by Mike Sharkey
Staff Writer
The Duval Delegation voted unanimously Thursday on a Jacksonville Bill that will allow the Police and Fire Pension Fund to increase the amount it can invest in real estate from 10 percent to 20 percent.
“Basically, the Pension Fund is looking for more flexibility in the allotment of their investments,” said State Rep. Mike Weinstein, who sponsored the legislation.
The legislation will amend Article 22 of the Jacksonville Charter. The bill now needs the approval of the Legislature and Gov. Charlie Crist’s signature.
Pension Fund Administrator John Keane said City Council and Mayor John Peyton support the legislation. He also said the national and worldwide economy combined with the real estate investment limit has cost the Pension Fund hundreds of millions of dollars over the years. He explained there are two types of regulations that govern pensions in the state: one that covers general employees while the other covers the 400 or so police and fire pension funds.
“We have a much narrower option,” said Keane of his Fund’s investment diversity. “We have a much narrower playing field and less options.”
Keane said a study indicated the Fund has missed out on $200 million worth of returns on real estate investments in recent years due to the diversity limitations. Real estate investments, he said, generate a higher rate of return than fixed income investments. The Fund currently owns three buildings Downtown and Keane said he’s looking to acquire other commercial properties for renovations. Those projects, he said, will also employ local craftsmen, architectural firms, construction management firms and local building suppliers.
“We don’t have it and as a consequence, the Police and Fire Pension Fund, and other pension funds, are underfunded,” he said, explaining his Fund is currently underfunded by about $500 million. “We don’t owe $500 million today, tomorrow or in the next 10 years. But, we owe it over the next 50 years. We do not have a liquidity crisis at this time.”
Keane also said history shows that when the market does recover after a steady decline or crash, it tends to recover at a rate of about 30 percent the first year.
“That will put us well on our way to recovery,” said Keane. “There is no danger whatsoever in defaulting on payments to our members who have served the community.”
In a move that seemed to catch many in the audience by surprise, State Rep. Charles McBurney withdrew his J-Bill, one that would have allowed the police officers employed by the Jacksonville Aviation Authority to become employees of the Jacksonville Sheriff’s Office. The bill would have also given Council much more control over the actions of the JAA, its executive director John Clark and its board of directors. By Delegation rules, as sponsor of the bill, McBurney isn’t allowed to support or disapprove of the legislation. Several speakers were on the agenda poised to speak on the matter including Council members Glorious Johnson, Kevin Hyde and Don Redman as well as Fraternal Order of Police President Nelson Cuba, Aviation Chair Jim McCollum and Aviation police officer Donald Green.
State Sen. Jim King said there are several problems with the legislation.
“The longer we go on with it, the more problems we will have,” he said.
King suggested the Council — which did not vote in favor of the bill — take a closer look at the legislation before sending it back to the Delegation for further consideration and possible approval.
“It’s a local rule situation and it needs to be embraced or endorsed by the people who will feel the pangs, and that is City Council,” said King.
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