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Fri December 20, 2013
What's more valuable, 5% of the DIA collection, or Detroiters' pensions?
That's one of the sad questions people are asking themselves in the face of Detroit's restructuring under Chapter 9 bankruptcy.
Detroit pensioners stand to lose their quality of life, and the community stands to lose a significant source of culture and pride.
All the interested parties are working closely with federal bankruptcy mediators to find a solution to the prickly question, but they needed information first.
Part of that information arrived this week.
Christie's delivered its final evaluation of part of the art collection in the Detroit Institute of Arts. The estimated value is somewhere between $454 million and $867 million - a fraction of Detroit's $18 billion debt.
The auction house only looked at part of the collection.
Detroit Emergency Manager Kevyn Orr instructed Christie's to evaluate items purchased with city funds. Most of that art was purchased in the 1920s and 30s, and it amounts to just under 5% of the DIA’s total collection of around 66,000 objects.
These works were targeted because they're the pieces most unencumbered with potential legal restrictions.
The thinking goes, “The city bought them. The city needs money. The city could potentially sell that art to raise cash.”
Other art at the DIA, according to Orr’s office, could not be used in such a way without getting tied up in legal battles.
Mark Stryker of the Detroit Free Press reports that even if Orr thinks it’s the most logical collection to evaluate, the DIA doesn’t think so:
The DIA has vowed to fight in court a forced sale of art or any plan to monetize the collection by using it as collateral for a loan or other means. Museum leaders say a forced sale would permanently cripple the DIA, causing donors to flee and pushing county leaders to repeal the property tax that now makes up some 70% of the museum’s budget. Museum officials declined to comment on the specifics of Christie’s report and reiterated its long-held public stance that “the City of Detroit and the museum hold the art collection in trust for the citizens of Detroit and Michigan.”
So plans have been hatched to have the foundation and philanthropic communities step in to help save the art at the DIA.
It's been referred to as "the Grand Bargain" - raise around $500 million to keep the collection off the bankruptcy bargaining table.
Lee Rosenbaum of the CultureGrrl blog writes that the giving community initially balked at the idea. They wouldn't step in to solve a problem caused by bad debts.
Now, Rosenbaum writes, philanthropists are warming up to the idea:
So why are the Ford Foundation and others now getting behind the so-called “grand bargain” that would give Orr the $500 million he wants from the DIA?
My guess is that this change of heart is due to the change in how the use of the funds is now being defined. While the money could be used to help pay a portion of the pensions that the city owes its workers, the $500 million would, in essence, be used to buy the once-independent museum back from the city, releasing the DIA from Detroit’s onerous oversight and allowing it to function in perpetuity (one hopes) as a stand-alone nonprofit entity, no longer subject to the vagaries of municipal stewardship.
Whether supporters of the DIA step in or not, creditors are likely going to argue that people’s pensions and healthcare are more important than art.
Creditors who want to be paid will argue the Christie's evaluation is too low. Mark Stryker of the Freep reports they want a second opinion:
U.S. Bankruptcy Judge Steven Rhodes scheduled a hearing for 10 a.m. Jan. 22 to consider a challenge by a group of Detroit creditors to the appraisal.
A coalition of the largest creditors in Detroit’s bankruptcy filed a motion Nov. 26 asking Rhodes to appoint a committee to conduct an independent evaluation of the art.
Here are the three most valuable pieces in this part of the DIA’s collection, according to Christie's (pictured above):
- Up to $200 million Pieter Bruegel the Elder’s 16th-Century painting “The Wedding Dance”
- Up to $150 million for Van Gogh’s self-portrait
- Up to $90 million for Rembrandt’s “The Visitation”