February 21, 2014 at 5:54 pm

Detroit filing backs DIA rescue plan

A DIA visitor walks past 'The Wedding Dance,' an oil painting by Netherlander Pieter Bruegel the Elder. (Daniel Mears / The Detroit News)

The proposed $815 million rescue plan for the Detroit Institute of Arts and the city’s beleaguered pensioners won endorsement Friday in the city’s plan of adjustment filed in bankruptcy court.

“Today is an historic day for the City of Detroit and, indeed, the entire state, and we at the DIA are very proud to be a major contributor to the emergency manager’s and governor’s efforts and to be the custodian of this great museum,” said Eugene A. Gargaro Jr., chairman of the DIA board of directors, in a statement.

The rescue package, to be financed by private foundations, the state and the museum itself, aims to generate about what museum artworks might raise on the open market. Christie’s Appraisals of New York, hired last summer to price works bought decades ago with city of Detroit funds, pegged the value of about 2,000 objects, including “priceless” van Goghs and Rembrandts, at between $454 million and $867 million.

Some creditors challenged the appraisal, calling it too low, and appealed to U.S. Bankruptcy Judge Steven Rhodes to order a new, “independent” assessment of the museum’s holdings. Rhodes denied that request.

City-purchased works account for about 5 percent of the DIA’s collection.

When asked what would happen to the DIA if the rescue plan isn’t approved in bankruptcy, Detroit Emergency Manager Kevyn Orr said he wouldn’t comment because he considers approval likely.

“I’m not going to speculate about the grand bargain because it’s such a good deal” he can’t imagine it would be rejected, Orr said in a Friday conference call with reporters.

Under the proposal, the $815 million paid out over 20 years would bolster the city’s underfunded pension plans, and release the DIA and its collection from city ownership so the museum couldn’t be threatened by future municipal crises. The DIA would become a nonprofit charitable trust, possibly with ties to the state of Michigan, but remain at its Woodward Avenue home.

For some retirees, the overall $815 million art and pension rescue plan is not enough.

“Why aren’t they selling the art and Belle Isle instead of ruining the lives of city workers? Art means more to the politicians?” said Emery Esse, 63, a retired police officer who lives outside Michigan.

Ten national and local foundations, led by the New York-based Ford and Troy-based Kresge foundations, along with individual DIA donors, have pledged $465 million over 20 years, while Gov. Rick Snyder and Republican legislative leaders have proposed the state contribute $350 million over the same period.

The DIA agreed in late January to raise the remaining $100 million, for a total of $815 million.

The unprecedented rescue plan was hatched by Chief U.S. District Judge Gerald Rosen, who was tapped by Rhodes to try to mediate agreements with city creditors in advance of the Plan of Adjustment.

Despite the nod from the plan of adjustment, the rescue package faces considerable hurdles. The city’s two pension funds have not yet signed on, and their support could be crucial. In addition, Snyder could face difficulty getting the state’s share through the Legislature.

The package will likely come with conditions. Snyder has said the state would require independent financial managers to oversee the city’s two pension funds. And foundations may demand seats on the DIA board for some of the fund’s biggest donors.

mhodges@detroitnews.com