A drop in the bucket? Christie's appraises Detroit's art

Reuters News
Posted: Dec 04, 2013 10:09 AM
A drop in the bucket? Christie's appraises Detroit's art

By Joseph Lichterman

DETROIT (Reuters) - The auction house Christie's put a price tag on one of Detroit's highest-profile city assets, its share of the Detroit Institute of Arts collection, stating that nearly 3,000 works controlled by the city are worth between $452 million and $866 million.

The finding by Christie's, hired to place a value on art treasures that could become a contested element of the Detroit bankruptcy, puts a range of value on 2,781 works owned or partially owned by the city.

The holdings represent only about 5 percent of the DIA's full collection, but with the finding Tuesday that Detroit is bankrupt under Chapter 9 of the federal bankruptcy code, it is possible the city may seek to monetize some of the artwork.

Christie's said 11 pieces on display at the museum account for 75 percent of the appraised collection's total value.

Christie's said it will propose five alternatives to outright sale that would allow the city to monetize the collection. The auction house would not elaborate on what those choices may be.

Detroit emergency manager Kevyn Orr retained Christie's in August to appraise city-owned works as part of Detroit's bankruptcy case. Christie's said it would provide a full report to Orr, and release it publicly, during the week of December 16. It said it would also propose five alternatives to outright sale that would allow the city to monetize the collection.

The first two portions of the three-phase appraisal process have been completed, Christie's said. The first phase valued 319 city-owned works on view in the museum's galleries. The second phase examined city-owned pieces in storage, each with an estimated value of more than $50,000.

The third phase, which is ongoing, consists of appraisals of city-owned art in storage, none of which are estimated to be worth more than $50,000. The auction house said it expects to finish the third stage later this month.

Though Christie's has yet to finish its appraisals, it said it did not expect its total estimate of the art's value to change drastically.

"As this process moves forward, we trust our findings will provide a useful foundation for the city to engage in further discussion with the creditors and the DIA, and for all parties involved to make informed decisions about the best use of the city's assets," Christie's America President Doug Woodham said in a statement.

Christie's stressed that its valuation was for fair market value, the price at which a piece would be sold in an appropriate market. The valuation is different than an auction estimate, which is used to attract interest from potential bidders.

The market for fine art has sizzled this year. Francis Bacon's "Three Studies of Lucian Freud" fetched a record-breaking $142 million in a Christie's sale last month. The November 13 auction in New York brought in $691 million, the highest in art market history, and prompted talk of a bubble.

"What we are experiencing now is a kind of melt-up in the market," art advisor Todd Levin, of Levin Art Group, told Reuters after the auction.

The DIA declined to comment on the appraisal, but said in a statement that it "continues to maintain its position that the museum collection is a cultural resource, not a municipal asset."

Bill Nowling, a spokesman for Emergency Manager Kevyn Orr, did not immediately respond to a request for comment.

The museum's collection, which includes an 1877 self-portrait by Vincent van Gogh and works by Claude Monet and Rembrandt, has become a flash point in the city's bankruptcy and caused heated debates throughout the Detroit area. The DIA and Michigan Attorney General Bill Schuette have said Detroit cannot touch the museum's collection because the works are held in a charitable trust for the people of Michigan.

In 2012, voters in Detroit and the three suburban counties surrounding Detroit voted to increase property taxes to help cover the DIA's operating expenses. The tax provides about two-thirds of the museum's budget of about $35 million. Suburban officials have said that any sale of the art might force them to revoke the tax funds that are sent to the DIA.

But Orr has maintained that the city must value all of the city's assets, including the art.

"Once we find out what we're talking about, that'll probably lead the discussion about what we can and can't do," Orr told Reuters in August about a possible sale of the art.

With more than $18 billion in debt and liabilities, Detroit on Tuesday became the largest U.S. city to be declared bankrupt.

And Orr has said the city is looking at other assets to monetize, aside from the art, like the Detroit Water and Sewerage Department, Coleman A. Young International Airport, or other city-owned parking lots or land.

In his ruling Tuesday, however, U.S. Bankruptcy Judge Steven Rhodes, who is overseeing the case, said selling assets was not the solution to Detroit's long-term financial problems.

"A one-time infusion of cash, whether from an asset sale or borrowing, delays the inevitable," he said.

A group of the city's largest creditors last month asked Rhodes to approve an independent valuation of the DIA's collection. The creditors asked Rhodes to appoint a committee that will consider "a wide range of potential options to monetize the art," according to a court filing.

Also last month, the federal judge acting as the chief mediator in the bankruptcy case put forward a proposal that a group of non-profit foundations could create a fund to protect the DIA's city-owned art.

(Additional reporting by Bernie Woodall in Detroit and Patricia Reaney in New York; Editing by Bernadette Baum)