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Feds Ask Private Embarcadero Art Museum if it's a Tax Shelter for Rich Founder 

Wednesday, Dec 9 2015
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Pier 24 Photography, one of the world's largest photography museums, is easy to miss. It's housed in a nondescript warehouse beneath the Bay Bridge, with a single discreet nameplate out front and no banners promoting current exhibitions. Many longtime San Franciscans have never heard of the place, which can be visited by appointment only.

That's concerning, says Sen. Orrin Hatch (R-Utah), who, as chairman of the Senate Committee on Finance, has launched a federal inquiry into 11 private art museums, including Pier 24. Hatch wants to know if these museums do enough to benefit the "public interest" and thus deserve their nonprofit status — or if they're tax shelters for their wealthy founders.

Pier 24's founder, Andrew Pilara, is an investment banker who began buying photography 12 years ago. In 2010, he signed a long-term lease on the 28,000-square-foot Embarcadero warehouse where he now displays some of his more than 2,000 prints — a collection that includes high-dollar acquisitions from art stars like Diane Arbus, Garry Winogrand, Lee Friedlander, and Richard Avedon.

In 2010, Pilara told the San Francisco Chronicle that he didn't know how much he'd spent on his collection because he doesn't consider it an investment. But according to the most recent available tax filings (from 2013), Pier 24's assets total more than $37 million. As a nonprofit — registered as the Pilara Family Foundation — the museum can deduct from its taxes the full market value of any art it buys, along with the costs of insuring, conserving, and warehousing that art.

In a letter to Pier 24, Hatch gave the museum until Dec. 15 to disclose its operating hours, its policy for loaning art to other museums, and the donors who've provided more than 5 percent of its collection.

The inquiry could prove troublesome for Pier 24 (which didn't return SF Weekly's repeated requests for comment). Like the recently opened Broad Museum in L.A. — also under scrutiny — Pier 24 is a public showcase solely for the collection of its connoisseur-founder. (And despite being a nonprofit, in 2013 the museum reported $1.6 million in revenue — tax-free money that could be used to buy more tax-free art.)

Hatch's quest for answers could be difficult. As the New York Times notes, "public interest" is hard to quantify, although the IRS considers "access and adequate signage" prerequisites.

Giving private museums tax breaks is so murky an issue that few in the industry will address it. All of the local arts organizations SF Weekly contacted either declined to comment or didn't respond. Two law firms specializing in nonprofit tax law also declined to comment.

That murkiness may work to Pier 24's advantage, as may support for the museum from the local art community. Shortly after Pier 24 opened, Sandra Phillips, the San Francisco Museum of Modern Art's photography curator, told the Chronicle it was "truly unique."

When it comes to retaining its nonprofit status, Pier 24 better hope the only writing on the wall is its curatorial notes.

About The Author

Jeremy Lybarger

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