via Artinfo, 1/22/08 :
NEW YORK—The Chelsea Art Museum is facing foreclosure after a failed attempt to sell its "air rights" (rights to use and develop the empty space above the property), the New York Post reports. In 2006, museum founder Dorothea Keeser made a deal with developer Alf Naman to sell Naman 40,000 square feet of air rights for $8.5 million. Keeser planned to use the proceeds to pay off a $5.8 million mortgage due for the museum and minor renovations. As part of the deal, the museum was to keep 5,000 square feet of air rights, which it planned to use to create a roof garden, cafe, and apartments for an artist-in-residence program. A closing was scheduled for April 30, 2006, but Naman, who paid an $800,000 deposit, backed out of the deal. Since then, the museum and Naman have been locked in a court battle that includes a $20 million lawsuit from Naman claiming Keeser never came to the closing. In the meantime, Keeser said that she has not been able to repay the mortgage, the loan is in default, and she has paid $2.4 million extra in added interest, fees, and expenses. The bank launched a foreclosure proceeding in October. Lawyers were in court last week trying to sort out the mess."We are in an extended crisis," Keeser told the Post.