Creative strongarming?
Detroit Emergency Manager Kevyn Orr has said for some time that he expects the Detroit Institute of Arts to come up with a half billion dollars of what can only be called ransom to help settle Detroit’s bankruptcy crisis. The expectation had the result of pitting the pensions of retired Detroit workers against priceless pieces of art held in trust by Detroit for the residents of the state. It’s an unfair equation, of course, but that is exactly how it has played out.
Christie’s auction house did an evaluation of the portion of the DIA collection that had been purchased with city funds and found it to be worth between $454 million to $867 million. This would suggest that the museum would need to sell off nearly all of the art purchased with city funds in order to pay the ransom.
However, in December of last year, federal mediators announced that they had been working on a deal since November to engage “national and local foundations among other funding sources to create a mechanism for providing cash for the city, while ensuring the present and future safety of the DIA collection”. In other words, the mediators were working with these foundations, groups like Ford Foundation, the Kellogg Foundation, and the Community Foundation for Southeast Michigan, to come to the rescue of the DIA’s art by helping them to pay their tab.
The Detroit Free Press is reporting this morning that a final deal may be announced as early as today.
A deal to use foundation money to protect the Detroit Institute of Arts’ collection and Detroit’s pensioners from the consequences of the city’s bankruptcy could be announced as early as today, according to sources familiar with the negotiations.One source, who spoke on the condition of anonymity, said talks are at a delicate stage and there are “a number of moving parts,” including what role the state would play in any deal. […]
Darren Walker, CEO of the Ford Foundation in New York, has reportedly taken a lead role in structuring the deal and bringing other foundations into it.
Gerald Rosen, chief judge of U.S. District Court in Detroit, is the mediator in the city’s bankruptcy case and called the foundations together in the fall to discuss ways to help with the DIA and the pensions.
One sticking point appears to be how much the state of Michigan would bring to the table.
Sources say the foundations have insisted that the state chip in on the effort, and that to date, no agreement — on the amount of state help, or the terms — has been reached. Some sources said the state’s share could be as high as $100 million, paid over 10 or 20 years; other sources have said the amount being asked of state officials was lower.
The state has capped the level of aid it’s willing to contribute to the city’s restructuring at $5 million so the expectation that they will contribute $100 million over 10-20 years may be a show stopper, particularly when state Republicans are eager to buy votes by giving tax rebates to Michigan voters using their current budget surplus.
It’s good to see the federal mediators working so hard to come up with innovative ways to solve Detroit’s vexing problems and it’s particularly nice to see wealthy foundations willing to participate. Here’s hoping the our state government doesn’t screw it up.
[DIA “Thinker” image modified from CC photo by Michael Barera | Wikimedia Commons]
