The Detroit Institute of Arts should sell part of its collection

May 29, 2013

After the question was recently raised about the Detroit Institute of Arts selling its holdings to provide liquidity to the city, many looked to Michigan Governor Rick Snyder. According to the Detroit News editorial page editor Nolan Finley on Twitter, the governor (who tweets from @onetoughnerd) said that ultimately it is a “legal question” whether or not the art should be sold. But is it? Or it is more of a moral question in the face of Detroit’s desperate financial situation?

The Detroit Institute of Arts has one of the most substantial public art collections in the country. The building and art collection are owned by the city of Detroit and administered by a non-profit organization. The DIA describes the setup:

Under a 20-year agreement with the City of Detroit (Feb. 1998-Feb. 2018), museum operations are the responsibility of a non-profit corporation known as The Detroit Institute of Arts. The non-profit corporation is run by a volunteer board of directors, which appoints and supervises the museum’s director and CEO.

The museum cannot be forced to sell assets by a federal bankruptcy court or creditors, but the Emergency Manager could compel a sale. Pension and Investments says:

A federal bankruptcy court can’t force the city to sell part or all of the DIA collection to meet pension and other liabilities, but as Detroit’s emergency manager, Mr. Orr may include artwork sales in a possible Chapter 9 bankruptcy recovery plan.

Let’s put aside the legalities and focus on what is happening in Detroit. This April Detroit Mayor Dave Bing announced that he had secured private donations to keep 51 city parks funded and open.

Just in time for summer recreation, Detroit Mayor Dave Bing said Wednesday he was able to raise enough funds from metro Detroit companies to avoid shutting down 51 city parks this year, which he had threatened to do after a deal for the state to lease Belle Isle collapsed last year.

Bing credited donations — including $5 million over five years from the auto supplier Lear Corp. — for helping to close an $8-million gap in parks and recreation funding. Bing announced $14 million of donations for his Active and Safe Detroit Campaign to keep parks open and maintain recreation activities for the city’s kids and seniors.

Detroit city parks and recreation centers serve over 300,000 children and senior citizens. It is a “public good” in the broadest sense. Detroit is so broke that it had to beg for private monies to open its parks. By contrast, the Detroit Institute of Arts, supported by a tax levy on property in three counties, spent $23 million of public money to provide access to 411,000 people (2009 data). DIA does not pay a PILOT (payment in lieu of taxes) to the city or another payment for police and fire services.

The DIA needs to join in the collective effort to fiscally stabilize the city. Like all stakeholders – public employees, retirees and bondholders – it needs to put something on the table to aid recovery. Whether it sells 15 percent or 30 percent of its collection, it needs to help pull the train to return Detroit to its former glory. It will still remain an important cultural institution. And this action needs to be voluntary, not forced by the Emergency Manager. It would set a tone for a historic recovery for the city. There is an art to rebuilding a city and everyone must lend a hand.

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