from Carol Vogel in the NY Times:

Three years after reaching a tentative agreement with the city, the Whitney Museum of American Art is forging ahead with plans to build a second museum at the entrance to the High Line, the abandoned elevated railway line that has recently been transformed into a public park.

The museum signed a contract last month with the New York City Economic Development Corporation to buy the city-owned site at Washington and Gansevoort Streets, in the meatpacking district, for $18 million. That is about half the appraised value of the property, a sign of the city’s interest in drawing visitors to the area.

According to the final agreement, the Whitney has up to four years to close on the purchase of the land and five years to begin construction of the building, designed by Renzo Piano. The museum will make nonrefundable monthly payments of $50,000 to the city until the closing date, which has not been determined. These payments will be credited toward the purchase price. (The balance is due at the closing.)

The signed contract comes three years after the Dia Art Foundation scrapped its plans to open a museum next to the High Line entrance. That’s when the Whitney stepped in and reached a conditional agreement to take over the space.

Since then the economy has taken a toll. In the spring the Whitney laid off eight employees, or 4 percent of its work force, and froze the salaries of senior staff members. In addition, the operating budget was reduced by about 10 percent.

Adam D. Weinberg, the Whitney’s director, said the money for the project would come from capital funds, not the operating budget. “The two are separate,” he explained.

For decades the Whitney had tried to expand its landmark home — the 1966 Marcel Breuer building on Madison Avenue and 75th Street — but because of cost considerations the museum abandoned those plans and focused on a satellite downtown.

A second museum is critical to the future of the institution, Mr. Weinberg said, adding: “This is the only way we can continue to justify building a collection. We simply don’t have enough space to show our holdings. And since at least 60 percent of the art we acquire comes through gifts, it becomes more difficult to ask people to donate works if we cannot show them.”

Most of the Breuer space is devoted to special exhibitions, Mr. Weinberg said, with only about a quarter of the building left to display art from the permanent collection, one of the foremost holdings of 20th-century American art. “I’d like it to be 50-50,” he said. “You hear people say they are going to the Whitney to see a show, but you rarely hear someone say they are going to the Whitney to see our collection.”

The Breuer building is also a difficult space to maneuver. When the giant biennial closes, for instance, it takes three weeks to get the art out and install another show. “That’s just bad business,” Mr. Weinberg said.

But in this economy, paying for the High Line site will be a challenge. In May the museum announced a fund-raising campaign of $680 million: $435 million for the new building and about $245 million for the endowment. While Mr. Weinberg would not say how much had been raised so far, other than “a very substantial amount,” he did say that “giving slowed last year, but since the summer things have picked up.”

In addition to raising money from individuals and corporations, the Whitney plans to sell five town houses next to the Breuer building when the real estate market improves. The proceeds will be earmarked for the downtown site.

The project would give the Whitney a six-floor museum more than twice the size of its Madison Avenue home. The satellite would include more than 50,000 square feet of galleries and about 15,000 square feet of outdoor exhibition space.

The Whitney will also have right of first offer on another city-owned property, north of the downtown site, which is occupied by the Gansevoort Meat Market Cooperative. If the co-op decides not to renew its lease, which expires in 2014, the Whitney could entertain the possibility of expanding once again.

“It’s bigger than our existing site,” Mr. Weinberg said, comparing the co-op’s space to that of the Whitney project. “And we would probably co-develop it with another institution.”

For the city, the addition of a Whitney downtown is another magnet to draw people to an area it has worked hard to develop. “We think this is a great anchor to this cultural district,” said Seth Pinsky, president of the New York City Economic Development Corporation. “It will provide a gateway to the High Line. The two are complementary.”

A question remains, however, about how the Whitney can run two sites at once. Last year when Leonard A. Lauder, the museum’s chairman emeritus, gave $131 million through his foundation, he stipulated that the Whitney could not sell its Breuer building for an extended, but unspecified, period of time.

Mr. Weinberg said that the museum was studying options to see how to make the two sites work programmatically and financially. Teaming up with another institution is one idea. “We’re exploring all sorts of possibilities,” Mr. Weinberg said.