CALAIS, Maine — Four years after it opened, the $6 million Downeast Heritage Museum has filed for bankruptcy, the board of trustees announced Tuesday.
The trustees made the decision last week after assuring that all bills were paid except the $600,000 mortgage that USDA Rural Development holds and a $1 million second mortgage with the Department of Commerce.
The Chapter 7 bankruptcy, filed in U.S. Bankruptcy Court in Bangor on Monday, comes on the heels of a troubled history for the museum. Under Chapter 7, assets are liquidated in order to pay off debts.
The museum, which focuses on the cultural heritage of the area, was built without city taxpayer money.
Shortly before it opened in June 2004, the museum’s struggles began. A federal agency’s budget was cut and a $1 million grant for operating funds was withdrawn.
That same month the museum was forced to open because financing agreements dictated that the museum be open for the St. Croix Island celebration, which experts had forecast would bring 400,000 people to the area over the summer. But only a trickle of tourists attended the 400th anniversary celebration of St. Croix Island, where the French established a settlement in 1604.
The museum’s director eventually was replaced.
In late 2006, the museum filed for protection under Chapter 11 with the federal bankruptcy court. The action culminated in a reduction in debt from $3.2 million to the $600,000 owed Rural Development.
To help mitigate the museum’s unhealthy balance sheet, tenants were allowed to move in. One of the tenants, Maine Indian Education, which oversees the education needs of students on the two Passamaquoddy reservations, entered into a 10-year lease with the museum. MIE agreed to pay the museum around $3,000 a month, which covered the museum’s monthly mortgage payment to Rural Development.
Other tenants moved in including the St. Croix Valley Chamber of Commerce and the Maine Office of Tourism, but they did not pay rent. It was hoped that the Tourist Information Center would attract visitors to the museum, but that didn’t happen.
The museum continued to bleed money.
In July, the trustees notified all interested parties that it intended to file under Chapter 7.
“Future use of the building is subject to decisions by the U.S. Bankruptcy Trustee and USDA Rural Development,” stated a press release issued Tuesday by the trustees. The tenants are expected to remain in the building. Rural Development officials did not return a telephone call Tuesday.
Papers filed with the court show just how dire the situation is. It cost the trustees about $5,000 a month to operate the facility, but the museum has only $1,294 in its checking account.
The museum has $13,500 in personal property including office furnishings, remaining gift shop inventory and the St. Croix Island Exhibit as well as other artifacts.
The museum owes the U.S. Department of Commerce’s Economic Development Administration $1 million.
“They hold a second mortgage on the building,” the museum’s attorney, Dan Lacasse of Calais, said Tuesday. “The condition of that grant was that we remain a museum or a philanthropic organization,” he said. The $1 million owed the federal government is included in the bankruptcy filings.
While the museum goes through bankruptcy, it continues to operate. Maine Indian Education is now paying for utilities with money it receives from the Bureau of Indian Affairs.
“They are managing the building while Rural Development ... decides what it is going to do,” Lacasse said.
A disclosure hearing is scheduled for later this month at the bankruptcy court in Bangor.
“Presumably somebody will make some kind of decision as to what happens with the building whether it is foreclosed or sold, whatever,” Lacasse said. “It is up to Rural Development. If they make out some kind of arrangement with the Bureau of Indian [Affairs] to refinance it or have them assume the obligation, then the building could stay as it is. But if they can’t and Maine Indian Education elects to go somewhere else — because this is a very expensive building to maintain because of the utilities — then Rural Development will put it on the market and try to sell it.”
City Manager Diane Barnes, who was not in Calais when the museum was built, said Tuesday it was unfortunate that the museum got into trouble. “It is really too bad,” she said. “The end result is the filing of Chapter 7 through the bankruptcy court, and nobody wants to see that happen not in anyone’s personal life and certainly not in this situation.”
She noted that the museum is a prime piece of waterfront real estate. “Hopefully, whatever happens down there, it is in the best interest of the city of Calais,” she said.
Jim Porter, who is the chairman of the board of trustees, said he regretted they had to file for bankruptcy. “I am sorry to see this happen,” he said Tuesday. Porter said a lot of people worked very hard to keep the museum going.
“It’s nobody’s fault,” Jim Thompson, the museum’s executive director, echoed Tuesday.
Last year, Thompson wrote a vision paper recommending that the museum be turned into a Native American education culture center. He presented the paper to the Bureau of Indian Affairs, but he has not heard back. “The wheels grind slowly,” he said.
On 10/1/08 at 7:31 AM,
sewmama wrote:
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What do you mean Jim Thompson, "it's nobodys' fault". It didn't take a rocket scientist to figure this one out. The majority of the people in Calais didn't want this "white elephant". Common sense didn't prevail here.
It's projects like this all over our Country that has put this nation in the financial crisis it's in. Among allot of other "pie in the sky" spending.
On 10/1/08 at 7:37 AM,
Coolfusion wrote:
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Just another Collins "Earmark" rip-off. We're all $600,000 poorer on this borrowed money... and will be paying interest on it to foreign countries for the rest of time.
On 10/1/08 at 7:46 AM,
Bandbox wrote:
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[quote] It's nobody's fault [end quote], said the museum's executive director. Well, if he means there's no individual who can be singled out, he's probably right, but collectively there's a lot of fault. Obviously, this museum started out as a politically-correct boodoggle, financed by grants and mortgage loans from federal agencies that resulted in more debt than the museum could service. The taxpayer, as usual, suffers the consequences when an ill conceived project like this goes under. The remedy is cutting losses, not having the feds refinance or assume the debt as the museum's lawyer suggests. These federal handouts have to stop. We can't afford them. Foreclose and liquidate.
On 10/1/08 at 8:11 AM,
Knightscross wrote:
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What a Scandal this has been since day one. I agree, just a Collins rip off of the Taxpayers.. A museum in Welfare County, what would they have to exhibit, welfare and food stamp applications? Oh yea, heat supplement applications too, for historical exhibits.
On 10/1/08 at 8:18 AM,
mrclam wrote:
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This place would have served a higher purpose as a barn. There would be plenty of room for all the BS related to its success.
On 10/1/08 at 9:10 AM,
barbra wrote:
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This has nothing to do with Senator Collins. This project was not a christmas tree ornament on a federal bill nor a handout of any kind. A group of people went to the USDA and applied for a loan, just as anyone can. The USDA has low interest home loans, loans to farmers, etc. just as any bank provides loans. If people fluff up their ability to repay a loan and get a loan for more than they can repay, it is the individuals fault, not the lending institution. If you apply for 10 credit cards and max them all out, who's fault is it?
On 10/1/08 at 9:28 AM,
Bandbox wrote:
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Really, barbra? I think I understand. Lenders - including the US - have no duty of financial due diligence, they should just accept borrowers fluffed up loan applications with the understanding that it doesn't make any difference in the end if the loan defaults, because the government can bail out the borrower in case of default or liquidate the loan security and let the taxpayer suffer any deficiency.
On 10/1/08 at 9:30 AM,
Bandbox wrote:
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Really, barbra? I think I understand. Lenders - including the US - have no duty of financial due diligence, they should just accept borrowers fluffed up loan applications with the understanding that it doesn't make any difference in the end if the loan defaults, because the government can bail out the borrower in case of default or liquidate the loan security and let the taxpayer suffer any deficiency.
On 10/1/08 at 11:50 AM,
David889327 wrote:
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How about trying a Drugs & Alcohol Museum?
On 10/1/08 at 12:30 PM,
ralphmcdevitts wrote:
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how couldn't see the coming?
On 10/1/08 at 12:31 PM,
ralphmcdevitts wrote:
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the out of state marketing firm that predicted 400,000 for the 400th year celebration should be brought up on federal charges. they also indicated that 100k plus people would visit this place each year. what a joke!! anyone in their right mind knew this wasn't going to happen.
On 10/2/08 at 6:01 PM,
hossthehermit wrote:
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Your tax dollars at work
On 10/3/08 at 9:33 AM,
ivac33 wrote:
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I think we should make it a Casino and call it "The Friggin Rusty Nail"
On 10/3/08 at 9:56 AM,
getitdone wrote:
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LOL bad! ivac33 you may be on to something there. Oh well, Calais got a nice new parking lot for people who no longer can go to the stores in Main St. due to the fact that they were torn down, I'll be laughing all day over that comment!
On 10/4/08 at 5:25 PM,
meadowlands wrote:
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Even on a very elementary level this museum was ill-conceived. Was there ever even a readable sign? Was there ever really a study and/or an attempt to send mailings to potentail French background groups of visitors who might want to have come for the various celebrations 4 years ago and subsequently? Marketing? Who sent an invitation to the French of say Woonsocket, Rhode Island, Manchester, New Hampshire, Grand Digue, New Brunswick, etc? The Indians have been paying toward the mortgage of this BABY white or is it pink elephant? The Indians have been wanting and needing a Casino. LET'S GO!!! Let them take over what they are already paying towards. Let them do something with it!
On 10/13/08 at 9:34 AM,
AmityBeane wrote:
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Wow. Sad! How about making it into a school, daycare or the like??? How about a real innovative approach to education? When I worked at SU107 my photojournalism students partnered with the museum to take local nature pictures. I remember telling all my students to go to the museum to see their work on display. Sadly they reported back that their work was housed in a binder and not on the walls. This made me sad. Our children are our future. Let's focus on them. Let's give them the center of the community BACK and give them the tools to share our wonderful resources with the world. I envision a tech-centered school where the kids just blow our minds with their creativity. One can dream.
If not a school, how about some industry???? Not a gift shop, but perhaps studio space for local artists? Another grant would be needed, just an idea.
If not a school or a local artisan space, what about a thrift shop, food closet, and social services? Our county is in need of help, not snide comments. Let's put our heads together for a solution.
I currently work in Oxford County where the casino is again up for grabs. This does not seem fair to me! Last resort for this space should be a casino in Calais. I am not "for" gambling or addictive types of activities but let's get real. How come Oxford County has this issue on the table and not Washington County?? Not very fair at all.
On 10/13/08 at 9:37 AM,
AmityBeane wrote:
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Also, I agree that the marketing firm that came up with those magic numbers ought to be SUED. It's like the mortgage crisis--let's MAKE UP some numbers so we can borrow more money. To me these people should be brought to task on their "new math".
On 10/19/08 at 10:31 AM,
ivac33 wrote:
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Washington County, especially the downeast area needs something that is going to" make" money not "cost" money for this community. It is obvious from what has happened that this building needs to be used for something that is going to benefit the community.
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