The Detroit News’ Robert Snell, in covering the hearing today in which the City of Detroit was ruled eligible to enter Chapter 9 bankruptcy, noted that U.S. Bankruptcy Judge Steven Rhodes had taken a skeptical stance on the subject of selling off the collection of the Detroit Institute of Arts in order to meet the city’s debt obligations or help fill the hole in its pension fund. “When the expenses of an enterprise exceed its revenue, a one-time infusion of cash, whether from an asset sale or borrowing, only delays inevitable financial failure unless the enterprise reduces expenses or enhances income,” Rhodes said in delivering his ruling.
Rhodes is absolutely right. The international art market may be booming. But even if selling the Detroit Institute of Arts did give the city a one-time infusion of cash, even a very large one, it would strip the city of an asset that could be of use in its long-term recovery.
Detroit may be in an awful lot of trouble today, but one area where the city’s brand still has promise is as an arts community. Brand-name artists have been staging exhibitions there and using the city’s abandoned plants and facilities as inspiration. Less-established ones have come to Detroit because real estate prices are exceptionally cheap. The efforts by artists to revitalize underpopulated neighborhoods certainly aren’t enough to replace an auto industry that isn’t coming back into town, something that’s painfully clear in chronicles like the Sundance film Detropia. But they’re not nothing, either. And the presence of both an established art collection and new work by new artists are good for Detroit’s brand, a reason for outsiders to come, even temporarily as tourists, rather than to write the city off as a dystopian disaster.
There’s one proposal to sell the Detroit Institute of Arts collection that would preserve that brand. As my colleague Alan Pyke reported last month, U.S. District Judge Gerald Rosen, who was mediating the bankruptcy proceedings, suggested that the city could raise money from foundations to buy the art and place it in a trust for the city. That wouldn’t be the worst outcome, but it seems more like a pleasant fantasy than an actual option that’s on the table. And creating a new foundation would raise complicated governance questions for the Institute. Would the new organization have to approve of loans of the Institute’s collection to other institutions for exhibition purposes? And given that the City of Detroit owns the Institute, even though it isn’t providing funding to the museum, would other counties that have supported the Institute through tax levies have a claim on the money the new foundation paid for the collection? These are big, difficult questions, but without any foundations stepping up to volunteer to implement Rosen’s plans, they’re mostly hypothetical.
Far worse would be auctioning off some or all of the 65,000-piece collection piecemeal. In August, Kevyn Orr, Detroit’s Emergency Manager, asked Christie’s auction house to appraise 2,000 works in the collection. Last week, a group of Detroit’s creditors filed in court to push the city to expedite that assessment, which has been delayed, as an effort to “monetize the art.” I can imagine that there would be a market for some of the Detroit Institute of Arts collection, but selling off the gems of the Institute would degrade, if not destroy, its ability to draw and audience. Judge Rhodes’ ruling would seem to be a rebuke to that idea.
And in the mean time, the Detroit Institute of Arts is pursuing its own vision of self-help. In 2012, the Institute announced an ambitious plan to rebuild an endowment that was badly sapped by the recession. And it’s soldiering on without financial help from the city that technically owns it, but with aid from surrounding communities. “Through the support of museum donors and the residents of Macomb, Oakland, and Wayne counties, the DIA will continue to operate the museum without City financial support, saving Detroit $350 million in expenses over the next 10 years and giving the people of Michigan ready access to world-class artistic and educational experiences,” the Institute said in response to Rhodes ruling. “The DIA will maintain its position as a cornerstone of the vibrant economic and social community that continues to take shape in Midtown Detroit, and will continue to work with local, regional, and national foundations and businesses to help raise funds to address the City’s financial crisis without dismantling the museum.” Here’s hoping.