Detroit launches two-month review of city assets

Reuters News
Posted: Aug 05, 2013 2:29 PM
Detroit launches two-month review of city assets

By Joseph Lichterman and Deepa Seetharaman

DETROIT (Reuters) - Detroit will begin to assess the value of its assets, including parking meters, real estate, and a portion of the Detroit Institute of Arts (DIA) collection, in what the city called a "necessary part" of its restructuring efforts.

The city said on Monday it has hired famed auction house Christie's to appraise the city-owned portion of the DIA's 60,000-piece collection as well as advise Detroit officials on how to realize value for the art without selling it.

Detroit is also hiring outside experts to gauge the value of assets including parking garages, the Detroit-Windsor Tunnel and the Coleman A. Young International Airport.

"It doesn't mean that we have any particular plans to sell any particular assets in any sort of fashion," Detroit Emergency Manager Kevyn Orr said in a video posted to his YouTube account.

"We have an obligation to perform our duties as a debtor in bankruptcy to make sure we account for all the assets of the city," he added.

Orr wants to finish the assessment by mid-October, in time for the next big step in the bankruptcy process, the October 23 court hearing on whether Detroit is eligible to enter Chapter 9.

"We don't want to lose any time after eligibility has been declared," city spokesman Bill Nowling said in an interview. He added that Detroit tapped Christie's so early in the process because "we think that's going to take the longest amount of time."

Detroit and its creditors are discussing ways to settle at least $18 billion in debt and unfunded liabilities after it filed for bankruptcy protection last month.

Creditors asked for the valuation of city-owned assets, which is a typical part of the bankruptcy process. This effort does not "portend a sale of any asset," Orr said in a statement.

The possibility of selling artwork from the museum has drawn intense criticism, but advocates of the move say preserving art should not outweigh the need to pay pensions and benefits to city workers.

The museum's collection includes an 1887 self portrait of Vincent van Gogh and a 27-panel fresco by Mexican artist Diego Rivera. Roughly 5 percent of the collection was bought with city funds, according to Tim Burns, executive assistant to the museum's director.

"The City must know the current value of all its assets, including the city-owned collection at the DIA," Orr said. "There has never been, nor is there now, any plan to sell art."


Annmarie Erickson, chief operating officer of the Detroit Institute of Art, said she had heard through media reports that Christie's had been hired by the city.

"We are deeply disappointed that Christie's is taking this action, which we believe is contrary to the well-being of the museum," Erickson said.

The museum has said the art cannot be sold because it is held in a charitable trust for the people of Michigan, a position backed by state Attorney General Bill Schuette.

The DIA also hired bankruptcy attorney Richard Levin and set aside funds for legal expenses.

Alternatives to flat-out sales include creating a public-private partnership to run the museum or leasing some of the finest pieces in the collection for a global exhibition that museums would pay to show, arts experts said.

"For example, if the works were sold to donors willing to give the art back to the museum, that's a possibility," said L. Eden Burgess, an attorney with Cultural Heritage Partners who advises on auctions, purchases and sales.

"That way, the art could stay in the city but there still could be value realized from it. That's one possibility. There may be others as well," Burgess said.

Erickson said the museum, which has faced financial difficulties for years, has not been able to find a way to monetize the collection while maintaining its public mission.

Miller Buckfire & Co, Detroit's restructuring investment bank, met with DIA officials in May to discuss the museum's options. At the same time, Miller Buckfire also reached out to Christie's about conducting a valuation.

Erickson said two Christie's officials had visited to the museum in June but had not returned since. The city said Christie's visited the DIA as part of its due diligence.

"They then informed us that they would be suspending their work," she said. "This is the first that we've heard that they've been resuming that work."

(Reporting by Deepa Seetharaman and Joseph Lichterman; Editing by Gerald E. McCormick, Toni Reinhold and Richard Chang)