Two pieces of news to report today on the Detroit Institute of Arts:
First, it must be an election year…Republicans are buying votes!
Gov. Snyder, flanked by fellow Republicans, House Speaker Jase Bolger and Senate Majority Leader Randy Richardville, held a press conference at 3:30 this afternoon to announce their intention to commit $350 million in state funds over twenty years to help fund Detroit pensions. Although, the legislature will have the final say on his plan in upcoming budget negotiations, it remains hopeful news. The commitment acts as a good-faith match to the $330 million raised by private donors — the whole deal hinges on keeping artworks at the Detroit Institute of Arts out of the city’s bankruptcy equation as a “protected asset”.
The governor went to comical lengths to characterize his proposal as a “settlement, not a bail-out”, using the word “settlement” in nearly every sentence of the half-hour long press conference. The proposal tentatively tags state tobacco settlement revenues to finance its portion of the pension funds. Currently those funds go to various human services functions, Medicaid and economic development in the state.
Snyder admitted he has not yet asked for votes on this, but Senate Majority Leader Richardville stood by the governor’s side to offer that he “is very excited” with the proposal, although he, along with Speaker Bolger, conceded that it won’t be an “easy sell”.
In a parallel breaking story, Bankruptcy Judge Steven Rhodes ruled today that creditors may not form a special committee to independently appraise Detroit Institute of Arts works for possible sale to settle a small portion of the estimated $18 billion the Motor City owes. Rhodes told creditors:
“The court further concludes however that even if it did have the authority and discretion to grant this motion, that discretion should not be exercised here.”
Christies had previously conducted an audit of the works and found them to be worth between $454 and $867 million — a number which some creditors, (who have a storied history of over-estimating asset values), felt was too low for the 2800 pieces being considered for sale. The city had asked Christies to evaluate only those works which had been purchased with DIA funds — approximately 5 percent of the collection.
Creditors are additionally insisting that the entire collection, including those with donor restrictions attached to them, should be appraised and available for liquidation.
In this morning’s court session, Judge Rhodes questioned whether the art can even be sold to settle the city’s debt. The Detroit Free Press reported that an attorney for European banking interests insisted that the works are “in play”, to which Rhodes replied:
“I have to say that, that is not altogether clear to me at all. It depends on what you mean by ‘in play.’”
The judge went on to admonish the creditor’s legal counsel with a warning…
“…to be careful what you ask for. If you ask for a ruling that the art is part of the case, you might not get that ruling.”
Today’s decision does not answer the question as to whether the art is “in play”, but merely that an independent committee of creditors to evaluate the art will not be allowed. If, and when, any DIA holdings are subject to sale, it will be Detroit’s Emergency Manager Kevyn Orr to make the call. He has previously indicated that he believes the assets are subject to liquidation. However, Judge Rhodes has stated that when deciding what to sell, the city “must take extreme care that the asset is truly unnecessary in carrying out its mission.” He’s made it clear that it’s not going to be a fire sale of assets at the whim of Orr and the creditors.
Rhodes, himself an artist, may have a greater respect for the arts than some anticipated. When he’s not on the bench, he’s in the band. He plays rhythm guitar for a classic rock band called the Indubitable Equivalents, or the “Indubies”. The musicians are sponsored by their professional organization, the American Bankruptcy Institute. If you want to hear what a rock-n-roll judge sounds like (and who doesn’t?), click here for a video.
All and all, this adds up to a decent day for Detroit, its retirees, and the DIA.