Detroit Institute of Arts
People look at a mural by artist Diego Rivera at the Art Institute of Detroit in Detroit, Michigan December 3, 2013. Some of the art collection owned by the city of Detroit is in jeopardy of being auctioned off due to the city's current financial situation. Detroit is eligible for the biggest municipal bankruptcy in U.S. history because the city is broke and negotiations with its thousands of creditors were unfeasible, a federal judge said on Tuesday in a wide-ranging ruling that also said the city could cut retiree pensions. Reuters

Declared eligible for the largest-ever municipal bankruptcy Tuesday, Detroit has found itself in the spotlight of the art world with onlookers concerned that a portion of the Detroit Institute of Arts’ precious collection may be headed to the auction block to satisfy creditors of the financially distressed city.

The headline-making story of the museum’s battle to keep its art -- one of the finest collections in the country -- is atypical on many fronts and represents the first time that an American museum of its size has confronted such a threat to its archives. Unlike most major civic museums, DIA’s building and collection are actually owned by the City of Detroit, while a governing nonprofit institution oversees the day-to-day operations under a contract that runs through 2018.

DIA was founded in 1885 and has been housed in an imposing Beaux-Arts style building since 1927. It’s considered a vestige of Detroit’s glory days with a courtyard of priceless automobile-industry murals by Diego Rivera that offer a telling reminder of the breezier Motor City of yesteryear. Among the more than 60,000 works on display inside are an 1887 Vincent van Gogh self-portrait, Henri Matisse’s “The Window,” Mark Rothko’s “Orange Brown,” Andy Warhol’s “Double Self Portrait” and Tintoretto’s “The Dreams of Men.”

Detroit’s new emergency manager, Kevyn Orr, paid Christie’s $200,000 in August to value the city-owned art, and the auction house confirmed Wednesday that it had delivered a preliminary report on its valuation project. It said the report summarized the scope of work set by the City, outlined Christie’s process in conducting the appraisal and offered a preliminary aggregate valuation range based on fair market value.

Doug Woodham, president of Christie’s Americas, said in a statement Wednesday that the auction house had valued only those parts of the collection that the City asked it to. “These city-owned works account for less than 5 percent of the DIA’s total collection of 66,000 works,” he said. “The fair market value estimate range is $452 to $866 million” for the 2,781 works at the museum that had been purchased entirely or in part with city funds.

“As this process moves forward, we trust our findings will provide a useful foundation for the City to engage in further discussion with the creditors and the DIA, and for all parties involved to make informed decisions about best use of the City’s assets,” Woodham added.

The full report is not expected until Dec. 16, but in its preliminary findings, Christie’s also recommended five options for alternatives to the sale that would allow Detroit to gain value from its collection while leaving it intact. Those options include the museum tapping outside donors to raise funds to lease art from the city or renting the works out to other museums.

The scope of Orr’s power as an emergency manager to actually sell the masterpieces -- or any other major assets -- would likely be tested in court, and lawyers say that if DIA was forced to sell some of its treasures, works bought by the city would absolutely be the first to go. Those pieces donated by patrons would likely be guarded by a wider legal shield, subject to the specific contractual agreement of each piece.

DIA said in a statement Wednesday that it maintained its position that the museum’s collection was a cultural resource, not a municipal asset. “The Museum would like to draw attention, once again, to the formal opinion issued by the Attorney General of the State of Michigan that the Museum and the art collection are held in trust for the people of the City of Detroit and State of Michigan,” it said. “The collection's true value is in the education and enjoyment of the public.”

The DIA said that, no matter what happens, it will continue to be “an essential anchor institution in the revitalization of Midtown Detroit” and is “critical to continued economic growth and community development” in Detroit and beyond.

“The DIA remains hopeful that the Emergency Manager will, consistent with the City's fiduciary duty as a public trustee, continue to protect the Museum and the collection and oppose any attempts to force a sale, despite the position that some creditors have taken in a recent bankruptcy court filing. However, if the collection is jeopardized, the DIA remains committed to taking appropriate action to preserve this cultural birthright for future generations.”

As Federal Judge Steven Rhodes ruled Tuesday that Detroit could officially enter bankruptcy, he included in his remarks what appeared to be a comment in opposition of selling the city’s artwork. “A one-time infusion of cash by selling an asset,” he said, “only delays the inevitable financial failure of the city.” Rhodes went on to add that Detroit “must take extreme care that the asset is truly unnecessary in carrying out its mission” to refund creditors.

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