Aug 1 A top officer at the Detroit Institute of
Arts predicts near-certain closure for the museum if Detroit
sells major pieces from the 60,000 works in the institute's art
collection as a way to address the city's dire financial
In an interview Wednesday, Annmarie Erickson, the DIA's
chief operating officer, told Reuters the museum could lose
significant funding if pieces from the collection are sold.
"It would certainly mean the closure of the museum, maybe
not tomorrow, but eventually," Erickson said. "Our situation is
in some respects just as dire as that of the creditors."
But with Detroit facing more than $18 billion in debt and
retired city workers confronting cuts to pension and health
benefits, the museum could have a tough time making a case for
preserving its assets, bankruptcy experts say. Kevyn Orr, the
state-appointed financial manager, has not ruled out the sale of
DIA treasures to address the city's financial plight.
The rocky outlook for cultural assets like the DIA
illustrates the tough choices facing a city once considered the
cradle of American vehicle manufacturing. Like General Motors
and Chrysler - Detroit titans that survived
collapse by having painful decisions thrust upon them via
bankruptcy - the city may have to part with cultural gems to
bounce back from disaster.
Mark Young, president of the Detroit Lieutenants and
Sergeants Association, which represents about 500 mid-level
managers in Detroit's police department, said art should not
outweigh workers, whose pensions and benefits are likely to face
big cuts as Detroit restructures.
"The Van Gogh must go," said Young. "We don't need Monet -
we need money."
The Detroit Institute of Art is not the only major cultural
institution that could be caught up in Detroit's bankruptcy
proceedings. Belle Isle, a 982-acre recreational spot in the
Detroit River, as well as the Detroit Zoo could both be sold.
While the cultural assets may have a strong book value - the
DIA collection is said to be worth billions - converting them to
cash may prove both politically and practically challenging.
The state of Michigan first offered to lease Belle Isle from
Detroit in January, agreeing to assume $6 million in annual
operating costs. But Governor Rick Snyder abandoned the plan
after the City Council stalled a vote on it. Orr has said he
intends to enter a new agreement with the state under "generally
the same terms" as the January offer.
In one of the more improbable proposals, a local developer,
Rod Lockwood, has floated a plan to buy Belle Isle for $1
billion and turn it into a libertarian commonwealth where
residents would pay a $300,000 citizenship fee. But public
officials have expressed determination to keep Belle Isle open
to the public, and Orr's spokesman, Bill Nowling, on Wednesday
dismissed the Lockwood proposal as "out of the mainstream."
The Detroit Zoo, supported by a tax voters approved in 2008,
is owned by the city but operated by the nonprofit Detroit
Zoological Society, which received $475,018 from the city in
2012, down more than $100,000 from 2011, to reimburse security
and insurance costs.
"The primary asset is really the land," the zoo's
spokeswoman, Patricia Janeway, told Reuters. "The facility has
obviously been developed as a zoo and would require major
expense for other use."
The zoo's animals, she added, "fundamentally have no
None of the cultural assets has caught the attention of the
public quite like the Detroit Institute of Art. One of the
largest U.S. fine art museums, it features works such as a
Vincent van Gogh 1887 self portrait and a 27-panel fresco by
Mexican artist Diego Rivera. It is a rare shared point of civic
pride for citizens of both Detroit and its suburbs.
The DIA is owned by the city and run by a nonprofit group
whose board includes some of Detroit's most high-profile civic
leaders. Residents of Detroit and its suburbs agreed to help
cover operating costs through a tax levied according to the
value of their real estate.
Erickson, the museum official, warned that art sales could
lead to revocation of the tax, which provides nearly two-thirds
of the museum's roughly $35 million budget.
Doug Bernstein, a bankruptcy expert and lawyer at Plunkett
Cooney, said Detroit could argue in bankruptcy court that it
needs to keep the DIA intact. "If you're going to ever
restructure a city, you've got to revitalize the tax base, and
part of that is having attractions," he said.
Even if Orr does try to sell DIA art, he could run into
obstacles. The museum has said the art cannot be sold because it
is held in a charitable trust for the people of Michigan, a
position backed by state Attorney General Bill Schuette.
Individual pieces of donated art can also carry contracts
that bar their sale, Erickson said. Robert Hudson Tannahill, the
late Detroit art collector, donated 470 objects, but his will
stipulates that if the DIA sells any piece, the entire
collection must be offered to another museum, Erickson said.
Orr may be able to overcome those blockades under bankruptcy
rules that let debtors reject unprofitable contracts, said Bill
Brandt, a bankruptcy expert and head of turnaround consultant
Development Specialists Inc.
In the end, some art is likely to go, said Brandt. "You
can't kill pensions but save the art," he said.
If Orr does move to sell the art, he will probably face
public resistance, along with a costly, time-consuming legal
battle. The DIA has retained bankruptcy guru Richard Levin and
has saved for months to fund its legal costs, Erickson said.
There are alternatives to flat-out sales, like creating a
public-private partnership to run the museum.
"But the private entity has to make money," said one
bankruptcy expert, who declined to be named because he is
involved in the case. "Where's it going to come from? Charging
for admission? Then your attendance goes down."
Orr could seek to charge the DIA rent, but Erickson said the
museum already pays $31 million a year in operating costs and
cannot afford much more.
'ALL DOLLARS ARE GREEN'
Politically, there may be no winning formula, with strong
feelings on both sides of the argument.
Richard Feigen, chairman of the Richard L. Feigen & Co
gallery, said some collectors would be repulsed by a sale of DIA
art. "The auction would be tainted," he said. "Even if I had the
financial capability, I wouldn't buy."
The city's creditors are likely to view the DIA's art a bit
differently. "I would say all dollars are green," said one
creditor-side professional who declined to be named.
It won't be a quick process. Erickson said Orr has yet to
meet with the DIA to discuss his plans for the art. A person
close to one creditor said Orr has not brought the issue up in
discussions with creditors, either.
"In spite of all the attention given to this, I think we're
pretty far down (Orr's) list," Erickson said. "We're in it for
the long haul."