Aetna Springs was only one of many illiquid and esoteric
investments that the pension system made. In addition to real
estate investments, DPFP made a series of commitments to
private equity and natural-resources funds, including energy
investments in Texas and elsewhere. The plan also invested in
farmland, agriculture, and timber around the world, in such
far-flung locales as Australia and South Africa. As of December
the fund had a staggering 44.8 percent of its assets invested
in a real assets portfolio comprising real estate (25.4
percent), natural resources (11.6 percent), and infrastructure
(7.8 percent), along with a 15.8 percent allocation to private
equity funds. Even for a pension plan without major liquidity
concerns, such an asset allocation is unusual.
Many of DPFPs investments were troubled. In the case
of Aetna Springs, just as with Museum Tower, there were
problems early on, when entitlement rights for a proposed golf
course were not obtained. The issues and setbacks continue to
this day. Separately, DPFP invested in a residential
development in Hawaii that proved to be a money-loser.
Then there were the losing bets that DPFP made through CDK
Realty Advisors. According to the complaint filed by DPFP
against CDK in recently settled litigation, CDK put DPFP into a
series of high-risk investments [that] have resulted in
write-downs and losses of more than $320 million. These
investments included land development deals in Iowa and
Colorado in which DPFP acted as both an equity investor and a
How did the pension plan come to be in this situation? Many
point the finger at Tettamant, who was appointed the
funds administrator in 1992, having previously worked for
the city. These critics accuse Tettamant of promoting an
investment strategy that included high-risk, illiquid assets
that put the fund in the role of real estate developer a
role for which it was not qualified.
Tettamant did not respond to requests for comment for this
story, but he provided lengthy comments to D Magazine
in response to a January article titled Why Richard
Tettamant Could Cost Dallas $1 Billion.
In the early 2000s the DPFPS Board voted to
invest in separate account real estate investments to improve
its returns, Tettamant said in his comments. It is
not the responsibility of the DPFP staff, including myself, to
recommend investment strategy or investment decisions, but
rather to assist the Board as directed by its Trustees. All
investments were vetted by the DPFPS Investment Advisory
Committee wholly consisting of Trustees and reviewed by outside
investment consultants. Prior to the purchase of almost every
investment, the Board reviews the financials and in almost
every case performs a site visit, including meeting and
interviewing the investment managers. The role of the
administrator, Tettamant insisted, was merely to provide
Board members who served during Tettamants time paint
a different picture. City council member Lee Kleinman, who was
a pension trustee from 2013 until his resignation as vice
chairman of the board in 2016, says it was almost impossible to
get information on investments out of DPFP staff, including
Tettamant, and that when information was provided, it sometimes
seemed to be inaccurate or incomplete.
Other council member trustees recall similar experiences.
It is very difficult when you are sitting on a board and
the professional staff are telling you everything is
fine, Kingston says. It is very difficult to
exercise your fiduciary duty as a board member if you are
confounded with a professional staff that is trying to deceive
Trustees say board members who raised questions could be
subject to harassment. Scott Griggs was Mayor Rawlingss
first appointment. I went on in 2011, he says.
I was the only board member at the time asking
questions. In particular, Griggs asked about the Museum
Tower project. As a result of his questioning, Griggs says, the
pension system hired a PR person and a private investigator in
an attempt to find evidence that could be used against him. He
says Tettamant and Gary Lawson, the pensions former
outside counsel, were among those who oversaw the effort.
Lawson, who no longer works for the pension fund, insisted in
an e-mail to II that there was never an investigation
of Griggs of any kind, saying, I have the
highest regard for Councilman Griggs but he is incorrect on
For trustees who decided to go along, the perks of a
position on the DPFP board could be enormous. For starters,
there was foreign travel: Trustees went on extensive and
expensive trips, all on the taxpayers dime. Under the
auspices of due-diligence trips, some trustees visited
Australia, China, Dubai, Hawaii, and elsewhere.
All three of the city council trustees who served on the
board while Tettamant was still active and who spoke to
II for this story said that within a month of their
appointment to the board, they were approached about going on a
On my first day I was offered an iPad and a trip to
Australia for me and my family, says Griggs. Kleinman
adds, Within a week or two, I was offered to take a trip
to South Africa via Amsterdam. Griggs and Kleinman
declined these offers. Kingston was offered a
due-diligence trip to look at forestry assets outside
London and Cape Town, South Africa. What the hell
forestry assets do we have outside of London? wonders
Kingston, who also turned down the trip. Did we buy St.
Almost all of the DPFP board has turned over in the past few
years, but Kleinman describes a deal-happy environment early in
his tenure, with trustees voting to invest in transactions he
deemed too complex for cops and firefighters to fully
understand. All they ever did is chase deals and look at
how they could travel, he says. They got suckered
into a bunch of stuff.
The party came to an end in 2014 with the ousting of
Tettamant after he had lost the confidence of the fire and
police board members. The new executive director, Kelly
Gottschalk, who joined in 2015, is widely regarded as being
good at her job. But the pension system is still struggling
with the aftermath of earlier bad decisions.
The parking lot behind the squat, four-story office block at
4100 Harry Hines Boulevard in Dallas home to the DPFP
began filling up with pickup trucks at about 1:00 p.m.
on Tuesday, February 14. Retired cops and firefighters hunkered
down in their vehicles, sheltering from the rain and waiting
for pension system officials to open the buildings doors.
A special meeting of the DPFP board of trustees had been called
for 1:30 p.m. to discuss, among other urgent items, the city
council member trustee lawsuit. ?
The restless cops and firefighters probably did not know it,
but 4100 Harry Hines Boulevard itself is a testament to their
pension plans folly. DPFP owns the building, which the
plan says it invested in at the recommendation of CDK; in turn,
CDK managed the property for DPFP. But according to the pension
plans lawsuit against the real estate firm, CDK did not
operate the property in a satisfactory and efficient
manner. Instead, the firm charged other tenants in the
building, including its own attorney, below-market rents. CDK
sold the top floor of the building to itself, in what the
pension system alleged was a clear instance of self-dealing.
CDK did not respond to requests for comment.
In 2016, the Federal Bureau of Investigation raided
CDKs offices as part of an inquiry into the pension
plans investments. (The FBI also visited the DPFPs
offices.) The investigation is ongoing. A federal grand jury
also is reported to be weighing evidence against the fund, and
Rawlings has called in the Texas Rangers to review its
As the cops and firefighters streamed into the boardroom for
the special meeting of the pension board on that February
afternoon, they seemed less concerned about where their money
had been invested although at a meeting the previous
week there had been anger over this than they were with
what was happening to their retirement benefits and DROP money.
As they waited for the meeting to start, they clustered in
groups. Almost to a man they were dressed in jeans and
sweatshirts; many wore baseball caps. They talked about
retirement savings (I just want my money) and
health care costs, and worried about what it is like to grow
old in a system that they feel does not have their backs.
This Valentines Day their anger was very clearly
focused on the city council board members. One cop who got up
to speak objected to the fact that the council members were
having their legal bills paid for by the city. Brad, a cop with
47 years of service, said the council members were being
offered unlimited funds to fight their case. He
told the council members in the room, I feel like you are
hiding behind a super-PAC.
The city, however, does not have unlimited funds. Speaking
before the Texas Pension Review Board in December, Rawlings
warned that Dallas will be forced to file for bankruptcy if it
doesnt get a solution to its problem soon. The city
council DPFP board members also are worried about the state of
the citys finances: A separate pending legal dispute
could add even more billions of dollars in back pay.
Its like jumping off a cliff and stabbing yourself
on the way down, says Deputy Mayor Pro Tem Wilson.