A group of leading foundations have offered $330 million to keep art on display in the Detroit Institute of Arts while also helping city retirees who are at risk of having their pension benefits slashed.
It's not clear if the offer will be accepted and it would close only a small fraction of the huge debt that forced Detroit into bankruptcy last year.
But it would at least help inject some cash into the reorganization of the city and eliminate the risk that Detroit's treasured art collection could be sold off to private investors to pay its debts.
The offer was reached after discussions with a federal judge serving as a mediator in the city's bankruptcy case. Since the Detroit Institute of Arts is a unit of city government, some have suggested the art could be sold off to help compensate creditors hurt by the city's bankruptcy filing.
The new offer from the private foundations would provide a way to draw money from the art work without removing it from the museum.
The deal has yet to be approved by either Kevyn Orr, the emergency manager who is effectively running Detroit, or the bankruptcy court that is overseeing the city.
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An appraisal of the art in the museum by auction house Chistie's has valued the collection at between $452 million and $866 million. So it is unclear if the offer is sufficient to satisfy creditors.
Detroit has $18 billion in debt, and Orr has proposed slashing $11.5 billion of unsecured debt, including promised pension benefits and retiree health care coverage, by more than 80%.
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The foundations' offer is contingent on the money being used to help close the funding gap in the pension plans and limit the reduction in benefits.
The foundations include the Community Foundation for Southeast Michigan, the Ford Foundation, the Kresge Foundation and the John S. and James L. Knight Foundation.
