A group of local and national foundations have committed more than $330 million to help Detroit resolve two daunting challenges in the city’s bankruptcy case: a solution to underfunded pensions and the preservation of the Detroit Institute of Arts’ collection.
The presidents of the Community Foundation for Southeast Michigan, Kresge Foundation, the New York City-based Ford Foundation and the Miami-based John S. and James L. Knight Foundation are heading a leadership committee coordinating the effort, according to a statement issued on behalf of mediators in the Detroit bankruptcy case.
While details of the offer haven’t been revealed, a court statement said DIA supporters are offering more than $330 million in assistance.
The foundation contributions and $33,000 donated so far to a fund at the Community Foundation will go directly to the pensioners and not fund a permanent endowment, foundation President Mariam Noland said.
Chief Judge Gerald Rosen of the U.S. District Court for the Eastern District of Michigan is mediator in the case, with assistance from attorney Eugene Driker and others.
The foundation support has leveraged additional commitments including a previously reported $5 million gift from A. Paul Schaap, a former chemistry professor whose work led to the founding of Southfield-based Lumigen, and 130 individual contributions to a subsequent fund set up at the Community Foundation. That’s according to the statement made on behalf of mediators by Rod Hansen, media information officer for the U.S. District Court.
So far, contributions to the Community Foundation fund have come not only from around the state but also from Maine, Oregon, Illinois, Florida, Maryland and Scotland, Noland said. The amount raised is in addition to Schaap’s gift.
The mediators said they continue their work to facilitate agreements among as many of Detroit’s creditor constituencies as possible and are “deeply grateful for the incredibly generous and constructive part the foundations have agreed to play in this larger process.”
Other foundations playing a role in the effort so far include the William Davidson Foundation, Fred A. and Barbara M. Erb Family Foundation, Hudson-Webber Foundation, McGregor Fund and the Flint-based Charles Stewart Mott Foundation.
In a statement, the foundations said they share a strong commitment to the revitalization of Detroit and Southeast Michigan.
“Many of us have worked for years to help rebuild the city and ensure its prosperous and sustainable future,” they said. That led them to readily agree when Rosen and his team approached them in the fall about playing a role in helping the city emerge from bankruptcy.
“The proposal we’ve been working on has one overarching goal: to enable Detroit and its citizens to focus on the task of renewing this great American city,” the foundations said.
“Helping to protect the hard-earned pensions of city workers while also preserving the DIA’s collection for all the people of Southeastern Michigan are worthy components of a balanced overall settlement that will help ignite Detroit’s renewal.”
The foundations said their participation in the plan would not be the totality of their investment in Detroit now or in the years to come, and it will not affect existing grant commitments.
The foundations said they are thinking carefully about how their participation in the plan can complement their ongoing, individual efforts in the city.
“As foundations, we recognize the limitations of the role we can play,” they said. “But helping the leaders of this community put forward workable solutions to vexing issues is something to which we can contribute.”
Rosen approached the foundations last fall on the plan to build a reported $500 million fund that would help satisfy the city’s pension obligations while preventing the sales of the DIA’s city-owned artwork.
That plan could include spinning the city-owned museum and its assets off to the nonprofit that has long operated it, sources have said. That would protect the museum’s art from a sale to appease Detroit’s creditors.
In December, Christie’s Appraisals Inc. estimated the fair market value of the city-owned art at the DIA at $454 million to $867 million. Christie’s also presented other ideas for “monetizing” the art. Among them: Using the art as collateral for a loan, leasing some art on a long-term basis and creating a masterpiece trust.
Source: Crain’s Detroit Buisness