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The Art of the Deal 

The Academy of Art College may be questionable as a school, but it's a hell of a business

Wednesday, Apr 4 2001
Desperation has no actual smell, despite what people say; but it might as well. One would think, for example, that there would be no finer dining experience than at a struggling restaurant: There are spotless surroundings, eager waitstaff, extra-careful chefs, and all the best tables free for the taking. But somehow the waiters' muted panic makes their attention seem cloying. The cleanliness feels sterile, the doted-on food overdone. Similarly, there theoretically should be no better lover than a thrice-scorned man, what with the weekly flowers, daily phone calls, and courtesy in spades. But somehow unseemly neediness putrefies every exaggerated act of grace.

So it was with First Congregational Church, the huge, 86-year-old Romanesque sanctuary at Post and Mason streets. It was once the largest Protestant church in San Francisco and the site of the 1949 service creating the United Nations. But by early this year its 1,300-seat, balconied sanctuary was home to only 55 members; about 50 attended any given Sunday. Thanks to this desperate state its grand interior felt old and musty. New visitors were met by a fervently attentive congregation whose members, after the service, escorted them to punch and cookies, then begged for a return visit. Still, the congregants couldn't stanch their own decline. In January the church was sold to a local art school. The tiny congregation planned to use the money to build a new, humbler church elsewhere.

Desperation's opposite, depredation, is likewise odorless yet corrosive. But where desperation's quenchless neediness broadcasts itself immediately, depredation, or needless plunder, reveals itself in more subtle ways.

Such is the case of the Academy of Art College, a dubious trade-school operation whose owners have assembled a family real estate empire by taking advantage of society's most desperate prey: those who dream of someday becoming artists.

By nature, the desperate and the predatory are drawn to each other. And so it was that on Jan. 22, the Academy of Art College bought the First Congregational Church building. The school will use the structure to expand its motion picture and television and acting departments.

The Academy of Art College has managed to insinuate itself into the consciousness of San Franciscans as a legitimate art school through advertising (its spots have appeared on MTV and elsewhere), prominent campuses (the Stephens family, which owns the college, has accumulated downtown buildings appraised at $36 million, each prominently displaying AAC signs), and a fleet of logoed, navy blue buses that endlessly plies the downtown area.

But there's rot within. In the space of a day of putting word out in the San Francisco art community that I was doing a story on the Academy of Art College, I began getting telephone calls from current and former employees.

"Basically, I would hope it becomes common knowledge that the quality of education there is poor," said one employee.

"What a crazy bunch of loons who run the Academy of Art College," said another.

"It was creepy and bad and horrible," said a former faculty member.

Students attending the Academy of Art College obtain more than $22 million a year in federal grants and loans, plus another $2.1 million in state grants, to pay for AAC tuition and other expenses. Money not milked from the government comes from the pockets of ingenuous students: The school charges $34,650 for a typical MFA degree. The academy has failed to gain accreditation from the most prominent regional accrediting institution, the Western Association of Schools & Colleges. Instead, it is listed with the Accrediting Council for Independent Colleges and Schools, the Foundation for Interior Design Education Research, and the National Association of Schools of Art and Design.

The school applied for accreditation with the Western Association in 1982 and obtained several extensions for consideration before it was finally rejected in 1989. AAC President Elisa Stephens was quoted three years ago saying she would reapply, but the Western Association has no record of her having done so.

"In terms of having a fourth accreditation -- we considered it, but now it's not critical," Stephens says.

It's possible to look at the Academy of Art College, see the Stephens' growing real estate portfolio, and imagine a cash-flow machine that allows the family of AAC founder and board chairman Richard A. Stephens to accumulate mountains of property. In the case of the First Congregational Church building, Elisa Stephens, who is Richard's daughter, along with her brother, Scott, bought the church for $7.5 million, then turned around and leased the building to the school. The family owns buildings all around the Financial District, SOMA, and Nob Hill through entities such as the Stephens Institute, the Stephens Family Trust, and the Elisa Stephens Trust. Essentially, the college appears to be, at heart, a real estate investment firm.

But Elisa Stephens counters that if she were a real estate speculator, she wouldn't be holding her properties. Unlike San Francisco buy-and-hold real estate players such as Clint Reilly and Walter Shorenstein, she'd be selling, Stephens says.

"All the facilities that the school owned or leases actually house the university. In today's market, a school is a low-end user. So if that were true, I think I'd be selling, or the school would be selling, its real estate," says Stephens. "Our challenges are the same as any academic institution. The only difference is that we've met them better than anybody else. That's why we're the largest art education institution in the country."

However, employees at the Academy of Art College describe an institution where Elisa Stephens fires employees at whim -- then forgets they're gone. (In one case, faculty members kept a fired employee on staff by hiding him whenever Stephens happened by.)

Stephens says she takes pains to retain staff in the tight Bay Area job market.

Yet staffers say they're so ill-paid that faculty loyalty is veneer-thin -- so thin, in fact, that one former employee says she was paid to visit classrooms to make sure teachers were actually teaching the courses they claimed to be.

"One of the things that had been a problem was that professors were saying they had classes, and they weren't having the class. So that was my entire job. Go to every class, every day, and make sure the class was actually happening," says the ex-employee. "The professors hated me, because I was a spy."

This is not surprising, other faculty members say.

"It's on a contract system, and it's really frustrating because they don't provide a lot of benefits unless you're on a 52-week contract. Most of us are under what they need to pay benefits or insurance. I think it was a 48-week contract. You could be there three or four years and never get benefits. I saw this happen 25 times," says one employee.

Stephens acknowledges that her staff consists mostly of part-time employees, but says that is because the school hires "pro" artists who also earn money elsewhere.

The school is even less discriminatory in accepting students.

"I had the feeling if someone was motivated and had talent to begin with, they could come away learning something," says one ex-staffer. "But I had the feeling that the majority [of students] were people who saw it as a glamorous field. There's no portfolio review. They'll take anyone whose check clears. I'd say a good 10 percent of the people came out with a pretty solid portfolio of work."

Stephens says students come to the academy because it does a good job of placing them after graduation.

For some employees, the school's innermost nature was revealed at the annual Christmas party, held last December in the First Congregational sanctuary weeks before the purchase was finalized.

Or, in the words of one staffer who quit not long after sending me the following e-mail:

"We're told we're not allowed to bring a guest. We're told the party will be at the Congregational Church that the school just bought. We're told we'll be playing bingo, and the prizes are things like a week trip to Paris for two, a week trip to Hawaii for two, a private jet to Spago for dinner for six, multiple color printers, DVD players, digital cameras, Mac G4s, $400, $500, and $600 dinner gift certificates to places like Hawthorne Lane ... oh, and a brand new sports car! Wow! So all that, but no bonuses, and you can't bring a guest ... mind-blowing.

"Still at the Christmas party: the president's dad, Mr. Stephens, [chairman] of the academy, makes a speech saying this: "Well, it's been a good year for us, everyone worked very hard. Congratulations! [Applause.] Now, if you work even harder, next year we will all be driving Mercedes!' Problem with his statement, besides the obvious, is the school chronically underpays its employees. At this job, I make $10,000-15,000 less a year than I could get at just about anywhere else in my field. The remark was just preposterous and clueless and perfectly symbolic of how everything is done at this school.

"Again, at the Christmas party, it was very offensive that we were playing bingo on top of Bibles while drinking our wine sitting in the pews. They also had a huge cross on the stage, but with the academy logo projected really, really large above it. I'm not a terribly religious person, but I found all that extremely offensive."

Elisa Stephens explains that her dad's comment was meant to be humorous: "We were bingo-ing a Toyota Celica. I think next year maybe it will be a Mercedes."

In the words of Joe Story, chairman of the board of trustees of First Congregational Church, the congregation that sold its building to the art school: "I think the academy have been wonderful partners in helping us through this transition."

A perfect marriage of desperation and depredation.

On the subject of depredation, imagine for a moment that a private corporation in San Francisco had joined a $60 million lawsuit against the city that threatened to jeopardize the city's fiscal health. Imagine that the corporation had done this after receiving enough city subsidies to put even the most aggressive corporate welfare queen to shame. Would supervisors honor that corporation by taking special measures to attend its yearly gala event?

In the case of the corporation in question, the city sold $15 million in bonds to build infrastructure around its business facilities, borrowed an additional $12 million for property improvements, then spent $1.5 million in planning costs -- all on the corporation's behalf.

In left-wing San Francisco, scourge of the corporate leech, this corporation would be dead meat, right? Well, not exactly. In the case of the San Francisco Giants, the city's punishment involved moving Monday's 2 p.m. Board of Supervisors meeting to 10 a.m. so that the supes could make the Giants/Padres season opener. The Giants are among the several hundred businesses in San Francisco that have sued the city over its dual business tax structure. With $29 million in subsidies under their belt, meanwhile, the Giants posted $27 million in year 2000 operating income.

While the Giants aren't generous enough to back off their mean-spirited lawsuit, they were generous enough to toss the supes some opening-day tickets.

"I'd have liked to invite my staff, but really, I can't," given the circumstances, said Supervisor Aaron Peskin. "I'm facing the first political crisis of my term," he added, referring to the resulting long faces around the office.

To his even greater credit Peskin used the early supes' meeting to address questions I posed in last week's column, which described a private, city-chartered company that is now helping run the airports of Honduras. To review, San Francisco International Airport seems to be running a private corporation out of its own offices that does consulting work for foreign countries. So far the corporation has won a contract privatizing the airports of Honduras, and it plans to bid on a similar Jamaican airport privatization.

I've since learned that the corporation is called SFO Enterprises Inc. and is governed by a board of directors consisting of S.F. Treasurer Susan Leal, SFO Director John Martin, and former Supervisor Barbara Kaufman. Its CEO is SFO Deputy Director and Chief of Staff John Costas.

At Monday's meeting, Peskin pointed out a possible conflict of interest between Kaufman's SFO Enterprises board position and her role as president of the Bay Conservation and Development Commission.

"As many know, BCDC is charged with ensuring that local development -- including development at the airport -- does not compromise the environmental quality of the bay. BCDC's role has become extremely sensitive in light of the airport's controversial runway expansion plan. In this respect, it makes me extremely nervous that the president of BCDC also sits as leader of a private -- one could say secret -- entity of the airport," Peskin said.

Peskin called for a letter of inquiry to Martin, asking him to describe SFO Enterprises Inc.'s activities, revenues, and expenses. He also asked the City Attorney's Office to determine whether San Francisco could be held responsible for SFO Enterprises' actions. After all, though SFO Enterprises calls itself a private corporation, it's actually run by city officials, was chartered by the city, is directed by city officials, and earns revenue off the work of city employees, all for the purposes of earning money for city coffers.

"A court may take an approach that if it looks like a duck, quacks like a duck, then it is a duck," Peskin said.

About The Author

Matt Smith


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