Dallas Pension Data

Dallas Cops’ Pension Fund Nears Insolvency In Wake Of Shady Real Estate Deals, FBI Raid

The Dallas Police & Fire Pension (DPFP), which covers nearly 10,000 police and firefighters, is on the verge of collapse as its board and the City of Dallas struggle to pitch benefit cuts to save the plan from complete failure.  According the the National Real Estate Investor, DPFP was once applauded for it’s “diverse investment portfolio” but turns out it may have all been a fraud as the pension’s former real estate investment manager, CDK Realy Advisors, was raided by the FBI in April 2016 and the fund was subsequently forced to mark down their entire real estate book by 32%Guess it’s pretty easy to generate good returns if you manage a book of illiquid assets that can be marked at your “discretion”.

To provide a little background, per the Dallas Morning News, Richard Tettamant served as the DPFP’s administrator for a couple of decades right up until he was forced out in June 2014.  Starting in 2005, Tettamant oversaw a plan to “diversify” the pension into “hard assets” and away from the “risky” stock market…because there’s no risk if you don’t have to mark your book every day.  By the time the “diversification” was complete, Tettamant had invested half of the DPFP’s assets in, effectively, the housing bubble.  Investments included a $200mm luxury apartment building in Dallas, luxury Hawaiian homes, a tract of undeveloped land in the Arizona desert, Uruguayan timber, the American Idol production company and a resort in Napa. 

Despite huge exposure to bubbly 2005/2006 vintage real estate investments, DPFP assets “performed” remarkably well throughout the “great recession.”  But as it turns out, Tettamant’s “performance” was only as good as the illiquidity of his investments.  We guess returns are easier to come by when you invest your whole book in illiquid, private assets and have “discretion” over how they’re valued.

Not unlike other public plans so anxious to justify 8% valuation interest rates that they invest pension money with anyone willing to tell them that’s what they are getting.

Though looking over their actuarial reports the Dallas Employees’ Retirement Fund is not much better.

DFR

DDR

DAP

12 responses to this post.

  1. Posted by anon on August 21, 2016 at 11:49 pm

    The 8-10% interest on the DROP accounts including allowing them to leave the lump sums in the fund after actual retirement really is insane.

    Reply

  2. lol. that’s what happens when you promise a dollar to more than one person.

    Reply

  3. Posted by S Moderation Douglas on August 22, 2016 at 3:06 pm

    On a somewhat related subject, the mayor of Indianapolis wants to eliminate pensions for city employees and replace them with a defined contribution plan.

    Three guesses who he wants to exempt…

    http://www.ibj.com/articles/60024-hogsett-seeks-to-eliminate-city-pensions

    Reply

    • Posted by Anonymous on August 23, 2016 at 9:13 pm

      Alas, you can eliminate early retirement perks for cops if you include them in the reforms. Funny though, take away a pension and yu may have cops quitting and not even working until some 30 yr mark. That’s not smart plan g considering the costs of training police. The idea is to keep the good ones, and pay them well and make it easier to fire the ones who deserve it. That will lead to better policing.

      Reply

      • Funny though, take away a pension and yu may have cops quitting and not even working until some 30 yr mark.
        Well, tell me, how will cops, a GED job, pay for their living and retirement expenses if they stop working, before 30 years or even at 30 years? Do you think they will go to work at Goldman Sachs and make millions? Or start up a “tech company” and make billions??? Cop is a semi skilled job that many people can do, and eventually the hammer will come down on the over compensation that has taken place the last 25 years. Back in the 70’s and 80’s cop and ff were not jobs that had compensation in the top 2%-3%.

        Reply

  4. Posted by MJ on August 25, 2016 at 6:01 pm

    Somehow, I don’t think we will ever have a shortage of cops……..

    Reply

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