R Street paper encourages using Detroit’s art collection to help combat debts
DETROIT, Mich. (March 24, 2014) – In order to relieve the crippling debt to creditors in the bankrupt City of Detroit, the city should turn to its priceless art collection, argued co-authors Andrew Moylan and Alan Smith in a paper the R Street Institute published today.
Some boosters have suggested that payments be made to spin the art collection of the Detroit Institute of Arts off in an independent entity, with proceeds used solely to bail out pensions. But Moylan and Smith argue such a move would be misguided legally and could hamper the city’s economic reboot. Detroit is unique among major cities in having amassed a large collection of valuable artwork that has been largely financed by the taxpayers, which in total is now worth billions.
“One need not diminish the cultural enrichment and aesthetic value of the collection to nonetheless determine that a city that quite literally cannot keep the lights on must consider every available option to blunt the financial impact on investors and pensioners,” said the authors.
Moylan, R Street executive director, and Smith, R Street Midwest director wrote that state-appointed emergency manager Kevyn Orr should embark on an honest legal assessment of which works can be sold, then perform a full-scale appraisal of the entire collection to determine its true value.
“If Detroit is forced to take the heartbreaking step of selling its art, it should get the maximum value, to reduce as much as possible the burdens on pensioners and other creditors,” the authors said.
Monetizing these pieces would be a major step toward relieving the city’s staggering debt to its creditors. The authors note that every untapped dollar that remains at the DIA represents a dollar that must come out of future pension checks of Detroit employees or a dollar that must be paid on top of ordinary rates in order to convince investors to set aside their fears about loaning money to a struggling city.
Moylan and Smith further stressed that monetizing the collection should not have the consequence of leaving Detroit without its art, and care should be taken to keep as much of the work in Detroit as possible.
“Monetizing the art would likely not involve emptying the building from stem to stern, nor should it,” the authors wrote. There are several scenarios in which the DIA would remain full of these priceless treasures, including sales that would keep the works on permanent loan to the Institute, leasing the art to other exhibitions or placing the collection in a trust in which shares could be sold.
