DETROIT (Reuters) - The Detroit Institute of Art (DIA) said on Wednesday its board of directors approved a commitment to raise $100 million to help protect its art collection and city retirees in Detroit's bankruptcy.
Added to the total already pledged by U.S. philanthropic foundations and by Michigan's Republican Governor Rick Snyder, some $820 million has now been committed to city pensioners and the museum.
"We are hopeful this agreement will allow Detroit's bankruptcy to move forward smoothly as we all work toward a brighter and better future for Detroit," DIA board chairman Eugene A. Gargaro said in a statement.
The city's emergency manager has been looking at assets the city could use to meet some of the pension fund liabilities and thus avoid making steep cuts to retiree benefits. The aim of the fundraising is to help avoid those cuts and keep the artwork in the museum's hands.
The museum statement added that as part of a deal to raise $100 million from corporate and individual donors, the city of Detroit would transfer "free and clear legal title to the museum building, the art collection and all related assets."
The DIA would continue operate with donor funds and taxes raised from Detroit's suburbs.
On Tuesday the W.K. Kellogg Foundation committed $40 million, bringing the total pledged by foundations to $370 million. Governor Snyder unveiled a plan last week to tap up to $350 million in state funds over 20 years for Detroit retirees.
Kevyn Orr, Detroit's state-appointed emergency manager who took the city to U.S. Bankruptcy Court in July, has opened the door to monetizing city-owned works at the institute, which have been appraised at as much as $867 million. That could include selling the artwork or using it as collateral for loans.
Orr has also eyed severe cuts in the city workers' retirement benefits. Detroit's two pension funds are the city's biggest unsecured creditors and Orr has pegged the unfunded pension liability at $3.5 billion.
Overall, Detroit faces some $18 billion in long-term debt.
(Reporting By Nick Carey; Editing by Cynthia Osterman)
- Budget, Tax & Economy
- Detroit Institute of Art
- city of Detroit