Chief Economist of the Federal Reserve of Chicago at the Detroit branch, Paul Traub, mentioned during our discussion about Detroit’s bankruptcy the prospect of the city liquidating the Detroit Institute of Art’s assets, which have been appraised at between $421.5 million to $805 million (Time). The proposal to ameliorate Detroit’s financial crisis by liquidating DIA remains a matter of contention. Detroit’s chapter 9 bankruptcy judge, Steven Rhodes, authorized in December (at the time of the bankruptcy declaration) the sale of DIA’s assets to help pay off the city’s debt. However, Rhodes questioned the effectiveness of such action. “When the expenses of an enterprise exceed its revenue, a one-time infusion of cash, whether from an asset sale or borrowing, only delays inevitable financial failure unless the enterprise reduces expenses or enhances income,” Rhodes said in December (LA Times).
As Juan mentioned in his post on the Detroit Three, DIA has approached Detroit’s automakers asking for $50 million to decrease pension cuts and help DIA keep its art. A city so plagued by misfortune and disrepair should work to maintain the few valuable and attractive assets it has left. I think liquidating DIA, which Time Magazine ranked as Detroit’s No. 1 tourist attraction, would be a long term economic mistake for Detroit.