Detroit's debt could force selloff of prized artworks

Andrew Carnegie's vision about art museum keeps Pittsburgh collection out of harm's way


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As usual, Andrew Carnegie knew what he was doing.

The steel baron turned philanthropist put the City of Pittsburgh in charge of operating the library he gave it in 1895, but when he added an art museum to the Oakland facility just one year later, he kept it out of city hands.

"The city is not to maintain [the art gallery and museum]," Carnegie said in his dedication address. "These are to be regarded as wise extravagances, for which public revenues should not be given, not as necessaries. These are such gifts as a citizen may fitly bestow upon a community and endow, so that it will cost the city nothing."

That decision puts Pittsburgh's major artworks in a safer position than that of struggling Detroit. Facing a $15 billion debt load, the city's emergency manager is considering selling art from the municipal-owned Detroit Institute of Arts, founded in 1885.

DIA holds such masterpieces as Claude Monet's serene garden painting "Gladioli," "The Wedding Dance" by Pieter Bruegel the Elder and Fra Angelico's "Annunciatory Angel," plus a cast of Auguste Rodin's sculpture "The Thinker."

The 60,000 items held for the public by DIA are considered assets by the city's emergency manager, who is considering all assets and options as he tries to reduce the city's crushing debt. Both emergency manager Kevyn Orr and Michigan Gov. Rick Snyder, who appointed him, have said they don't wish to plunder the museum's billion-dollar vaults, but all city property must be identified for the people to whom the city is in debt.

"Things that are good for the people of Detroit, like Belle Isle and the DIA, are important to the livelihood of the city," Mr. Snyder said last week.

Mr. Orr's broad powers, outlined in state law, allow him to negotiate with creditors and unions and to terminate contracts, including those with city employees. In the works is his restructuring plan, expected to be completed and presented to the city's nearly 100 creditors and stakeholders in about three weeks, said Bill Nowling, spokesman for the emergency manager's office.

That's when talks will start in earnest. If all creditors agree to the plan, details will be hammered out. If not, Mr. Orr can recommend and the governor can approve Detroit's move into Chapter 9 bankruptcy, which could put the DIA collection at risk.

"We don't have any plans on the table to sell anything, but we have to have a clear understanding of all the city's assets and how they provide value to the city," said Mr. Nowling, adding that both long and short-term values are being considered.

Major assets fall into about 15 categories, of which the DIA is one, Mr. Nowling said. Others include Belle Isle (a 982-acre island park in the Detroit River), the Detroit Zoo, electrical grids, 100,000-plus vacant properties, various buildings, Detroit City Airport, and the Detroit Water and Sewerage Department, which, he noted, provides a regional service, deriving 80 percent of its revenue from outside the city.

Mr. Orr has requested a copy of the museum's entire inventory, the vast majority of which is owned by the city.

"This is completely unprecedented. We just don't know how this is going to play out," said Annmarie Erickson, DIA vice president and chief operating officer. "The museum will not sell art unless compelled to do so." That specter was mere cocktail party conversation a year ago, she said. "When the emergency manager was appointed, that's when we knew we were in a different situation."

If Mr. Orr and Mr. Snyder decide the best road to resolution is through bankruptcy, creditors and the judge could pressure the city into selling real estate, buildings, systems, and even inspired artifacts that are rare and ancient.

The DIA's Ms. Erickson and others intone a single phrase: It's uncharted territory that's legally complicated and untested.

At the Carnegie: a different story

But it couldn't happen in Pittsburgh, even though the city also has struggled with debt and pension issues and the Democratic nominee for mayor, Bill Peduto, has said he would consider selling off unneeded city facilities as one way to address those obligations.

The city can't touch the Carnegie museum or its artworks, however. Even their actual owners at the private Carnegie Institute would have trouble doing that.

The Carnegie and other museums nationwide also wrestle with their finances and will at times sell their art, but frown upon such "deaccessioning" for solely financial reasons. A 2010 policy issued by Association of Art Museum Directors said art should only be sold to buy better quality works, or art better suited to a museum's mission, but judged selling it off for purely budgetary reasons to be mismanagement.

That doesn't keep the Carnegie from selling, though. Its decorative arts collections were so clogged that in 2009 it sold 185 pieces, netting $374,720. In 2011 it deaccessioned five works by George Romney, an 18th-century English portrait painter, that had not been displayed for 80 years.

"At Carnegie Museum of Art, the deaccessioning process is governed by a well-defined protocol," director Lynn Zelevansky wrote after the latter sale. "After carefully studying an object, we make every effort to consult with the donor or their heirs before selling it. We use funds from the sale to acquire art related to the piece we deaccessioned, and the original donor is credited as the donor of the new work(s)."

The museum also aspires to frugality through another Carnegie idea. He launched the first Carnegie International exhibition in 1896 to buy what he called "Old Masters of tomorrow" at cheaper prices of today. That hope continues with the museum's current collection, which contains many pieces from the 2008 International that will be featured in a June 8 installation previewing the 2013 International opening in October.

The big building housing the art and natural history museums, library and music hall at 4400 Forbes Ave. is owned by the private Carnegie Institute.

Andrew Carnegie made Carnegie Institute a separate institution within his city-run library with a deed of trust on March 2, 1896.

Buying and selling artworks was always up to the privately run Carnegie museum board, with much of the money for its first artworks coming from the billionaire himself, writes historian Robert J. Gangewere in his 2011 book "Palace of Culture: Andrew Carnegie's Museums and Library in Pittsburgh."

Though his business background, Carnegie was accustomed to creating subsidiary organizations such as the Institute.

"It was private, paid for by people like himself. He did not want that to be a burden on the taxpayer," Mr. Gangewere said.

That also led to tensions that continue today with the Carnegie library system, which has a more complicated relationship with city government and its coffers. While the Carnegie museums are private and thus shy away from seeking public money, the libraries are opposite.

The museum got just 2.7 percent of its 2011 funding from government sources, and 57 percent from grants and endowment income.

But the city, going back to its initial 1890s agreements with Carnegie himself, was in charge of financing the libraries. Even as Pittsburgh privatized cultural appendages such as the aviary and zoo, for decades library officials were forced to beg city and state officials for operating money.

Meanwhile the city left the library buildings it owned in dilapidated shape.

That began changing in 1993 with Allegheny County's new 1 percent Regional Asset District tax, which since 1995 has issued city libraries almost $318 million. RAD funds also backed a $55 million Carnegie Library capital fund, which it used to take over library maintenance from city government, in exchange for a 29-year lease signed in 2002. (A sale or a 30-year lease would have triggered deed transfer taxes the library could not pay.) The library was further buffeted when Gov. Ed Rendell cut state funding for it and other libraries in half in 2003.

City voters approved a 0.25-of-a-mill property tax in 2011 to further fund library operations. Its reliance on RAD, property taxes and even some table gaming revenue still makes it about 90 percent publicly funded, just as Andrew Carnegie wanted, but not through the control of Pittsburgh city government.

The physical interrelationship the steelmaker cemented between his library and museums in 1895 has long since eroded. While it says "Free to the People" on the main library archway, the Museum of Art began charging admission in 1974 after the opening of the Sarah Scaife Galleries, according to Mr. Gangewere's "Palace of Culture," requiring visitors to feed into admissions desks. Museum officials closed the last main connection between the two -- a library doorway near the Hall of Architecture -- in 2008.

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Block News Alliance consists of the Pittsburgh Post-Gazette and The Blade of Toledo, Ohio. Tim McNulty is a reporter for the Post-Gazette: tmcnulty@post-gazette.com or 412-263-1581. Tahree Lane is a reporter for The Blade: tlane@theblade.com or 419-724-6075.


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