ARCHITECTURE

Plans gone awry

A financial crisis strikes Arthur Erickson

ANNE GREGOR July 22 1991
ARCHITECTURE

Plans gone awry

A financial crisis strikes Arthur Erickson

ANNE GREGOR July 22 1991

Plans gone awry

ARCHITECTURE

A financial crisis strikes Arthur Erickson

The architectural community in Los Angeles buzzed with the reports all week. One of its most distinguished members, Arthur Erickson, the Canadian-born designer of such landmarks as Toronto’s Roy Thomson Hall and Canada’s embassy in Washington, had been forced to close his Los Angeles office in the face of overwhelming debts. At week’s end, Erickson was in Vancouver, his home town and the site of his only remaining office. In being forced to abandon all his California projects,

Erickson also left behind a collection of angry creditors, several of whom accused the much-honored architect of financial mismanagement and living beyond his means. For his part, Erickson told Maclean ’s that his problems stemmed from poor financial advice. But he acknowledged that he himself bore ultimate responsibility for the collapse of the Los Angeles operation. He added: “We just did not have the cash flow to keep up.” The sudden closure of Erickson’s Los Angeles office is the latest in a series of financial problems for the 67year-old architect. Although clients and colleagues praise him as one of the world’s most talented designers, Erickson says that he is a poor manager of his own business affairs. In 1988, several of Canada’s wealthiest and best-known business leaders, including Conrad Black and Galen Weston, formed a private corporation, Arthur Erickson Capital Group Ltd., to help the architect obtain financing after he ran into problems with several projects in the Middle East and Canada. But despite their efforts, Erickson closed his Toronto office in the fall of 1989, leaving a trail of unhappy creditors, and began to devote most of his attention to his California practice, which he launched in 1981.

But Erickson’s financial problems continued after he moved to Los Angeles. In California, he was responsi-

ble for designing the San Diego Convention Center, which opened in early 1990, two rapidtransit stations in Los Angeles and the second phase of a mammoth office complex known as California Plaza—the largest real estate development in downtown Los Angeles. As recently as 1989, Erickson’s office in west Los Angeles employed as many as 45 architects, and busi-

ness was brisk. But when the recession hit, the firm’s revenues plummeted. Said Erickson: “We realized a year ago that new work was not coming in.” Now, all the work that Erickson began in California is to be completed by other architectural firms. In Canada, the Vancouver office has several ongoing projects.

Erickson finally abandoned his stylish Los Angeles offices on June 5, a deadline set by his landlord after Erickson failed to pay his back rent for the $10,000-a-month premises. “It looked like someone blew a whistle and said ‘Stop work—go home,’ ” said Joseph Pulici, a partner in a Los Angeles mechanical-engineering consulting firm, Heilman and Lober. His

firm claims to be owed $100,000 by Erickson for consulting work done on two projects in the Los Angeles area. Pulici said that he visited the architect’s offices after discovering that Erickson’s telephones had been disconnected. The office was unlocked, he added, with architectural drawings and blueprints scattered on the desks.

Another associate, San Diego laboratory design consultant Earl Walls, says that Erickson owes him “into six figures.” Added Walls, who has yet to decide what to do about the matter: “He is such a good architect. It is a shame that he cannot pull it all together.” Last week, Erickson said that he hopes to arrange a merger or association with another firm of U.S. architects so that he can continue his operations in Los Angeles. But at least one company that studied the possibility of such a merger decided to drop the idea after discovering that Erickson’s firm owed money to the U.S. Internal Revenue Service. “They weren’t paying their withholding taxes,” said Leo McEachem, treasurer of the Boston-based architectural firm of Shepley Bulfinch Richardson and Abbott. At first, McEachern said, his company had been excited about the prospect of a merger with such a prominent designer. But, he added, after hiring Erickson’s own accountants to study the firm's finances, “we kind of got turned off.” McEachem said that Shepley Bulfinch even advanced Erickson $50,000 in April so that he could meet his payroll. Declared McEachem: “It is money gone, as far as we are concerned.”

For his part, Erickson said that he has since paid the withholding taxes. He also dismissed suggestions from several of his former associates that his financial problems resulted from his lavish lifestyle. Under the terms of the firm’s partnership agreement, he and his friend and business associate, interior designer Francisco Kripacz, were entitled to a monthly management fee, instead of a salary, equal to seven per cent of the firm’s gross billings. Erickson says that he and Kripacz together received about $35,000 a month from the company, adding that his other partners in the firm knew that virtually all of the money would go towards the pair’s personal expenses, including luxury cars, expensive meals in restaurants and a Malibu house that rented for $12,500 a month. “Our attitude was that we were supposed to become part of the community,” Erickson added. According to the renowned archi-

tect, his predicament arises from the inevitable clash of dreams with reality. “You are always anticipating that cheques will come in, and you tend to be foolishly optimistic,” he said. Not for the first time, Erickson’s dreamy optimism has forced him back to the drawing board.

ANNE GREGOR in Los Angeles