The Land Report

2018.3

The Magazine of the American Landowner is an essential guide for investors, landowners, and those interested in buying or selling land. The award-winning quarterly is known for its annual survey of America's largest landowners, The Land Report 100.

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M I R R R AN CH G RO U P But the land ventures are examples of the risky investing tactics that, along with overly generous benefits, led the pension to the brink of insolvency. is week, the Texas Legislature agreed on a fix that will deeply cut ben- efits and require city taxpayers and first responders to pay millions more each year to fill the financial hole. e vote could save the pension. But the fund still must deal with a legacy of speculative investments — including the thousands of undeveloped acres in Idaho and Colorado that the fund's cur- rent leaders would rather not own. A DEVELOPMENT DREAM In the summer of 2005, two Dallas police officers and a firefighter flew to Idaho to scope out real estate. e market was booming all over the country, and few places seemed as hot as Boise. Californians, priced out of their own state, were buying properties sight unseen in the Boise suburbs. persuaded the pension fund to specu- late on ranchland north of Boise. e fund ultimately bought more than 17,000 acres. e plan was to turn 6,750 acres of foothills into a new community called Spring Valley. It would nearly double the size of the town of Eagle, a picturesque suburb of Boise. e pen- sion would partner with an Arizona development firm, M3 Builders, that had done deals with CDK and the pen- sion before. M3 would launch a massive development: perhaps 12,000 mostly upscale residences, a 500-room hotel, hundreds of thousands of square feet of office space, shops, restaurants, parks, equestrian trails and a vineyard. Next Dallas' public safety work- ers would finance it. ey'd spend $42 million on the land, and over six years, more than double their money, an early version of the plan said. is was no ordinary investment for a pension fund. Traditionally, pen- sions invested in risk-averse mixtures of stocks and bonds. e Dallas fund wasn't the only one betting on real estate, but it was doing so on a much larger scale than others. In essence, the city's police officers and firefighters were cashing out stocks and bonds, giv- ing the money to land speculators and hoping for a big payoff. In Idaho, many locals could only watch these outside investors and won- der. Jim Farrens, the engineer for Ada County at the time, says Spring Valley was among the biggest of about two dozen proposed communities. His department was working overtime to keep up. Farrens never thought the project was feasible. For one thing, he says, the area's roads couldn't support it. "I felt like I was standing next to an empty pool, and the police and fire- fighters' fund was up on the high board, and they're getting ready to dive off," he said. "All I could do was say, 'You know, somebody could get hurt.'" THE BUBBLE BURSTS Tettamant and the board relied on their advisers and managers, CDK and M3, to steer the Dallas fire Lt. Gerald Brown was the pension fund's chairman, police Sgt. Steve Shaw its vice chairman, and Sgt. Steve Umlor a trustee. ey spent much of that June traveling the country view- ing investment properties. e pension was coming off a couple of good years. For 2003, it had posted a return of 31 percent, ranking it best performer among similar funds. Its leaders looked smart, and they carried themselves that way. e pension's top staffer then, Rich- ard Tettamant, held his position for more than two decades. He couldn't understand, he would tell people, why other fund managers went for aver- age returns just because they seemed safe. "You have to be above average," he said in a 2012 interview. "And that's been our goal." He reported to a board made up of police officers, firefighters and City Council members. During that summer of 2005, CDK OPEN SPACE It took more than a decade for the pension fund's 2,038-acre Colorado investment to be liquidated. Ken Mirr of Mirr Ranch Group brokered the sale of the Sandstone Ranch to Douglas County for $18.75 million in January 2018. 88 L ANDREP ORT.COM e LandReport | FALL 20 18

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