The nonprofit board that oversees the James J. Hill Center is closing the facility in downtown St. Paul next week, but that does not mean the nonprofit will disappear.
In fact, both the nonprofit and the Hill Center are sticking around, said board chair Pat Moran.
“This building is not going anywhere, whether we use it or someone else uses it. It’s not going away,” said Moran, who is married to a descendant of the Hill family. “It was built in a day when they built things to last, and it was built to last.”
Not to be confused with the general-purpose George Latimer Central Library in the adjoining building, the century-old James J. Hill business center, wedding venue and reference library draws its name from a railroad titan who was determined to create a privately-managed learning center independent of government influence.
In fact, other than the basement and ground level, the floors of the Hill Center do not physically line up with those of the Central Library next door.
FEWER PRIVATELY-ENDOWED INDEPENDENT LIBRARIES
During World War II, the Hill Center drew some 40,000 to 50,000 students and job seekers annually. But foot traffic dwindled in the modern era, despite efforts to promote its databases and business services.
Across the country, most large, private turn-of-the-century libraries have been absorbed by universities and other entities.
“There aren’t very many privately-endowed independent libraries anymore,” said executive director Tamara Prato.
The Hill Center, which had some 23 staff members in 2016, had dwindled to a dozen or so as of a year ago. It is letting go all of its remaining employees except Prato and an assistant and shutting its doors to the public on July 3 while the 11-member board examines its options.
Prato and Moran cited mounting maintenance needs and increasing financial pressure on the nonprofit’s small endowment.
Weddings scheduled in 2019 will still be honored, but not those in 2020.
Those financial pressures are underscored by the nonprofit’s 2016 filing with the Internal Revenue Service, the most recent 990 filing publicly available on GuideStar.org.
The filing listed $1 million in revenue and $1.27 million in expenses, or deficit spending of $183,000. That was actually an improvement from the year before, when the nonprofit went into the red by $303,000.
By continuing on that path, the nonprofit would have to dip deeper and deeper into its $13 million to $15 million endowment until the money was all gone, Moran said.
A $1.2 million elevator replacement project in 2017 drew from the endowment, as well.
“You’d literally have an entity where you’d have to cut staff every year, and that is clearly against the donor’s intent,” he said.
Moran noted that Prato, who was hired in 2016, excelled at creating new programs, such as hosting business start-ups and an “Ideas Academy” youth camp.
Many of those services, however, were free of charge and grant-funded, and did not generate the kind of revenue necessary to maintain a large historic building.
$5 MILLION IN IMPROVEMENTS
Last year, a historic structure report commissioned by the Hill Center found that the building needs roughly $5 million in serious improvements.
“We don’t have fire suppression,” Moran said. “If you build a building like this today, you’d have fire suppression. It’s not a super flammable building, either, but you do have books in it.”
The Hill Center’s endowment is managed by Bank of America/U.S. Trust. Gains from that endowment offset annual operating expenses of $1.2 million to $1.5 million, Moran said, while grants and revenue from programs and special events such as wedding bookings cover a modest amount, and vary year to year.
“The vast majority of revenue comes from earnings on the endowment,” Moran said. “In that $1.2 million to $1.5 million (annual operating budget), there’s not really enough spent on maintenance. The reality is, we really should have spent $400,000 a year on maintenance over the past 20 years.”
Hill Center board member Barry Gisser, the chief financial officer at the Science Museum of Minnesota, served as the center’s interim executive director before Prato, and he felt the July 3 closure was necessary.
“For us to be able to deliver on our fiduciary responsibility, it was time to do this,” Gisser said.
That said, it doesn’t mean the Hill Center could not go on under new leadership or ownership.
“I do think it’s important to clarify that this is a suspension as part of a strategic evaluation, and as part of a strategic evaluation, anything is on the table,” Gisser said.
Prato said that if the nonprofit does end up departing the Hill Center, Hill’s papers and other important aspects of the collection could land with state and local historical societies, museums or institutions of higher education.
James Slade — Hill’s great-great-grandson — serves on the board, and his grandmother Charlotte Hill Slade “was one of the daughters heavily involved with getting the library up and running,” Prato said. “A member of the Slade family has been involved since at least the early 1960’s.”
NON-PROFIT WON’T GO AWAY
In recent months, Moran and other board members have reached out to the city of St. Paul, the Friends of the St. Paul Public Library and other nonprofit boards to discuss their rocky financial footing.
Moran and library officials agree that the city and library system are focused on serving the public by enhancing neighborhood branches, and are not in a position to adopt another historic building and associated costs.
“We’re a charitable nonprofit in the same way that the Hill Center is its own nonprofit. We’re separate,” said Beth Burns, president of the Friends of the St. Paul Public Library. “Obviously, as the two facilities are so closely geographically connected, that’s where our interest lies — that a good solution is found for the Hill.”
If the board of the James J. Hill Center were to part with the physical building, that does not mean the nonprofit itself necessarily goes away.
The 11-member, all-volunteer board is largely composed of business leaders with strong ties to St. Paul and the Twin Cities, some of them going back generations. The nonprofit could transition to business advocacy, youth advocacy or another role in keeping with Hill’s legacy of entrepreneurialism.
“We think that the money and resources can be deployed in the community in a much more impactful way,” Moran said. “We have to be fiduciaries, and we have to keep the donor’s intent in mind.”