Friday, May 24, 2013

Where Diversity Leads: Detroit is $15 Billion in Debt; Emergency Manager Contemplates Selling Off Art Museum's Treasures; Clueless, White Suburban Art Connoisseurs Scream Bloody Murder

 
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Posted by Nicholas Stix

 

Thanks to reader-researcher "W" for the sendalong.

 

I posted the following comment at the Detroit Free Press:

 

Over 90 percent of the commenters on this thread are drooling imbeciles. I'll bet you have college degrees, too, but all you do is emote. 'You can't do this, it would be a crime, evil Republicans, the art belongs to the people,' blah, blah, blah.

 

Guess what, the fact that the art belongs to the people is exactly why it can and must be sold off.

 

The official story is that Detroit is $15 billion in the red. The real story is that it has gotten probably over $20 billion in handouts from state and federal taxpayers over the past 40 years, and wasted every penny, plus the official $15 billion in debt.

 

Besides, Detroiters will never miss it. They don't visit the Museum, all of you out-of-towners do. And most people who call themselves "Detroiters" aren't, they're suburbanites. So, if you want to save it, I suggest you pony up a few bil.

 

By the way, how many of you folks now emoting and engaging in moral preening called for a halt to state and federal aid to Detroit over the past 40 years, and for the city's criminal, er, elected leaders to cut expenses, so that things wouldn't get to this point?

 

I didn't think so.

 

Is the current pass heart-breaking? Sure, it is. But the same people screaming that you can't sell off the DIA's holdings have screamed "racist!" for years from their suburban redoubts at anyone who spoke rationally about Detroit's problems. The other people screaming "racism!" were the racist blacks looting the money that was confiscated from white state and federal taxpayers, and sent to Detroit.

 

 

 

 

http://www.freep.com/article/20130523/NEWS01/305230154/DIA-s-art-collection-could-face-sell-off-to-satisfy-Detroit-s-creditors

 

 

DIA's art collection could face sell-off to satisfy Detroit's creditors

1:53 PM, May 24, 2013 |

118Comments

 

 

Jorden Barnes, and her uncle Andre' Barnes visit the Detroit Institute of Arts in July of 2012.

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Susan Tusa/Detroit Free Press

 

By Mark Stryker and John Gallagher

Detroit Free Press Staff Writers

 

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The 1970 Alexander Calder sculpture 'Young Woman and Her Suitors' is shown outside the the Detroit Institute of Arts in Detroit, Tuesday, July 10, 2012. / Paul Sancya/Associated Press

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Auguste Rodin's sculpture 'The Thinker' is shown outside the Detroit Institute of Arts in Detroit, Tuesday, July 10, 2012. / Paul Sancya/Associated Press

 

Should the DIA's works of art be sold to satisfy the City of Detroit's debts?

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The once unthinkable is suddenly thinkable.

 

Detroit emergency manager Kevyn Orr is considering whether the multibillion-dollar collection at the Detroit Institute of Arts should be considered city assets that potentially could be sold to cover about $15 billion in debt.

 

How much is the art at the DIA worth? Nobody knows exactly, but several billion dollars might well be a low estimate.

 

Even the possibility has set off a sharp reaction. The DIA hired a bankruptcy lawyer to advise it, and philanthropist and DIA patron A. Alfred Taubman said this evening that "it would be a crime" to sell any of the DIA's collection to satisfy city creditors.

 

"I'm sure Mr. Orr, once he thinks about it, will certainly not choose that as one of the assets," Taubman said. "It's not just an asset of Detroit. It's an asset of the country."

 

Update:DIA says art collection a public trust, not for sale

 

Liquidating DIA art to pay down debt likely would be a monstrously complicated, controversial and contentious process never before tested on such a large scale and with no certain outcome. The DIA is unusual among major civic museums in that the city retains ownership of the building and collection while daily operations, including fund-raising, are overseen by a nonprofit institution.

 

DIA Executive Vice President Annmarie Erickson said the museum has hired New York bankruptcy attorney Richard Levin of Cravath, Swaine & Moore to advise ways to protect the collection from possible losses. Levin is one of the nation's leading bankruptcy attorneys and was active in the General Motors bankruptcy and other high-profile cases.

 

"We are standing by our contention and belief that we hold the collection in trust for the public," Erickson said this evening. "And although to some it may seem to be an asset, we do not."

 

Bill Nowling, a spokesman for Orr, said the art collection at the DIA must, however reluctantly, be considered one of the city's assets in the current financial emergency as the city heads toward a possible bankruptcy filing.

 

"We have no interest in selling art," Nowling said this evening. "I want to make that pretty clear. But it is an asset of the city to a certain degree. We've got a responsibility under the act to rationalize that asset, to make sure we understand what's it's worth.

"We have to look at everything on the table," he continued. "As much as it would pain us to do it, and it does, I'm a great lover of art and so is Kevyn, we've got a responsibility to rationalize all the assets of the city and find out what the worth is and what the city holds."

 

As emergency manager, Orr has great latitude in selling city assets to satisfy debt. But the scope of that power to sell off city jewels, such as the DIA collection, Belle Isle or the city's water department, for example, has yet to be exercised and likely would be tested in court.

 

Under Chapter 9 of the federal bankruptcy code, neither a judge nor creditors can force the city to liquidate its assets. But bankruptcy experts say the judge and creditors can push for a sale of assets and that the pressure could be hard to resist under some circumstances.

 

"The creditors can really force the issue," Nowling said. "If you go into court, they can object and say, 'Hey, I'm taking a huge haircut, and you've got a billion dollars worth of art sitting over there.' "

 

Nowling said that some creditors already have asked Orr whether the DIA collection is "on the table." Nowling would not identify which creditors, but he said, "These are people savvy enough to know where all the money for the City of Detroit is."

 

The possible forced sale of some of the DIA's greatest treasures — including some of the world's most famous paintings by Pieter Bruegel the Elder, Henri Matisse, Vincent van Gogh, and scores of other masterpieces, is sending shock waves through the museum world.

 

"There would be hue and cry the likes of which you've never heard," said Ford Bell, president of the American Alliance of Museums in Washington, D.C. "The museum should be a rallying point for the rebirth of Detroit and not a source of funds."

 

[Rebirth? There will be no rebirth of Detroit.]

 

Museums are not required by federal accounting rules to list their collections as assets. However, at the request of the Free Press, art dealers in New York and metro Detroit reviewed a list of 38 of the greatest masterpieces owned by the museum and estimated a market value of at least $2.5 billion with pieces such as Bruegel's "The Wedding Dance," van Gogh's "Self-Portrait" and Matisse's "The Window" all carrying estimates of between $100 million and $150 million each.

 

The estimates amount to educated guesses, however, because works of such historical value and quality hardly ever come on the market.

 

Even by considering selling off artwork, Orr, the DIA and the city are entering uncharted territory. Art law experts said that they were unaware of any precedents of a city being forced to sell works in a municipal bankruptcy.

 

Under normal circumstances, selling art to raise operating funds is strictly forbidden by the ethical codes and governing bodies in the museum world. Museums that run afoul of the rules are ostracized, and the threat of no longer being able to mount traveling exhibitions or borrow works is typically enough to prevent such sales — though the degree to which the DIA's peer institutions would hold it accountable in the case of a forced sale remains an open question.

 

Though the DIA began as an independent nonprofit in 1885, it quickly turned to the City of Detroit for financial help, and in 1919, it became a city department. In 1998, the DIA regained full control of its operations and is charged with running the museum in accordance with industry standards. But the operating agreement, which runs through 2018, makes no specific provisions for a municipal bankruptcy.

 

Although the city owns the DIA and the collection, many works of art were donated by collectors who may have put restrictions on what the DIA or city can do with the works.

 

Major patrons could mount a campaign to block any sale of art. At the very least, a fire sale of DIA works could cost the museum untold millions in future donations and support.

 

[It doesn't matter; the Museum is as dead as the Symphony. This is what diversity leads to.]

 

Nowling acknowledged that there would be a major downside to selling art to pay city bills and said Orr hopes to avoid that tactic.

 

"New York went into receivership, (and) nobody forced it to sell Central Park," Nowling said. "We're certainly going to make that argument that they're jewels of the city that are just inherent to the city itself that we need to have. But people need to be prepared."

 

[New York never descended to this level of debt or pathology.]

 

The major firewalls for the museum in trying to protect its art from being sold fall generally into two camps, according to lawyers who specialize in art law: legal prohibitions and those rooted in fairness, the public trust and the extraordinary public outcry that would accompany a forced sale.

 

[An outcry from suburbanites.]

 

Patty Gerstenblith, director of the Center for Art, Museum & Cultural Heritage Law at DePaul University in Chicago, said courts would be less likely to allow the sale of works donated to the museum with special covenants attached prohibiting a sale. However, works bought directly by the city decades ago or purchased later by the museum would be at greater risk, she said. "I don't know that I see anything that would stop those works from becoming an asset to creditors in bankruptcy."

 

Lawyers interviewed said a stronger argument against selling art may well come down to the issue of fairness and social and political pressure. The museum and its supporters could argue that the DIA has operated for a century, caring and maintaining the art as a public trust and that to strip Detroit of its greatest art treasures would tear an irreparable hole in the cultural fabric of the city and state, they said.

 

[What cultural fabric? The city's "cultural fabric" has been rent for 40 years.]

 

L. Eden Burgess, a lawyer at Cultural Heritage Partners, a Washington, D.C., firm that specializes in arts and cultural history issues, also noted that the tri-county property tax approved by voters last summer shows the degree to which the public considers the DIA central to its cultural identity and that a court might see a post-millage sale of art as a betrayal.

 

"The law provides us rights, but equity is the sense that there is more than law that protects us," Burgess said. "I think the museum has a fairly strong equity argument."

 

Contact John Gallagher: gallagher@freepress.com or 313-222-5173. Contact Mark Stryker: stryker@freepress.com or 313-222-6459

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