Moratorium NOW! Coalition called a demonstration a Greater Grace Temple in Detroit to oppose Emergency Manager Kevyn Orr who had cancelled a scheduled meeting. Participants called for abolition of the EM. (Photo: Abayomi Azikiwe), a photo by Pan-African News Wire File Photos on Flickr.
August 6, 2013 at 1:03 am
Detroit to pay Christie's $200K to value DIA art
Move part of broad appraisal of city's assets, including tunnel, airport
Robert Snell, Nolan Finley and Laura Berman
The Detroit News
Detroit— Emergency Manager Kevyn Orr announced Monday he has contracted with Christie’s Appraisals, the New York-based international auction house, to appraise the value of the Detroit Institute of Arts.
The city will pay Christie’s $200,000 to appraise what Christie’s described as “a portion of the city-owned collection” at the DIA, according to Orr’s spokesman Bill Nowling.
Outside experts also will be hired to provide valuations for other city-owned assets such as parking garages and parking meters, the Detroit-Windsor Tunnel, the Coleman A. Young International Airport and certain real estate holdings.
The city’s move to put a price tag on city assets will help negotiations with creditors but could fuel demand for a fire sale, legal experts said.
That possibility is especially controversial in the case of the DIA, with a value estimated in the billions. “It’s an absolutely unprecedented situation,” says Graham W. Beal, the DIA director, who contends the museum holds its collection in a public trust.
Beal said that the strong interest, local and national, in the value of the DIA as a city-owned asset had caused him sleepless nights and troubled dreams, as he tries to safeguard one of the Detroit area’s greatest cultural treasures.
Orr said in a statement the decision to bring in Christie’s came at the request of creditors. He added the DIA appraisal is part of a citywide valuation of assets and is intended to aid the restructuring process.
“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. This valuation, as well as the valuation of other city assets, is an integral part of the restructuring process. It is a step the city must take to reach resolutions with its creditors and secure a viable, strong future for Detroit and its residents.”
Art could be used as collateral
Orr, who is trying to restructure the city’s $11.5 billion of unsecured debt and speed up the biggest municipal bankruptcy case in U.S. history, said the auction house will also advise the city on “non-sale alternatives” for realizing value from the collection.
That could mean the city wants to borrow money while using the highly valuable Van Goghs and Matisses as collateral, Southfield-based bankruptcy attorney Michael Leib said.
The move does not mean a liquidation of artwork is imminent or inevitable but is expected to feed fear that one of the country’s most significant publicly owned art museums is vulnerable during Detroit’s historic bankruptcy case.
“The larger the value, the more there is going to be a cry from creditors that these assets should be liquidated to help share the pain,” said Leib.
The move to hire Christie’s comes amid a cry from creditors that the world-famous art collection is being shielded by the city while they are being asked to take as little as 10 cents on the dollar.
Beal argues that the city has never, in its long history, placed a dollar value on the museum. Even during the Depression, when staff was reduced, no one suggested stripping the galleries. “Our research is that the collection was never put on the city books as an asset,” he said.
“We don’t value our collections,” said Beal. Individual works are valued for insurance purposes when they’re loaned to other museums, and the museum secures “a hefty amount of insurance” that would cover the loss in the event of “a small bomb going off.”
Beal says he has never heard of an appraisal like this one being done on a museum comparable to the DIA.
“Kevyn Orr says he doesn’t want to sell anything that’s irreplaceable. If the DIA doesn’t qualify as an irreplaceable asset, I don’t know what does.”
DIA collection could attract residents
Placing a value on assets is a normal part of most bankruptcies, but not Chapter 9 cases. Municipalities are not required to list assets and the court can not order sales.
The valuation could play a key role in Orr’s talks with creditors. He has proposed a plan that would have unsecured creditors sharing a $2 billion payout in exchange for more than $11 billion in debt.
“Until you have this kind of information, there won’t be any serious discussions about negotiating,” Leib said of the appraisals. “There is no way creditors should be asked to compromise or agree to a plan without it.”
A liquidation analysis could place a market value on the DIA collection, and estimate a fire sale price, said Douglas Bernstein, a Bloomfield Hills attorney and expert on municipal bankruptcy.
“If there is a forced sale, an auction, you’re not going to maximize the return,” Bernstein said.
The DIA collection’s value could be more valuable in the city’s hands, in his view.
“The only way you are going to attract a new tax base is if you’ve got something that brings people to the city and the DIA is one of those things,” Bernstein said.
rsnell@detroitnews.com
(313) 222-2028
From The Detroit News: http://www.detroitnews.com/article/20130806/METRO01/308060021#ixzz2bAIsQ1os
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