In Detroit bankruptcy, what will happen to DIA?

[Coaccession]

I predict that 20 years from now, DetroitYESers will be debating whether the long-abandoned DIA should be turned back into an art museum or converted into a mass transit station or a backdrop for movies and outdoor concerts.

If Dave Bing's administration has been telling the unions that the City doesn't have the assets to cover its contractual obligations, then cman710, if he's a labor lawyer, might think the unions may have a basis for tearing up any agreements coming out of these negotiations... in good faith, the City should include all its assets in stating its financial position...

In conformity with allowable museum practice, the value of the Art Collection is excluded from Statements of Financial Position.

Given that the art collection belongs to the City of Detroit and the DIA is in fact the City's Arts Department, supervised by the City's Arts Commission, then conforming to GAAP would seem to require including the art collection's value on the City's books... unless the City of Detroit qualifies as a museum and the unions don't need to know about these assets.

Sales of works of art are subject to a policy that requires proceeds from their sales to be used to acquire other items from the collection.

That's another museum policy, rather than a city policy. If Detroit's a museum rather than a city, then it should keep its art collection off the books because it can only use art collection proceeds to replace one piece of art with another... like selling off the $2 million historic Custer Flag to buy Indian artworks. But if Detroit's a city, it can redeploy its assets in whatever way that best serves its needs as a city... like honestly paying what it owes to union members now so it can avoid a well-informed no vote that leads to an EFM or a bankruptcy that leads in turn to a willy-nilly liquidation of Detroit's DIA art collection to pay what the City always could have paid and an empty DIA redeployed as Retroit predicts.

Effective February 1, 1998, the {Founders Society} entered into an operating agreement with the City to administer, manage, and fundraise for the museum with the mission to promote and maintain the excellence of the museum. The City continues to own the museum's permanent art collection, including works of art acquired prior to or subsequent to the operating agreement, as well as the building museum and grounds. The operating agreement expires June 30, 2018.

The City's operating agreement for the Founders Society to run the DIA was supposed to last a century, but the Founders Society foundered on its side of the agreement before it even came up for its first renewal. Rather than asking the tri-county region to pay a museum tax on top of all the other taxes the region already pays, the Founders Society might ask itself why it can't pay its own expenses when it's managing many, many billions of dollars in assets -- assets that likely generated a billion dollars or more in capital appreciation in 2011. With a contract to manage that much financial value for the City of Detroit, the Founders Society ought to pay tens of millions of dollars a year to Detroit, if not hundreds of millions. Detroit's a wealthy city, and could enjoy that wealth a lot more if its DIA art collection did double duty rather than single duty, paying financial returns as well as cultural returns rather than cultural returns alone.

With an Arts Commission that's a lapdog rather than a watchdog and a Mayor and City Council that haven't yet publicly discussed deploying the financial value of Detroit's DIA art collection to fund essential services and arts investments, it seems increasingly likely that that collection will go from one single duty -- paying cultural returns at the DIA -- to another single duty -- paying off Detroit's creditors in bankruptcy. Given the enormous financial value that the City's leaving idle right now when its proper management could make a huge difference to the City's future and the DIA's future, that's a real shame!