The City of Helsinki has prepared a new funding proposal for establishing a Guggenheim museum in the city, after Finland’s co-ruling nationalist Finns party blocked state aid for the project’s development.

During recent budget talks, the Finns objected to the €40m (US$45m, £33.7m) support costs offered by the government,

especially during a time when Finland’s economy is struggling while the government pushes through a multi-billion Euro austerity measure to try and curb public debt growth.

In response, Helsinki leaders have developed a new funding package in cooperation with the Guggenheim Helsinki Supporting Foundation, which will be presented to the decision-making City Board of Helsinki next Monday (7 November).

The estimated construction cost of the Guggenheim Helsinki museum – designed by French architects Moreau Kusunok – is €130m (US$144,3m, £115.6m). Under the new proposal, the City of Helsinki would fund the construction with up to €80m and the Guggenheim Helsinki Supporting Foundation would provide €15m (US$16.6m, £13.3m). The two parties would establish a joint real estate company for the construction, with an 84-16 per cent ownership split. The company would take a €35m (US$38.8m, £31m) loan for the construction, with loan payments covered by the foundation for 30 years with leases paid to the real estate company. The City would give a guarantee to the loan.

According to the new plan, the City of Helsinki would be the principal owner of the museum building and cover the annual €6.5m (US$7.2m, £5.7m) cost of building maintenance but would not finance the museum’s operation in any other way. That funding would come from the foundation through income, private donations and the annual government subsidy for museums.

“Our goal was to find a feasible plan that would not place the full financial burden of the museum construction on the City of Helsinki and would keep the City of Helsinki’s responsibility for financing the same as it was with government involvement,” said deputy mayor Ritva Viljanen. “We have now found an approach to implement the museum project that allows us to present the matter to City decision-makers.”

“This is an exceptional project: no other cultural project in Helsinki has attracted this much private funding,” she added. “Private money would cover no less than €66.4m (US$73.7m, £59m) of the investment. I extend my heartfelt gratitude to the private sources of funding committed to the museum project, who make it possible for Helsinki to further this cause.”

The museum design sees a series of nine linked pavilions anchored by a lighthouse-style tower. The wood and concrete structures are clad in charred timber, a traditional method of making wood fire and water resistant used in Japan and Finland. The forefront of the museum would be an open public waterfront area, and the new proposal defines this area and the building’s inner courtyard as open and free-of-charge city spaces with public art exhibitions.

According to an assessment made by the City, the museum would bring more tourism to Helsinki and would increase the annual spending by visitors by at least €16m (US$17.7m, £14.2m) and boost employment by about 1,200 man-years.

“It is important to make investments that generate income and increase tourism in the city, even in challenging economic times,” argued Viljanen. “The Guggenheim museum would strengthen the international recognition of Finland and Helsinki, and it would improve our position as a tourism destination. The area would obtain a centre of contemporary art that would be exceptionally large even by international standards and would raise Helsinki’s profile as a city of art and design.”

The final decision on the matter will be made by the City Council. If it approves the museum project, construction could begin after 2019.