There’s been talk about two of Detroit’s options to pay off its retiree pensions, one difficult and one ugly. The ugly option: the city could auction off its only extensive public asset, the collection at the Detroit Institute of the Arts (DIA). The difficult option: the Grand Bargain, a deal mediated by federal judge Gerald Rosen, which calls on philanthropist foundations, private donors, DIA and the state of Michigan, to collectively raise $816 million total over the course of the next 20 years to pay off pensions. Raising this money would transfer ownership of the museum to private hands and protect it from future depletion for fast cash.
This Wednesday, in a demonstration that there is still an ample supply of good in the world, donors have shown their commitment to the difficult option instead of resigning to the easier, ugly one.
DIA announced on Wednesday morning a $26.8 million donation, a milestone in their $100 million goal, to pay off a portion of the city’s pension debt. This brings DIA to almost 80 percent of its personal financial commitment to the Grand Bargain, and that’s enough money to really get the ball rolling.
The donors of this specific $26 million include Roger S. Penske and Penske Corp., Quicken Loans and the Rock Ventures Family of Companies, DTE Energy, Blue Cross Blue Shield of Michigan, Meijer, Comerica Bank, JPMorgan Chase Foundation, Consumers Energy and Delta Air Lines Foundation.
It’s not only promising that the DIA is reaching its twenty year goal so quickly, it’s absolutely necessary for the survival of the Grand Bargain. First, this deal isn’t set in stone yet. Bankruptcy judge Stephen Rhodes is still voting at next month’s trial, and this donation, along with recent polls showing pensioners to be in favor of the Grand Bargain, does make it more likely that the Rhodes will vote in favor of the Grand Bargain.
Plus, the $100 million needed is only a small subset of the money DIA needs to raise in order to stay in business. The DIA must raise another $200 million or more in endowment funds during the next eight years in order to fund annual operations once its tri-county property tax expires in 2022. The tax provides about $23 million in annual income, so the DIA needs a total endowment of about $400 million to cover the gap in the budget once this revenue disappears.
Still, this donation shows a serious commitment of donors to the Grand Bargain. If all goes well, retired workers will get their pensions and we won’t see Detroit’s cultural heritage diced up and sold to the highest bidder.