Creditors eye Detroit's art museum

Randy Kennedy and Monica Davey / New York Times News Service /

Published Jul 20, 2013 at 05:00AM

As Detroit files for bankruptcy — the largest U.S. city ever to do so — the impressive collection of the Detroit Institute of Arts has become a political bargaining chip in a fight that could drag on for years between the city and its army of creditors, who have said in no uncertain terms that the artworks must be considered a salable asset.

“We haven’t proposed selling any asset,” said Bill Nowling, a spokesman for Kevyn Orr, the state-appointed emergency manager appointed to deal with Detroit’s debts, which could amount to more than $18 billion. “But we haven’t taken any asset off the table. We can’t. We cannot negotiate in good faith with our creditors by taking assets off the table. And all of our creditors have asked about the worth of the DIA. And we’ve told them that they’re welcome to find out.”

Unlike most art museums around the country, which are owned by nonprofit corporations that hold a collection in trust for citizens, the institute is owned by Detroit, as is much of its collection — which is not particularly deep but includes gems by artists like Bruegel, Caravaggio, Rembrandt and Van Gogh. It is considered among the top 10 encyclopedic museums in the country.

Museums do not generally appraise the market value of their works beyond a blanket amount for insurance policies. But experts have speculated that the institute’s works could bring more than $2 billion if sold.

The museum, which has hired a well-known bankruptcy lawyer, Richard Levin, to advise it on its possible exposure, declined to comment Friday. But on its Facebook page, the museum said: “As a municipal bankruptcy of this size is unprecedented, the DIA will continue to carefully monitor the situation, fully confident that the emergency manager, the governor and the courts will act in the best interest of the City, the public and the museum.”

Few large American art museums have found themselves in the financial cross hairs quite as often as the Detroit Institute of Arts. Not long after it was founded in 1885, it became enmeshed in a lawsuit that led to a loss of city appropriations, putting it in budgetary straits. In 1955, during a city financial crisis, the museum’s acquisitions mostly ceased. And in 1973, during another economic downturn, it had to close temporarily.

Last month, after the first rumblings that creditors were pressing the issue of the collection as an asset, Bill Schuette, Michigan’s attorney general, issued a forcefully worded opinion saying that the artworks — under the state’s trust law and other laws — were “held in trust for the public” and could be sold only for the purpose of acquiring additional art, not for satisfying municipal debts. He added that in decades of financial turmoil in Detroit, “at no time have the people demanded their most precious cultural resources be sold in order to satisfy financial obligations.”

Under federal bankruptcy proceedings, however, it is unclear what force that opinion would have. Even the question of what would happen if the city decided to sell the art is difficult to answer — whether, for example, the museum would appeal to the bankruptcy judge or would be able to go to another court to try to prevent it. Museum officials say the sale of even a part of an institution’s core collection in effect renders a museum defunct: donors stop giving money and art, attendance declines and other support dries up.

The Detroit Institute of Arts’ annual attendance is nearly 600,000. Last year three Michigan counties agreed to institute a property tax increase earmarked for the museum, putting it on a secure financial footing for the first time in decades.

Politically, and perhaps as a negotiating tactic, the question of the collection’s fate is being cast as a choice between measurable benefits, like city pensions, which could be cut to satisfy creditors, and the much harder-to-measure benefits of cultural assets.

“It’s hard to go to a pensioner on a fixed income and say, ‘We’re going to cut 20 percent of your income or 30 percent or whatever the number is, but art is eternal,’” Nowling said. “For people, that’s a hard distinction. I think it’s a distinction that some of the patrons of the DIA have a hard time understanding. We’re talking about real people here with real decisions that have real impact on their lives.”

He added, of the artworks: “It doesn’t mean we’re proposing to sell them. But we need to know how much they’re worth and we need to know what value are they bringing back to the city.”

Bankruptcy lawyers say the issue of the value of such cultural assets goes beyond philosophical or moral arguments. For a bankruptcy judge, the questions could include whether the sale of a city’s artworks would have long-term economic implications — depressing tourism, harming real-estate values and the value of other cultural institutions, for example — in a way that sets a city up for financial failure again down the road.

Samuel Sachs, who was the director of the museum from 1985 to 1997, said Friday, “If they do attack this, it will be the end of one of the most venerable cultural institutions in the country, not just in Detroit.”

He added: “If you could sell off Detroit’s hospitals and its universities, would you do that, too? If you do things like this, you’re basically spelling the end of the city as an ongoing entity.”

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