Billionaire Eli Broad says the decline in the market for contemporary art has “leveled out.”

“Prices are more rational,” the Los Angeles-based collector said in an interview at Art Basel yesterday. “They went up 500 percent over 10 years, now they’re up 250 percent. Now good things are beginning to come on the market.”

Broad, 76, one of the biggest U.S. art buyers, said prices are lower this year in Basel, the largest commercial fair for modern and contemporary works. The quality is higher, he said.

“During the fair,” said Broad, “we bought a drawing for an Ed Ruscha painting we have in our Foundation for a fraction of the price it was estimated at in an auction a year ago. It failed to sell.”

Silver-haired Broad, wearing a dark-blue blazer and open shirt, was speaking as dealers said more realistic pricing and an emphasis on classic works had generated better-than-expected sales at the preview day.

The Broad Art Foundation contains almost 2,000 contemporary works. These include 29 pieces by Andy Warhol, 24 by Jeff Koons, 10 by Damien Hirst and 120 by Cindy Sherman.

Broad paid $56 million for the construction of a contemporary art annex to the Los Angeles County Museum of Art. The 58,000 square-feet Broad Contemporary Art Museum, designed by Renzo Piano, opened in February, 2008, to show selected works from the Broad Foundation.

Lending Art

“We always planned to use our collection as a lending library from which many museums could borrow works and display them,” said Broad. “We don’t want the works to be sitting in a basement and not be seen by the public. We believe in the democratization of art.”

Broad has a private collection of 600 further works “which will end up in the foundation,” he said.

He is looking at sites in southern California for a museum to house and display the foundation’s collection.

“There’s nothing definitive now,” Broad said.

Broad founded Los Angeles-based KB Home, formerly known as Kaufman & Broad, with Donald Kaufman in 1957, and later founded retirement-fund company SunAmerica Inc., now part of American International Group Inc.

He has a net worth of $5.2 billion, said Forbes in a survey of the world’s billionaires in March. His wealth was down $1.5 billion in six months as AIG stock dropped 98 percent, said Forbes. It valued his collection of contemporary art at $1.5 billion.

Rescue Package

Broad has been responsible for devising a rescue package for the ailing Los Angeles Museum of Contemporary Art, where he is a Life Trustee. MOCA is one of the U.S. art institutions whose funding has been hit by the financial crisis. Its endowment peaked at $38.2 million in 2000 and fell to $19.8 million in 2007, after MOCA borrowed about $17.2 million from the endowment, according to the museum. In 2008 the endowment fell to $6 million, Broad said.

Under the terms of the new agreement, announced in December 2008, Broad’s foundation will match as much as $15 million raised by the museum and provide exhibition support of $15 million over five years. The package allows MOCA to remain independent and avoid amalgamation with LACMA.

Jeremy Strick, director since 2001, has been replaced by Charles Young, chancellor emeritus of the University of California at Los Angeles, in the new role of chief executive.

New Director

A new permanent display of works from MOCA’s 6,000-strong collection of contemporary works will open on November 14. A new MOCA director will be appointed within eight months, said Broad.

The museum’s “reserve fund” to match the Broad Foundation’s financial support has reached $20 million, David Johnson, co-chair of the Board of Trustees, said in an interview at Basel.

“The foundation is still buying works,” said Broad. “For a few years when things were wild, we hardly bought anything at auction. We also went back to buying older pieces.”

Broad, together with Christie’s International, has been in dispute with shipping magnate Gregory Callimanopulos over the $3.7 million sale of a painting by the Abstract Expressionist artist Sam Francis, who died in 1994.

Broad filed court papers on June 3 claiming he’s entitled to the work because he submitted the highest bid. Callimanopulos sued the auction house on May 15, saying it improperly sold the 1954 painting to Broad for $3.2 million, plus commission, on May 13. Callimanopulos said the auctioneer had already sold the work to him by bringing down the hammer on his $3 million bid.

“It’s very simple,” said Broad. “The painting is paid for and it’s in my possession. That’s why the judge ruled in our favor.”