Foundations Commit $330M-Plus To Save Detroit Art
By COREY WILLIAMS
DETROIT (AP) – National and local foundations have committed more than $330 million toward the pensions for Detroit’s public workers in an effort to stave off the sale of city owned-pieces as part of a historic bankruptcy, mediators said Monday.
Other foundations were expected to soon announce their participation in a plan to help solve two of the bigger issues facing the insolvent city. Nearly 130 individuals also have contributed to a fund established with a Detroit-area community foundation, said the mediators, a group of attorneys and current and retired judges.
Federal Judge Gerald Rosen, the chief mediator between the city and its creditors, has asked foundations and others to raise $500 million to protect pieces in the Detroit Institute of Arts while assisting pensioners who are expected to lose some benefits in the city’s restructuring.
In separate statements sent Monday, both the mediators and the foundations said assisting retirees while also preserving art would help lead to a “balanced settlement.”
Detroit became the largest U.S. city to enter bankruptcy on Dec. 3 when Judge Steven Rhodes approved the city’s petition.
State-appointed emergency manager Kevyn Orr has said Detroit has at least $18 billion in debt. Of that amount, about $3.5 billion is unfunded pension liabilities.
He warned DIA officials last spring that artwork owned by the city could be considered assets and might be vulnerable to sale if Detroit went into bankruptcy.
According to an appraisal ordered by Orr and completed late last year by New York-based Christie’s, about 2,800 paintings, sculptures and other pieces owned by Detroit are collectively worth between $454 million to $867 million. They represent about 5 percent of the museum’s estimated 66,000-work collection.
Their plan “offers an important opportunity to help Detroit find much needed solutions to its unique challenges,” the foundations said Monday in a statement.
The group includes the high-powered Ford, Hudson-Webber, Kresge and Knight foundations.
The DIA pieces likely will be part of Orr’s plan of adjustment for the city’s restructuring. Also part of that plan will be a renegotiated settlement with UBS and Bank of America Merrill Lynch over pension debt.
Closing arguments on the $165 million deal reached last month were being held Monday in bankruptcy court.
The city pledged casino tax revenue in 2009 as collateral to avoid defaulting on pension debt payments. The swaps allowed Detroit to get fixed interest rates on pension bonds with the banks.
An initial $220 million payoff was reached, but Rhodes ordered the city to renegotiate.
“There is no question the settlement is extremely beneficial to the city,” Merrill Lynch lawyer Mark Ellenberg told Rhodes Monday. “The city pushed us to the lowest number we would ever accept.”
Rhodes still has to approve the new deal.
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