Facing a $19.8 million bond debt, the Delaware Art Museum’s Board of Trustees has voted to sell up to four works of art to put the museum on a firmer financial footing.
It is not clear which works will be sold, as museum officials only said that as many as four works will be sold sometime within the next six months, adding that the names of the artwork will be made public once the sale is finalized. No works of art acquired through gift or bequest will be sold.
“This decision was made with heavy hearts, but clear minds,” said Elva Ferrari-Graham, president of the board of trustees. “This decision today will help us achieve financial stability and allow us to channel all of our collective energy back into our tradition of being a cherished community resource.”
Over the past five years, the museum has worked to solve its financial troubles through a number of steps, primarily by reducing staff. Funding for exhibitions and related programs were cut as well.
The sale is expected to net $30 million, which is sufficient to pay the debt and rebuild the museum’s endowment.
The financial crisis that began in 2008 damaged more than homeowners: The impact of more restrictive banking regulations following the crisis started a series of events that caused the Delaware Art Museum to default on requirements related to bonds issued in 2003.
The $24.8 million in tax-exempt bonds funded a renovation and expansion of the musuem’s historic building on Kentmere Parkway. That work was completed in mid-2005.
The bonds were initially due to be paid in full by 2037. Because the bonds were guaranteed through a bank letter of credit which must be renewed every two years, the tighter credit standards following the economic downturn required accelerated payments on the debt. The downturn also hurt the museum’s endowment, which suffered a decline in the stock market.
Delaware Art Museum CEO Mike Miller said the board made the decision to sell some art after exhausting every other possible alternative.
“The trustees had two agonizing choices in front of them: to either sell works of art or to close our doors,” Miller said. “While today’s decision is certainly hard to bear, the closure of this 100-year-old museum would be, by comparison, unbearable.”
The debt burden has taken much of the museum’s focus, leaving little time for the search for a new executive director. Former Executive Director Danielle Rice left the museum in August 2013 to start the new museum leadership graduate degree program at Drexel University.
Once the art sale removes the financial burden, Miller hopes to renew the search for a new leader with a national search that should begin in the fall of 2014.