Foundations to contribute $330M to help protect DIA collection, Detroit pensions

[jt1]

... so any such takeover is remote at best.

Remote at best is another way of saying it is possible. Given the movement of wealth, assets, population, taxes, business in this region over the years, it is reasonable to have concerns that it may happen, even if the odds are minimal.

I'm sure back in the day the odds of Chrysler moving to Auburn Hills was remote at best.

[Gistok]

Remote at best is another way of saying it is possible. Given the movement of wealth, assets, population, taxes, business in this region over the years, it is reasonable to have concerns that it may happen, even if the odds are minimal.

I'm sure back in the day the odds of Chrysler moving to Auburn Hills was remote at best.

Or for that matter... Detroit City Council EVER passing anyone's plans for leasing Belle Isle...

Sometiimes, as history has shown us... "remote" is not even worth the bother...

[majohnson]

So often, the newspapers and folks stated that the art as being in a 'public trust' and stated that as reason why ownership of the art assets could not be transferred during an auction sale, etc.
Why wouldn't the same hold true when the city transfers the ownership for $300M?

[Ray1936]

Without going into all the possible/probable legal ramifications on this matter, I'd just like to state one sincere thought.

As a DPD retiree, quite dependent on the pension, in NO WAY do I want to see any of the items in the Detroit Institute of Arts liquidated. The DIA is a treasure for the entire State of Michigan, and I pray it will be that forevermore.

And I don't even live in Michigan any more!

[samsonov]

Without going into all the possible/probable legal ramifications on this matter, I'd just like to state one sincere thought.

As a DPD retiree, quite dependent on the pension, in NO WAY do I want to see any of the items in the Detroit Institute of Arts liquidated. The DIA is a treasure for the entire State of Michigan, and I pray it will be that forevermore.

And I don't even live in Michigan any more!

You're a good man Ray1936

[BankruptcyGuy]

So often, the newspapers and folks stated that the art as being in a 'public trust' and stated that as reason why ownership of the art assets could not be transferred during an auction sale, etc.
Why wouldn't the same hold true when the city transfers the ownership for $300M?

It is my understanding that the City owns some art with restrictions on use, some is held in trust, and some is held without restrictions. Only the art held without restrictions is subject to sale or other disposition. If the DIA has $12B in art, that does not mean that all $12B is subject to sale. Bankrputcy courts cannot [[without a really good reason, like fraud) get rid of things like rights of reversion.

[Cincinnati_Kid]

A noble effort by the contributors of the 300 million, but realistically, 300 million is not going to solve the pension problem. Who makes up the difference between 300 million and supposedly 18.5 billion? The pensioners are still going to have to take undeserved cuts.

[Lowell]

A noble effort by the contributors of the 300 million, but realistically, 300 million is not going to solve the pension problem. Who makes up the difference between 300 million and supposedly 18.5 billion? The pensioners are still going to have to take undeserved cuts.

I have read that argument several times now. Obviously $300 mil won't solve it, but it isn't chump change and sure won't hurt things. It will insure that the collection survives and continue to be a revenue enhancing enterprise with billions of real dollars and intangible dollars in terms of prestige and image.

Once the haircuts are handed out, the pension funds will still need to be funded and a healthy Detroit is needed for that to happen. Otherwise we lose an irreplaceable asset and end up in the same hole again.

As I mentioned above this is similar to keeping a major league sports team in Detroit. The DIA is truly a major league collection and institution. But, unlike a sports team, one can't simply go out in the free agent market and rebuild it once sold and dispersed.

[Lowell]

I have just now heard on WDET that Gov. Snyder is proposing that the state match the foundations' $350 million. It would be spread over ten years and funded from tobacco settlement money or some other vague resources.

It sounds like a case of 'running it up the flag pole to see if anyone salutes it' but it is encouraging to hear. The state has a lot at stake to preserve the precious cultural asset.

[BankruptcyGuy]

I have just now heard on WDET that Gov. Snyder is proposing that the state match the foundations' $350 million. It would be spread over ten years and funded from tobacco settlement money or some other vague resources.

It sounds like a case of 'running it up the flag pole to see if anyone salutes it' but it is encouraging to hear. The state has a lot at stake to preserve the precious cultural asset.

I think it's more than that, Lowell. As indicated, I don't think either the State or the pensioners want a definitive answer on whether pensions can be cut in bankruptcy. If the proposed plan has:

a) $300MM from donors for art;
b) $350MM from the state for art;
c) the DWSD is spun off, with some payment to the city;
d) x% haircut to pensions
e) larger haircut to bondholders

then the only objecting party will be the bondholders. In BK cases, when the debtor and most creditors line up on one side of a plan, it is likely to be approved, absent manifest unfairness.

[mwilbert]

A noble effort by the contributors of the 300 million, but realistically, 300 million is not going to solve the pension problem. Who makes up the difference between 300 million and supposedly 18.5 billion? The pensioners are still going to have to take undeserved cuts.

The 18.5 billion isn't the pension shortfall. There isn't any agreement on what the pension shortfall actually is, but my guess is it might be a tenth of that. I wouldn't expect large pension cuts. The unfunded retiree healthcare benefits, on the other hand, are much larger and are probably going to be severely cut if not eliminated.

[Ray1936]

The 18.5 billion isn't the pension shortfall. There isn't any agreement on what the pension shortfall actually is, but my guess is it might be a tenth of that. I wouldn't expect large pension cuts. The unfunded retiree healthcare benefits, on the other hand, are much larger and are probably going to be severely cut if not eliminated.

They have been cut/eliminated effective March 1. Retirees, instead of having full BC/BS coverage [[including a great scripts plan), will receive a $125 stipend towards Obamacare. Those over 65 and on Medicare [[me) will be enrolled in a Medicare part D plan for scripts. City savings will be tremendous; nearly 8k per year per retiree. Rumors abound that there will also be a Kevorkian plan.

[Gistok]

The DIA is truly a major league collection and institution. But, unlike a sports team, one can't simply go out in the free agent market and rebuild it once sold and dispersed.

Amen to that...

The Getty Museum is the worlds richest museum... as far as endowment is concerned [[thanks to the late J. Paul Getty)... but even with them buying all the artwork they can find over the last 30 years... the have only been able to amass a world class collection of 2nd tier artwork...

99% of the first tier artwork is tied up in museums and private collections. It's just not possible anymore to amass a major collection that takes you back to tier 1.

[professorscott]

The 18.5 billion isn't the pension shortfall. There isn't any agreement on what the pension shortfall actually is, but my guess is it might be a tenth of that. I wouldn't expect large pension cuts.

Just so. As BankruptcyGuy has pointed out, the pension funds per se are not assets of the City and absolutely cannot be touched in the bankruptcy. The only difficulty is that the funds balance is, arguably, less than it ought to be, and the funds had expected the City to make up the difference in perpetuity. The amount of making-up-the-difference that occurs going forward is what is in play here.

So for instance: let's say the pensions are 90% funded; now, automatically, cuts will not exceed 10%. Let's further say that the City's expected contribution is reduced by 50% in the bankruptcy. Then in the end, in this scenario, the actual cuts will be 5%.

Of course, it is impossible to accurately predict outcomes, because nobody can tell to what degree the pensions are adequately funded [[it is a matter of predicting the future), and nobody yet knows by how much the City's expected contribution will be trimmed.

[Mikeg]

.....Rumors abound that there will also be a Kevorkian plan.

"My assistant and I will meet you in the van."

[Honky Tonk]

"My assistant and I will meet you in the van."

I was @ a party once, with a date, [[I'm old), and Kervorkian kept hitting on my date. I could've killed him.

[Ray1936]

LOL, Mikeg!

[cla1945]

They have been cut/eliminated effective March 1. Retirees, instead of having full BC/BS coverage [[including a great scripts plan), will receive a $125 stipend towards Obamacare. Those over 65 and on Medicare [[me) will be enrolled in a Medicare part D plan for scripts. City savings will be tremendous; nearly 8k per year per retiree. Rumors abound that there will also be a Kevorkian plan.

Ray, did you get the latest retirees Health Plan for March 1, 2014 through December 31, 2014 booklet? There have been some major changes regarding the stipend and insurance plans. As of now,they are offering 3 plans...BCBSM Medicare Plus PPO, BCN Advantage HMO PPO, and HAP Senior Plus. We now have to pay for dental and vision. Prescriptions are included in all plans. The plans are certainly not as good as the original one but better than nothing. We will be shopping next year for new insurance if this plan isn't sufficient. Being out of network like you are, your costs will be higher.

[Ray1936]

Problem is, cla1945, I'm out of state, so I can only take the Advantage PPO plan. The other two are for MI residents only. I looked into three other plans: Humana, AARP, and Aetna. All three would result in higher costs to me due to their prescription plans with the "gap", or donut hole, as some describe it. the BC BS Medicare Advantage, while minimal in covering non-medicare covered billings, does not have the gap on the scripts. Since the wife needs extensive medication, the Detroit offered plan, while NOTHING like the old one, is apparently the best.

As I've said in the past on this forum, I saved all my graft money, so we'll be okay.

[stromberg2]

Ray, you are awesome!!

Stromberg2, your Monroe bud!

[Ray1936]

Hey, Strom, how you be?

[stromberg2]

I'm awesome!! Hope you and the wife are well!

[coracle]

Bail out so far - a view from the suburbs:
Foundations are contributing $330k to bail-out for DIA/Pensions.
State is to contribute $350+k to bail-out.
State is running Belle Isle.
Suburbs are paying $23k per year to bail out DIA's $32k annual budget.
DIA expected to contribute $100k to Pensions over 20 years.
Ergo suburbs will be subsidizing Pensions. [[not what millage was for)
Suburbs are on the hook for Water Dept. [[which has been neglected)
Drip, drip, drip.....[[ pun intended).
Looks like Banks and Bond Holders will be stiffed. [[compulsory contribution)
Depending on Water Dept. price there is a long way to go yet.
What are Detroit taxpayers contributing? [[higher taxes?)
Who's going to get the State $1 B budget surplus?
Will City Council be responsible for spending our State/Suburb money?

[Ray1936]

Will City Council be responsible for spending our State/Suburb money?

Not to worry. Cushingberry will take care of everything.

[cla1945]

Not to worry. Cushingberry will take care of everything.

LOL Ray,,,,he's Kwames clone. I sure hope the powers that be keep a close rein on a couple of council members.