The operators of a large studio on public land that City Council set aside to remain affordable for artists are subletting at substantially higher rates than the low rate they pay to City Hall.
Santa Monica Fine Art Studios, a 22,500-square-foot hangar located at the airport, was leased out to Yossi Govrin in the early 2000s at a greatly subsidized rate (starting at 37 cents per square foot per month but currently up to more than 47 cents per square foot with inflation) after council explicitly expressed a desire for the studios to be made available to lower-income artists.
Despite that direction, auditing and affordability requirements never made it into Govrin's contract. Govrin beat out MTV and Santa Monica College in scoring the lease to the hangar.
Nearly three dozen artists rent studio space from Govrin.
Recent rent documents obtained by the Daily Press show that Govrin charges artists more than three times per square foot what he is charged by City Hall for rent.
In 2013, the Daily Press asked Govrin what artists pay for studio space and he flatly declined to answer, ultimately hanging up on the reporter. He also hung up on several follow-up phone calls.
Following a Daily Press article, City Hall vowed to audit the leases of all of its Santa Monica Airport tenants and, 16 months later, provided the Daily Press with sub-rental rates that Govrin had voluntarily given to City Hall.
The document shows that Govrin brings in $35,687 per month from artist's rents alone, compared to the $10,686.22 he's currently paying City Hall to use the land. Those figures do not include whatever Govrin is paying for utilities and insurance but it also does not include bonus revenues from filming rentals, event rentals or gallery space rentals, which are offered on the studio's website.
Govrin and co-founder Sherry Frumkin did not provide utility costs or the additional annual revenues. In an email to the Daily Press, they did list other expenses. They have a staff of four — although its unclear if they themselves are considered staff members or what each staff member is paid. They hire curators, they said, and pay for Santa Monica Airport event permit fees and parking lot rentals.
Over the course of a year, the difference between what the studio brings in from sub-rents and what it pays is almost exactly $300,000. The studios have been open for more than 10 years. Its principals have never provided sub-rent totals until now, so it's impossible to determine how much revenue they've collected over the last decade.
Council's will
The closest thing to a mention of affordability in the final contract, negotiated with City Hall, is an attached document in which Govrin says he'll offer rents at a monthly average of $1.50 per square foot. Govrin is currently offering rents at $2.55 per square foot, 58 percent higher than his promised rate, according to the documents he provided City Hall. This language never made it into the lease itself despite direction from council to require affordability at the art studios.
"When discussion of the lease began several years before it was actually executed, there were plans to build out two stories of studios," Govrin and Frumkin wrote in an emailed response to the Daily Press. "The initial idea was that the rentals from the additional space would allow us to offer artist rentals averaging $1.50. It became obvious that it was prohibitive (in the neighborhood of $1.5 to $2 million to build a second story which would have been financially impossible, especially given the term of the lease). Because of the extra time that would have been required to obtain permits for a 2-story building, the Airport management asked that we proceed with a one-story build-out. The City and Airport management acknowledge that Attachment A should not have been referenced in the lease."
Specifically, council asked that lease rates start at "about $150/month, going up to about $750/month, with the average space being about $350/month," according to the 2001 agenda item that council approved.
Currently, there is only one studio that rents for less than $400 per month. The average rate per studio is about $1,080 per month.
Govrin and Frumkin said they've put about $750,000 into upkeep of the studios. They attached photographs of the space in a state of disrepair.
In 2013 and in documents to council, Govrin stated that repairs cost around $550,000. As a result of the needed repairs, City Hall discounted the original proposed lease rate of 65 cents per square foot per month down to 37 cents per square foot.
"SMAS is not a passive investment for us," Govrin and Frumkin said in the email. "We are in the studios working with and meeting artists and the public to assist with artist career planning, exhibition preparation, lecture series and all special events both internal and external."
Govrin was commissioned to create a monument of Donald Douglas and his dog at the airport for $150,000, according to a 2008 report to the Santa Monica Airport Commission.
His past creations include a hand sculpture commissioned by Eagles guitarist Joe Walsh and a set piece built for "Iron Man 3."
Frumkin ran a gallery out of the space until the end of 2010.
Frumkin and Govrin do not pay for their studios, according to the documents provided by City Hall. Their studios are among the largest, according to a diagram on the studio's website.
A Santa Monica resident reached out to the Daily Press last year, noting that she was seeking affordable artist studios for her partner. She reached out to the Santa Monica Fine Art Studios and was told they were currently full, she said.
Two of the 33 tenants pay less than $1.50 per square foot — one pays $200 for a 180-square-foot space, the other $550 for a 465-square-foot studio — but nearly half the tenants pay $1,000 or more for studio space.
Renegotiation
When reviewing the studio's lease, Squar Milner, City Hall's consultant, said it could not find anything that would require Govrin to disclose rental rates or adhere to the projected rent amounts.
"Future lease agreements should include specific language requiring a schedule for submitting disclosure of rental rates to subtenants, certified operating income and expense reports, and revenue sharing provisions if applicable pursuant to Council direction," the consultants recommended.
Further, they recommend that City Hall consider negotiating revenue-sharing provisions in future leases.
"What has been suspected for some time is that the end-user artists don't seem to be getting the deal we had envisioned," then-Councilmember, now-Mayor Kevin McKeown told the Daily Press in 2013. "Nonetheless, the facility has become a valued and important part of Santa Monica's arts community."
City officials are in the process of renegotiating all leases at the airport and several elected and appointed officials have suggested the elimination of sub-leases, putting those revenues in the hands of City Hall, rather than in the hands of middlemen.
The Santa Monica Art Studios are on a month-to-month lease until airport officials negotiate a new contract.
dave@www.smdp.com
