A Online Deals-works-mediators-would-protect-art-pensions-Detroit-bankruptcy">deal to use foundation money to protect the Detroit Institute of Arts' collection and Detroit's pensioners from the consequences of the city's bankruptcy could be announced as early as today, according to sources familiar with the negotiations.
One source, who spoke on the condition of anonymity, said talks are at a delicate stage and there are "a number of moving parts," including what role the state would play in any deal.
But there's a 50/50 chance the " grand bargain " will be announced today, the source said, in part because of concerns about inaccurate speculation.
The foundations, which range from nationals such as Ford and Kellogg to local institutions such as Skillman and the Community Foundation for Southeast Michigan, were preparing Sunday to make a joint statement that reflects their enthusiasm at being involved in efforts to help the city get back on its feet.
Darren Walker, CEO of the Ford Foundation in New York, has reportedly taken a lead role in structuring the deal and bringing other foundations into it.
Gerald Rosen, chief judge of U.S. District Court in Detroit, is the mediator in the city's bankruptcy case and called the foundations together in the fall to discuss ways to help with the DIA and the pensions.
DIA officials declined comment Sunday, and pension officials could not be reached.
If a deal is brokered, it would be a breakthrough in addressing the two most contentious issues in the city's bankruptcy proceedings.
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Sources say the deal taking shape would have the foundations give between $300 million and $500 million to fill a portion of the funding shortfall in the city's two pension funds. Emergency manager Kevyn Orr has said that shortfall — mostly in the city's general retirement fund, not the one for police and firefighters — is as high as $3.5 billion.
The foundation money won't fill the gap entirely, but sources said it's intended to soften any blow retirees would be asked to take in the bankruptcy. If managed properly, it's also possible that the foundation money could be invested and eventually grow to pay an even larger share of the pension shortfall, which is projected to materialize over the next 30 years.
In exchange for the money given to pensioners, the museum would not be asked to sell any art or otherwise monetize its collection. Under the deal, the museum and its collection would eventually revert to state control, likely under an authority that would ensure that the DIA would never again face the possibility of having to sell its treasures to pay municipal or state debt.
There are several sticking points in the deal — a major one being what role the state would play.
Sources say the foundations have insisted that the state chip in on the effort, and that to date, no agreement — on the amount of state help, or the terms — has been reached. Some sources said the state's share could be as high as $100 million, paid over 10 or 20 years; other sources have said the amount being asked of state officials was lower.
It's possible any state contribution would have to be approved by the Legislature.
State Sen. Roger Kahn, R-Saginaw, who chairs the appropriations committee, said he hasn't been approached about money for the museum, but "that could come and I would consider that."
There also is concern, according to sources close to the negotiations, about the implication of a change in DIA ownership on the millages that were passed last year in Wayne, Oakland and Macomb counties to provide $23 million a year to the museum for the next decade. Negotiators plan to talk soon with county executives to be sure that the deal to save the museum's art doesn't wipe out the millage agreements. The foundations' help is contingent on the millage money staying in place.
Sources also say there are concerns about the future management of the pension funds. The police and fire pension fund is better managed than the general fund is, but there are questions about whether the foundations will give money without new management in place for both funds.
Rosen already has brokered a tentative agreement between Detroit and several banks over a 2005 credit swap deal. He has worked for weeks with the foundations and others to shape a deal to save the city's art museum and help retirees.