With $17 million from the city and $9.5 million in private donations, the Museum of the City of New York will break ground August 2 on a muchneeded addition to its landmark building in Spanish Harlem. Polshek Partnership Architects designed the two-and-a-half-story addition, which will be built in an empty yard behind the original 1932 building and will include 23,000 square feet of climatecontrolled storage and gallery space.

“The place was in terrible shape,” a public advocate and former president of the New York Historical Society, Betsy Gotbaum, said. “There was water in the basement and stuff like that.”

The addition, which is expected to be completed in 2008, is the first phase of a planned six-year, $70 million modernization program, which will include providing air conditioning in the main building and reorganizing its public and private spaces.

“This is a wonderful story for the Museum of the City of New York,” the museum’s president and director, Susan Henshaw Jones, said.”It sets us up for a bright future.”

The museum has 1.5 million objects that document the history of New York, beginning in the 1700s. Its major strengths are photographs, household goods and furnishings, and a collection tracing the history of theater in the city. “It used to be known as New York’s attic, because a lot of New Yorkers gave everything they had to the museum,” a former Parks Department commissioner and current president of New York Civic, Henry Stern, said.

Ms. Jones became director in 2003, at a difficult time for the museum.The Giuliani administration had promised that it could move downtown to the Tweed Courthouse. After taking office, Mayor Bloomberg rescinded the offer, leaving the museum stuck in its out-of-the-way-location and superannuated facility at Fifth Avenue and 103rd Street.

“This is a splendid museum, and it hasn’t had the attention it’s needed in part because of the neighborhood it’s in,” Mr. Stern said. The exhibitions were also not particularly interesting, Ms. Gotbaum said. “Nobody was going there.You had a staff at the museum who weren’t interested in New York.The director didn’t even live in New York.”

Ms. Gotbaum and others credit Ms. Jones for turning things around and revitalizing the museum. “There’s a whole new feeling there that wasn’t there before,” she said.

The novelist and former chairman of the museum, Louis Auchincloss, called Ms. Jones an “extraordinary” director. “She has tremendous energy,” he said. “And we have a strengthening board. Things are beginning to look good.”

The new building will have two floors of a curatorial center, which will include storage areas as well as research and exhibition-preparation areas. The final “half” story will be a 3,200-square-foot gallery. It will be integrated into the current building, Ms. Jones said, by having the entrance to the new gallery underneath the existing central staircase.

“We’ll have more room for exhibits, and much more room for storage, which we badly need,” Mr. Auchincloss said of the addition.

“We need everything we’re getting,” Ms. Jones said.

The $9.5 million in private donations have come mostly from board members, including James Dinn and Elizabeth Miller and David and Connie Clapp.

In the last few years, the museum has brought more deep-pocketed patrons onto its board, Mr. Auchincloss said. “In the past, we had trustees who were interested in old New York, and old silver, and old this and old that — but they weren’t tremendously good at the fund raising. And that’s all been changed. We have a very active and very giving board, and they have all kinds of contacts.”

The Department of Cultural Affairs is the authorizing city agency. In an e-mailed comment, Commissioner Kate Levin said: “This is an example of an institution really maximizing its space and becoming a more dynamic part of the neighborhood. The city has always had a major stake in MCNY, and with its rising attendance, an increased interest from the private sector, and a compelling vision for the future, there is a real opportunity for this administration to help ensure the museum can fulfill its public mission in a more robust and engaging way.”

One of its most famous holdings is a dollhouse built by Carrie Stettheimer, who with her sisters Florine and Ettie, hosted a New York salon in the 1920s frequented by artists like Marcel Duchamp. Many of Stettheimer’s artist friends contributed miniature paintings to the dollhouse, including Duchamp’s tiny version of his own “Nude Descending a Staircase.”

Recent exhibits, including “The High Style of Dorothy Draper” and “We Skate Hardcore” — an exhibit of photographs of young Latino men in Williamsburg — have regenerated interest in the museum, Ms. Jones said. “These shows have really been boosting our attendance and our visibility in the public eye.”