Mixing Politics and Pensions
We have come to a point of crisis in the matter of the sunburned sculpture garden and the pension fund. The clear appearance is that the mayor is injecting politics into the management of the Dallas Police and Fire Pension Fund. It's not exactly how the mayor of Detroit and his confederates wound up in the pen, but it's too close for comfort.
This ought to be simple. Politics. Pension fund. Never the twain should meet.
The mayor and some City Council members say the police and firefighters pension system needs to be audited. The city's firemen and police officers smell another agenda. They think the outside audit is a jawbone to bash the pension fund and help the sculpture garden.
(Note to out-of-towners who may have started reading this article by mistake. Forget it, Jake. It's Chinatown.)
People who live in Dallas and watch TV know by now what this is all about. The Nasher Sculpture Center, which opened in the arts district in 2003, was a gift to the city by a prominent Dallas family who had amassed one of the world's great collections of contemporary sculpture. Museum Tower, which opened across the street from the Nasher in 2012, is a glass-skinned 42-story condo building owned by the Dallas Police and Fire Pension Fund.
The Nasher argues that Museum Tower reflects way too much sunlight on it, burning up outdoor gardens and ruining natural lighting inside. But the Museum Tower and its glass skin fully comply with all Dallas ordinances and strictures. There is no rule the city can enforce to make Museum Tower do what the Nasher wants it to do.
In fact Museum Tower has offered to pay for a technical adjustment to the Nasher's louvered roof, a fix that would solve the indoor sunlight problem, according to Museum Tower. The Nasher has refused the offer, arguing instead that Museum Tower came along and caused the damn problem so Museum Tower should fix its own damn self.
There is a social and political subtext here. The people behind the Nasher include many of the city's most prominent and wealthy citizens, including people who have business ties to the mayor. Rusty Rose, for example, a strong friend and financial backer of the Nasher, was in the payday loan business with Rawlings until both cashed out in 2007. The list goes on.
The pension fund, on the other hand, is a grittier, more blue-collar presence in local politics. It has been active in funding several local high-profile real estate ventures. Its subscribers, some seven different police officer and firefighter associations, contribute money to political campaigns and play the local game, though at a more modest level than backers of the Nasher.
The first news organization in Dallas to raise serious questions about the financial underpinnings of the pension fund was the Dallas Observer, in a story by Anna Merlan published July 26, 2012. In it, Merlan revealed that the fund was investing heavily in luxury real estate including Museum Tower, for which the fund borrowed $160 million.
Fund officers told Merlan anybody who didn't like what they were doing would have to argue with their success. They said their record was consistently good compared with other similar funds. Merlan was able to raise substantive questions about the fund's operations without producing a smoking gun indictment. Whatever the story accomplished, it was utterly ignored by city officials and by The Dallas Morning News until the sunburned sculpture garden came along.
Now the mayor and the News are fluting their flutes and drumming their drums in a cry for an external audit of the fund, as if they know for sure that the fund is badly run. But just as we had to do with the sunburn issue, we need to pull back from this picture and acknowledge a certain factual structure where the fund's performance is concerned. It audits itself every year, pays for an external audit every three years, and all of those audits have concluded that the fund is well run.
So this is a bit ticklish, but I have to say it. It's wonderfully flattering that the city's only daily newspaper and the mayor have been so suddenly and powerfully converted to our cause here at the Observer, if indeed that is what's going on. They are all correct that the pension fund is ultimately a public obligation, and the public has every right to examine it and question its operation. The City Council has a right to demand certain amounts of disclosure.
But if the real agenda for going after the pension fund is to do for the Nasher politically what the Nasher cannot do for itself legally, then that is an intrusion of politics into the management of the fund. Last week I wrote a blog item drawing parallels between that possibility and what happened in Detroit, where local politicians got their hands on a pension fund and bled it for $84 million.
A reach? Not by much. Former Dallas City Council member Don Hill, now serving a very long stretch in the pen, was infamous for putting pressure on the pension fund to support the adventures of his friends — efforts in which we hope he was unsuccessful. But you see how it works in the world of good-for-the-goose. If the mayor, who is one vote on the council, can jawbone the pension fund to achieve his own political aims, then why can't another council member do the same?
Last week I met with representatives of the Dallas Police Association and the Dallas Hispanic Firefighters Association, who told me a disturbing story. Ron Pinkston, president of the DPA, and Rick Salinas and Sal Morales, officers of the DHFA, all said they were told last summer by then City Manager Mary Suhm that negotiations for a three-year pay agreement were suspended because the mayor was mad at the pension fund over Museum Tower.
I was not able to reach Suhm. Sam Merten, a spokesman for the mayor, said the mayor had never expressed that there was any linkage between pay talks and Museum Tower.
But the three association officers told me in some detail of a meeting last July in which the mayor came to their offices to explain why contract talks were stalled. They told me he went into some depth about his desire for an audit of the pension fund. One of them, Salinas, said he remembered the mayor bringing up Museum Tower. The other two were less certain on that particular issue. But all three were emphatic that the reason for the meeting was Suhm's explanation that pay and benefits talks were off the table until the mayor got satisfaction on Museum Tower.
Merten told me the mayor discussed the pension fund only because police and fire association members at the meeting asked him about it. Pinkston, Morales and Salinas told me it was the mayor who dove straight into the pension issue when they asked him why their contract talks were derailed.
Reasonable adults can differ in matters of memory. Who said what, why something was discussed, which point followed what question — without a voice recording, those issues are always going to be muddled with the passage of six months' time. But one very important point here is plain as day and clear as glass: The Museum Tower question, which is a political issue, has gotten itself entwined with strictly fiduciary questions about the pension. It's a terrible precedent. And frankly the whole thing expresses a certain dark culture at City Hall that we have seen way too often.
This is not unrelated to my guy at the car wash on MLK, the one who breaks no laws and obeys all ordinances but nevertheless is the victim of a 10-year campaign of harassment by city officials who want his land. There are strong parallels with the ongoing federal investigation of Dallas County Commissioner John Wiley Price, suspected of carrying out a campaign of sabotage against an industrial real estate developer who dared compete against Price's political patrons. The pattern is consistent; it's the use of political and social leverage to achieve a goal for which there is no legal basis.
But let's say that's not what is going on here. Let's even stipulate that the mayor and The Dallas Morning News just happened to be reading through old copies of the Observer and came across Merlan's story at about the same time the sunburned sculpture garden story came along, entirely by sheer coincidence.
The fact is that it looks bad. It looks like the big hue and cry for an audit of the pension fund is a cover story for an attempt to jack up the pension fund over Museum Tower. So why not do this instead? With abundant caution and a stern eye for the proprieties, why doesn't the mayor agree to back out of the Museum Tower issue entirely until the fiduciary questions about the pension fund are settled? In fact, why doesn't The Dallas Morning News editorial page stop lumping the two questions together in the same finger-wagging editorials?
If this push to audit the pension fund is not a political effort to make the fund bow to the wishes of the Nasher, then at least for now why shouldn't City Hall get all the way out of the Nasher question and leave it to the parties to settle privately? If the mayor isn't willing to do that much, then I think we have our answer.
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