Columnist and radio host Derek Hunter has a great piece on Townhall today that summarizes the problems with the recently announced $330 million deal to save the art. He writes:
This deal actually is a symbol of what's wrong with Detroit. Liberal elites prioritize the art collection, not safety, not balanced budgets, not services to the city. Unions prioritize their members first, not overall city success. Democratic politicians prioritize short-term deals to help their constituencies rather that long-term financial stability. Recognize that song? It’s the same old crony tune that got the city here in the first place.
Repeating old patterns of short-sighted deals, putting emotion (the DIA love is real, but irrelevant given the bankruptcy and how few people visit it) ahead of reason and protecting small constituencies at the expense of everyone else won't get the city out of this mess.
And that's why this DIA deal is wrong. It's not part of a long-term revitalization plan. I'm not even sure it's really has anything to do with bankruptcy.
Let me be specific.
First, the $330 million put up by foundations is a ridiculously low number. Even Christie's valuation was $866 million and that was considered very low because they only appraised a small percentage of the art. An estimate by the Detroit Free Press pegged the value at more than $2.5 billion. It seems the DIA collection is being deliberately undervalued to "protect" it. Admirable, I suppose, but that doesn’t change the city’s economic reality so it’s irrelevant.
Second, this deal does NOT really aid bankruptcy. Bankruptcy is about debtors and creditors. This does not involve creditors so it does nothing to stabilize Detroit's finances. Without a strong credit rating and investor confidence, Detroit will have to borrow at higher rates, if it can (eventually) raise new capital at all. And if the city can't raise new capital, how will it repair its long neglected infrastructure and aid economic development?
Helping pensioners is noble, but many live in Florida or Arizona and will not contribute to Detroit's revitalization. That may sound cold, but it’s the reality no one wants to face. If the city’s actions don’t prioritize its own financial stability this will all have been for nothing. And pensioners can be helped through a broader bankruptcy deal.
Lastly, I question the bankruptcy judge's priorities. Detroit has an $18 billion problem and Judge Steven Rhodes has spent an enormous amount of time and effort to engineer a deal between foundations, the DIA and pensioners. It seems to me Judge Rhodes should be focusing on a deal between the city and its creditors. A deal that should include maximizing the city's assets.