Detroit Museum Director Works in Bankruptcy Crossfire

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DETROIT - As one of the few major museums owned by a U.S. municipality, the Detroit Institute of Arts has landed in the crossfire of the country’s largest municipal bankruptcy.

“It’s a quirk of history that we’re owned by the city of Detroit,” Graham Beal, the director of the DIA, said Thursday in an interview with The Bond Buyer. “There’s no legal precedent for what’s happening here, and politics are involved, so the level of uncertainty is great.”

Beal spends a lot of time these days giving interviews and meeting with attorneys. The plight of the DIA, with a collection considered among the top in the country, captured international attention when state-appointed Detroit emergency manager Kevyn Orr announced in May that the collection may be used to help pay off the city’s $18 billion of debt.

To investors who hold Detroit bonds and are pushing for a sale of the art to boost their returns beyond Orr’s proposed dimes on the dollar, Beal said the DIA’s mission is to serve the public -- not investors -- and that their soured investments represent the risks they took.

“It simply reflects self-interest and reflects a bad investment,” he said. “Detroit has been troubled for decades. I’ve lived here for 14 years and I would not make that kind of investment.”

Since his original controversial announcement, Orr has said several times that he does not plan to sell the museum’s art, but needs to assess it as part of the city’s restructuring plan.

Beal said he has never met with Orr, despite requesting several meetings. “We learn about things when we read about them in the newspaper,” he said.

“We’ve tried to get an appointment, and we did get one once -- it was on the books for a half an hour before it was cancelled.”

Museum officials have met twice with Ken Buckfire of Miller Buckfire, the city’s investment banker and Orr’s right-hand man in the restructuring of the city’s debt and review of its assets.

Beal met with Buckfire in May, months before Detroit’s July 18 bankruptcy filing, and the museum’s chief operating officer and other officials met with the banker again a few weeks ago.

“They said, ‘Can’t we think of some kind of way to leverage the collection without selling it to come up with $20 million to $30 million a year for 20 years?’” Beal recalled. “What do you say to tough professional people?” he said. “I don’t want to insult anybody, but it’s not realistic.”

The DIA’s annual budget has been roughly $30 million since Beal first arrived, 14 years ago, he said. It does not receive any subsidies from the city. 

“The discrepancy between what museums get and the sums Mr. Orr’s colleagues seem to have in mind is great,” said Beal.

Last August, the museum won a major victory when voters in the three-county region approved a property tax increase to fund operations. The new revenue contributes about $23 million to the $32 million annual budget.

If the city opts to sell or privatize the art -- a move that it cannot be forced to do under a municipal bankruptcy -- that new stream of tax revenue source would likely be imperiled. The Oakland County Board of Commissioners last month passed a resolution warning the county would terminate the tax if there was any attempt to use the museum’s collection or budget to pay off Detroit’s debt.

The DIA also worked with state legislators to craft a bill, modeled on the American Alliance of Museums’ code of ethics, to prohibit the use of art as collateral. The Senate passed the bill over the summer, but it remains stalled in the House.

Michigan Attorney General Bill Schuette has issued an opinion that, under the terms of the public trust that governs the museum, its art cannot be used as collateral and any money from a sale can only be used to buy new art.

“The public trust is not just legal, it’s ethical,” said Beal. “This happens to be one of this country’s greatest art museums, and a reflection of when Detroit was powerful and wealthy.”

The collection include Diego Rivera’s famous “Detroit Works” murals, a Van Gogh self-portrait that, in 1922, marked the first purchase of a Van Gogh by a public museum, one of the original casts of Rodin’s the Thinker, as well as a comprehensive European collection and several galleries of contemporary African-American art.

Orr last month hired auction house Christie’s to assess the DIA’s collection to pin down a dollar figure. Representatives from the auction house, who come to the museum every Monday, are actually assessing a fraction of the collection. The review, part of the city’s review of all its assets, is expected to be completed by the end of October.

Of the approximately 66,000-piece collection, Christie’s is reviewing only the 3,300 that carry the credit line “purchased by the City of Detroit.”

Beal is now in the middle of his fifth contract as director, which expires in 2015.

Under his tenure, the DIA has risen to the forefront of an emerging museum philosophy of engaging regular citizens rather than art scholars and connoisseurs. The six-year effort has worked, with visits up and the new tax increase safely in place.

“I came here for very precise professional and personal reasons and I’ve fulfilled those,” he said.

Right now, the bankruptcy case “completely dominates my work week,” he said. “We’ll see what it looks like in two years. It doesn’t feel like a great job right now.”

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