San Jose Museum Of Quilts & Textiles, San Jose, California
The museum sought a permanent home in a desirable central cultural district, aiming to end a prolonged facility search and to build an asset for the organization. They were, however, unable to raise sufficient capital to get into a full ownership position and lacked the strength to obtain favorable financing. Until this point, the museum had leased space in multiple temporary locations, a situation that drained the organization’s resources, created a state of impermanence, and limited philanthropic giving.
Polatnick created a partnership for the San Jose Museum of Quilts and Textiles, composed of a group of philanthropic investors. Polatnick himself was included in this group; he matched the museum’s initial capital fund drive one-to-one. The partnership then took the form of a Limited Liability Corporation (LLC) to purchase and renovate a building the Museum had determined was best suited to their needs and that would support the mission. The investors signed for the bank financing. The museum then took out a lease on the building from the LLC under very favorable terms(they partially lease the building themselves and realize a return on their own equity position). Under this arrangement, the museum has an option to buy out the private investor group at a pre-determined fixed price and will launch a major capital campaign in an effort to do so.
With the capital infusion from the private investor group, the museum leveraged loan dollars available through their donor base to acquire an ownership position in downtown San Jose. The Redevelopment Agency then offered a generous loan package to improve the building for the museum.