The Detroit Institute of Arts has raised enough money to fulfill its $100 million commitment to the “grand bargain” portion of the city’s bankruptcy settlement, officials announced Monday.
“We’re thrilled that our generous donors have helped us reach our goal so quickly,” Eugene Gargaro Jr., DIA board chairman, said in a statement. “Not only have many long-time donors come through for us, but many new donors, including those from outside Michigan, have also given generously.”
The so-called “grand bargain” was agreed upon to shield city-owned art at the museum from being sold as part of bankruptcy negotiations and to soften the blow of cuts to pensioners.
Reaching the grand bargain goal quickly was a “wonderful success story” spurred by a compelling message, Gargaro said Monday night. “It was a product of a lot of hard work every day, all day, but we were able to accomplish it in about 10 months’ time.”
Under the deal, the DIA is required to pay $5 million annually for 20 years. But the museum is expected to take advantage of the “present value” discount negotiated in the settlement, officials said, which provides a benefit to donors for early payments.
DIA officials cited the state’s $194.8 million payment to Detroit’s two pension funds in the bankruptcy settlement plan as an example of the discount.
“Although the museum is still awaiting signed agreements from several donors, the DIA has secured payment schedules that will allow the museum to exceed its annual commitment of $5 million in the first five years, earning the museum a 6.75 percent present value benefit on those advance payments,” the statement read.
The Michigan Settlement Administration Authority last month approved a resolution setting Feb. 9 as the day the state will transfer its share of the bankruptcy settlement fund into the city’s General Retirement and the Police and Fire Retirement systems.
The state’s contribution is part of $816 million in pledges over 20 years from foundations and private DIA donors toward shoring up the pension funds. That lump sum contribution is the equivalent of $350 million over 20 years.
In the agreement, the money is to be transferred to the pension funds 60 days after the effective date of Detroit’s exit from bankruptcy court, which was Dec. 10.
Gov. Rick Snyder and the Legislature stipulated that several lawsuits brought against the state before Detroit filed for bankruptcy in July 2013 be dropped by the end of 2014 for the payments to be made. In June, the Legislature sent Snyder a 10-bill package approving the $194.8 million payment and attaching several conditions, including creation of a commission that will monitor city finances for at least the next 13 years.
Meanwhile, the DIA has made its first $5 million payment to the Foundation for Detroit’s Future, administered by the Community Foundation for Southeast Michigan, officials said Monday. The next scheduled payment is in June 2016, with additional annual payments through 2034, according to the museum.
Now that the deal’s goal has been reached, the DIA can “focus its fund-raising energy on building its unrestricted operating endowment,” officials said, so it can “reduce or eliminate its reliance on public funding.”
Detroit News Staff Writer Chad Livengood contributed.