Editorial Board. “The people I’ve been speaking to, the Frosts in particular, have indicated to me there are people willing to come up to the plate [and donate money]. But it’s got to be open.”
When the former board convened for what would be its final meeting at 8:30 a.m. on Feb. 10, one participant said two documents sat before each of them at the museum’s vacant old headquarters on the Vizcaya compound. One was a proposed resolution to vote themselves off the board and install Patricia Frost, Alvarez and Frost business associate Richard Pfenniger as the new trustees.
The other was a press release that would go out hours later announcing that “a change in the Board’s composition was requested by its primary pledged donors, Patricia and Phillip Frost, in connection with their agreeing to provide the Museum a bridge loan to continue the construction and operation of the new science museum project.”
One director asked how much the Frosts had actually paid to the museum at that time. The answer amounted to less than $10 million, according to accounts by several participants. That would put the Frosts behind Miami’s Knight Foundation, which has fully paid its $10 million pledge, a spokesman for the non-profit said last week.
The public dismissal of dozens of influential and affluent people on the Frost board sent off a wave of finger pointing and backroom complaints to county officials and others. While Gimenez had said he would require government officials to join the museum’s executive committee as a condition for the bailout, former directors said they were stunned at the demand that they oust themselves as a condition of the Frost rescue.
The internal strife at the Frost comes as Gimenez navigates his proposed bailout of the museum during an election year in which his primary opponent, school board member Raquel Regalado, opposes more public help for the museum.
Gimenez spokesman Michael Hernández said in a statement that “Mayor Gimenez has fully supported changes to the Science Museum Board.”
Like other boards, the Frost directors served primarily as a fund-raising committee. A 2014 museum financial report noted 80 cents of every dollar in pledge money came from the Frosts and their fellow board members.
It has to get done. It has to open.
Miami-Dade Mayor Carlos Gimenez
No former board member has publicly criticized the change ordered by the Frosts. Jack Falk, a lawyer and trustee for the Batchelor Foundation, a top Frost donor that also lost its seat on the museum board, called the Frosts and other directors “good people trying to accomplish something good.”
“Any pettiness and misunderstandings need to be swept aside,” he said. “Whatever is happening they are small things in relation to the overall goal that needs to be achieved.”
The two-page Feb. 9 letter illustrates the unique role the Frosts played on the now-dismissed board. Dr. Phillip Frost, a medical and pharmaceutical magnate with an estimated net worth topping $4 billion, was the lone billionaire in that circle (though only his wife, Patricia, held an actual board seat).
While dwarfed by the contribution from taxpayers, the couples’ pledges easily made them the top benefactor over Knight, a non-profit that sometimes partners with the Miami Herald on journalism projects. And with the museum’s finance team racing to keep cash flowing to contractors and payroll, the Frosts were apparently the only individuals willing to close that fiscal gap with a loan.
The first draw, for $3.5 million, was scheduled to arrive five days after the board resigned. By March 31, the full $11 million would be lent. The museum must pay a 2.7 percent annual interest rate on the money. If the Frosts aren’t repaid, their outstanding pledge would shrink by whatever amount was owed, according to the letter.
In his statement, Alvarez, the new board chairman, described the Frosts as both reliable donors who have “always made the payments on their $45 million pledge” and vital supporters of the museum.
“Their $45 million pledge to the Museum is evidence of what they consistently do to support our community, as well as how deeply they care about the well-being of all its residents,” Alvarez wrote.
Miami Herald staff writer Andres Viglucci contributed to this report.