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December 9, 2013

Should Detroit sell its priceless art to pay the bills?

— Like a mournful soul tune, news from Detroit seems to get worse with each verse. The latest is deeply dispiriting: The city may have to sell the artwork off the walls.

A federal judge ruled Dec. 3 that Detroit met the conditions for Chapter 9 bankruptcy. Now a question that's been simmering for months is coming to a boil: Should the Detroit Institute of Arts -  one of the country's finest art museums and perhaps the city's greatest cultural asset -  sell some or all of its collection to satisfy creditors?

It's a vexing question, but the answer is no. Not because the city isn't desperate for cash (it is), or because selling its Van Goghs and Picassos wouldn't raise a lot of money (it would). The best reason is that the art's ultimate owners, the taxpayers of greater Detroit, don't want to -  and the city's most profound challenge is how to reinvent itself as a place where people actually want to live and work.

Detroit may yet be able to avoid this dreadful outcome. A federal mediator is overseeing negotiations with philanthropic groups to spin off the institute -  which is owned by the city but receives no money from it -  in return for donations totaling $500 million or so. But there's no guarantee the talks will succeed.

So the grim accounting of Detroit's civic jewels proceeds. Christie's estimates that the roughly 2,800 artworks the city could feasibly sell might fetch from $452 million to $866 million. Such a one-time cash infusion could alleviate some of the city's innumerable woes, from a $3.5 billion pension shortfall to deteriorating public services. But Detroit's underlying problems -  a shrinking population, economic stagnation, poor governance -  would remain. So would most of the city's $18 billion in long-term debt.

The harder and more important question is whether the proceeds gained from selling the collection would be more valuable to the city than the museum itself.

And what is the museum's value? Well, it drew 594,267 visitors in the last fiscal year. It spends millions locally each year on goods and services, lures tourists and their money, provides jobs and education, and so on.

But these are insufficient metrics. A great art collection provides social and cultural benefits that don't fit well in spreadsheets. It helps make a city someplace where people want to buy homes and do business. It concentrates creativity and boosts innovative potential. And it expresses some important civic principles -  for instance, that a city should be something more than a group of citizens with the same ZIP code, and that art, as a demonstration of human excellence, is inherently ennobling.

The region's voters -  who haven't been consulted on very much lately -  effectively ratified this idea in 2012, when they approved a property-tax increase on themselves to ensure the Detroit Institute of Arts remained financially viable. The tax supports about two-thirds of the museum's budget, or about $23 million a year. Selling the art would probably abrogate this tax and thus vitiate the institute's finances. It would also violate voters' expressed wishes.

 Is there another way out?

Those negotiations with philanthropic groups are encouraging. And the judge overseeing the bankruptcy warned that selling the art only "delays the inevitable." The city's emergency manager, meanwhile, has said only that he would "like to find a way to monetize the DIA."

There are several ways of doing so that don't require gutting the collection. Christie's suggested using some of the artworks as collateral to obtain a long-term loan; creating partnerships with other museums to lease significant works or pre-packaged exhibitions; transferring art to a "masterpiece trust," in which other museums could purchase ownership shares; and selling exceptional items to philanthropists who would agree to permanently lend them back to the museum.

None of these would go very far toward resolving Detroit's budget problems. But the real question facing the city, in this instance, is more existential than fiscal. It's whether Detroit, in the future, will remain a city in any proper sense of the term -  a place where civic responsibilities are met, democratic wishes are respected, and cultural treasures are preserved for future generations.

 

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