DETROIT (AP) — The Detroit Institute of Arts says it has pledges for about 80 percent of the $100 million it promised toward an effort involving the state of Michigan and major foundations to prevent the sale of art and soften cuts to city retirees during Detroit's bankruptcy.
It announced nearly $27 million in new donations and grants from prominent businesses Wednesday, including $10 million from billionaire Roger Penske and his Penske Corp.
Other donations announced Wednesday include $5 million from Detroit-based utility DTE Energy, and $5 million from Dan Gilbert's Quicken Loans and Rock Ventures. Blue Cross Blue Shield of Michigan, Meijer Inc., Comerica Bank, the JPMorgan Chase Foundation, Consumers Energy and the Delta Air Lines Foundation also made pledges.
General Motors, Ford and Chrysler in June said they are kicking in $26 million as part of the museum's $100 million pledge toward a "grand bargain" that is a key piece to the city's restructuring plans heading into next month's bankruptcy trial. Other pieces include $195 million from the state to Detroit's two retirement systems and about $366 million from more than a dozen foundations. Over 20 years, the total value would be $816 million.
Home to paintings and sculptures by Van Gogh, Pieter Bruegel the Elder, Renoir and other masters, the DIA is one of the nation's top art museums. Much of the art is considered an asset of the city, which purchased many of the pieces years ago during more prosperous times.
Syncora, a bond insurer, is among some creditors that believe the sale of art should at least be explored to help pay the city's debts.
"The art ... needs to be considered as an asset to determine the appropriate treatment of creditors," said James Sprayregen, a partner and head of restructuring for Chicago-based Kirkland & Ellis, which is representing Syncora in Detroit's bankruptcy. "The way the grand bargain is structured, it doesn't do that."
Sprayregen says Syncora's bankruptcy claim is approximately $400 million.
An advisory company hired by the DIA and the city has said 60,377 pieces in the museum, collectively, could be worth more than $4.6 billion, but could fetch only about $1.1 billion in a forced liquidation. An earlier appraisal by an auction house placed the value of 2,800 city-owned pieces at between $454 million and $867 million.
"The $800 million-plus that has been contributed, in all likelihood would have been at least as good as if you had tried to liquidate (the art)," Mayor Mike Duggan said after Wednesday's announcement. "The DIA is essential to this city and it will be protected for the long run. But more importantly, we're protecting retiree pensions for a long time."
With the grand bargain money, non-uniformed retirees would see their pensions cut by 4.5 percent and cost-of-living allowances erased. Some cost-of-living payments for retired police and firefighters would be eliminated.
A majority of approximately 32,000 retirees and city workers needed to vote "yes" on the city's plan of adjustment for restructuring its debt, or the grand bargain money would disappear and steeper pension cuts would be inevitable. Results of that vote are expected to be released next week.
"It is a historic time for our city when such a diverse group of individuals, government, corporations and foundations come together to take this positive step in the process of revitalizing Detroit," Penske said. "It sets the tone for the work yet to be done. I am optimistic about the future of the city and its citizens."