Detroit Institute of Arts saves City of Detroit $35 Million per Year
More cost savings for Detroit than Belle Isle lease
October 7, 2013 (Detroit)—There has been considerable attention to the recent announcement that the state has signed an agreement to take over the operation of Belle Isle, saving the city $4 to $6 million a year in operating costs and pledging $10 to $20 million in renovations to the island over the next 10 years.
This is great news in terms of city savings, but those savings pale in comparison to the millions of dollars that the Detroit Institute of Arts, Inc. has saved the city since the not-for-profit organization took over daily operations of the museum in 1997. Even more important in light of the challenges now facing the city, the savings and benefits that the DIA will provide over the next 10 years vastly exceed the Belle Isle savings that are now being celebrated.
The DIA's current operating budget is $35 million a year, with not a single dime coming from the city. Over the next 10 years, the DIA will save the city $350 million in operating expenses, not taking into account any inflationary increase in costs. That's $350 million in savings as a result of the DIA operating agreement versus up to $60 million in savings as a result of the Belle Isle arrangement.
The DIA also invests approximately $2 million annually in capital improvements to the city-owned museum building and grounds; again not a single dime comes from the city.
But Detroit taxpayers do support the museum, along with taxpayers in Macomb, Oakland and Wayne counties. The key component of the DIA's current financial model is the regional millage that was approved by voters in 2012. The passage of the millage is widely recognized as regional recognition of our interconnectedness and of the fact that we that we all succeed or fail together. In securing passage of the millage, the DIA made a historic contribution to building regional unity. The millage will provide at least $23 million over 10 years—$230 million to support a regional institution located in one of Detroit's most thriving neighborhoods, Midtown.
So why would anyone suggest a plan that could jeopardize the millage? The sale or encumbrance of even one piece of art to pay Detroit's debts would have a catastrophic effect on the museum, the city and region. Public officials in Wayne, Oakland and Macomb counties have made clear their view that any sale of art as a part of the bankruptcy could invalidate or lead to the repeal of the millage, demolishing nearly two-thirds of the DIA's operating budget and sending the museum into slow but certain closure.
Finally, while we are all dismayed at Detroit's current financial condition, it is important to remember that the DIA has not been a factor in creating the city government's current financial condition. Museum operations are completely independent of the city budget. No city funds are involved in the day-to-day operation of the museum. In fact, closing the museum would impose a new financial burden on the city estimated at $4 to $6 million annually, as the city would assume the costs of maintaining another closed building and securing the remaining collection.
The news that the state's lease arrangement for Belle Isle could save the city $4 to $6 million a year seems to be a remarkable deal for the Emergency Manager. That makes it even more remarkable that the DIA has saved, and will continue to save, the city $35 million a year in operating costs including $2 million in capital expenditures, while bringing in another $23 million annually to support an institution recognized as a national treasure in the heart of Detroit. If Belle Isle is a good deal, the DIA is hundreds of millions of dollars better.
How the DIA relieves Detroit of a $350 million financial obligation over the next 10 years
· Three-County Regional Millage (operating support)
$23 Million/year through 2023 $230,000,000
· Fund-Raising/Private Support for operations
$10 Million/year through 2023 $100,000,000
· Capital Improvements to DIA building
$2 Million/year through 2023 $ 20,000,000
TOTAL: $350,000,000
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The Detroit Institute of Arts (DIA), one of the premier art museums in the United States, is home to more than 60,000 works that comprise a multicultural survey of human creativity from ancient times through the 21st century. From the first Van Gogh painting to enter a U.S. museum (Self-Portrait, 1887), to Diego Rivera's world-renowned Detroit Industry murals (1932–33), the DIA's collection is known for its quality, range, and depth. The DIA's mission is to create opportunities for all visitors to find personal meaning in art.
Programs are made possible with support from residents of Wayne, Oakland and Macomb counties.
