The Nasher Sculpture Center has been feuding with Museum Tower, its shiny new neighbor in the Arts District, over light, heat and reflectivity for going on six months now. At the end of July, we published a story showing that the tower isn't the only risky real estate project the pension fund has chosen to invest in. That's part of a broader investment philosophy in which higher-risk alternative investments make up half their portfolio. It is, as financial analyst Ed Easterling told us, "a very risky strategy for a taxpayer-backed entity."
In the fund's newsletter this month, George Tomasovic, chairman of DPFP's trustee board, responds to some of those criticisms. Sort of. In a lengthy editorial, he suggests that the onus is on the Nasher to change the orientation of its skylights, suggests that the media is attacking the pension fund "as a part of the general attack on public employee defined benefit plans like ours," and points out that all the other big cities have shiny glass buildings.
"Over the past couple of months I've traveled to three cities: New York, Chicago and Houston," the chairman writes in the letter, which was pointed out on the Morning News' arts blog last week. "What do they all have in common? Tall glass buildings, which reflect the sun! Believe it or not, they are proud of these buildings because they bring life and vibrancy to the downtown areas. Not only that, they bring tax dollars and jobs! That was our goal when we decided to build Museum Tower."
Tomasovic insists that the pension fund "carefully studied the issue" before deciding to invest in the project, and asks why the press didn't criticize the design before the tower was built. He never mentions that the reflectivity issues only arose after the pension fund bought the entire project and doubled its height.
"We built a beautiful glass building in a city full of glass buildings," Tomasovic adds. "A simple solution would be to shade or make a modest, and from their visitors experience, an almost invisible change to the design of the roof skylights of the Nasher. For some reason, that seems to be out of the question. It has been done in other cities with [Renzo] Piano designed roofs, because of similar reflectivity issues."
This isn't the first time the pension fund leadership has suggested, directly or indirectly, that the responsibility for fixing the problem lies with the Nasher. But it is interesting: sources with knowledge of the fund's operations told us recently that DPFP would probably be trying to resolve this dispute very soon, because hardly any of the condos in Museum Tower have actually sold. The proposed solutions we've heard about all involved some changes to Museum Tower's property. But Tomasovic, obviously, is suggesting something very different, and in doing so, indicates that a resolution may not be very close at all.
Tomasovic also attacks the open records requests made by local media outlets. The Observer, for example, asked for information on all the alternative investments the fund is currently involved with, as well as any gains or losses to date. Despite repeated requests, the pension fund didn't provide that information. Instead, we were eventually presented with a list of seven "successful investments" and some general information on how much money DPFP keeps with each investment advisor.
The chairman suggests that, in general, open records requests are "possibly ... part of a general attack on public employee defined benefit plans like ours," and disparagingly notes that the media is "requesting tens of thousands of documents."
Yep: This is an entity paid for entirely with taxpayer money suggesting that it's hostile or presumptuous for us to ask where our money is being invested.
In reporting the cover story, I heard several times that any criticism of the pension fund is probably an attack on public employee unions and defined benefit plans. A little explanation: a defined benefit plan makes specific promises to its pensioners about the amount they'll receive when they retire. A lot of conservative think tanks and economics professors will suggest that pension systems should move to "defined contribution" models, in which future pensioners pay in a specific amount, but a specific pay-out isn't guaranteed.
That's the free-market model of retirement benefits, and it's not actually what any of the local media coverage has been about. Our cover certainly wasn't suggesting that DB plans are a bad idea. But it's an excellent boogeyman to keep Dallas police and firefighters from asking where exactly their paychecks are being invested.
A few months ago, I spoke to Ron Pinkston, president of the Dallas Police Association. I asked if DPA members were following the Museum Tower controversy or had any concerns about the direction of the pension fund.
"They're not talking about what the pension board's doing," Pinkston replied. "They're talking about what's going around in the country where public pensions are under attack...People are coming after them. We've always had low pay and low benefits. And we've had an average pension that we look forward to. Now they're looking to take that away too."
Referring to a cover story in D Magazine a few months ago about Museum Tower, he said, "That was a political attack. That's what it appeared to me."
"Maybe they're a little riskier than some," Pinkston said. "But you can't be rated the top pension in the country if you're not performing above everybody."
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In fact, DPFP's unreleased annual report shows a dismal performance by the pension fund last year . An April New York Times analysis showed the fund's five-year rate of return isn't anywhere near the top in the country.
In the last 10 years, many other pension funds have out-performed DPFP, according to Cliffwater LLC, a consultant company that studied 69 funds across the country. The average rate of return, according to Cliffwater: 5.7 percent, compared to DPFP's 4.3 percent. That's nowhere near the 8.5 percent target they're shooting for each year.
Tomasovic promises in his editorial that the "media storm is not over" and the DPFP will continue to "attempt to keep the record straight."