Lincoln Yards Opposition at CTPF Pension Fund Meeting June 15, 2023
The opposition to the Chicago Teachers Pension Fund CTPF investing in Sterling Bay’s Lincoln Yards TIF megadevelopment continues to grow.
“I ask you to vote no for the Sterling Bay investment,” Patricia Kubistal told the CTPF Board of Trustees at its June 15, 2023 Board Meeting during public participation. “This is not an investment, this is merely a loan and the history of our organization is no one pays back our loans. Our funding has gone down and I think it is your fiduciary responsibility to reject this proposal. All the local business media have pointed out (that) this company is having serious financial difficulties so why you would consider investing with this company goes beyond my reasonable ability. Please vote no on the Sterling Bay proposal.”
Kubistal is a former principal and the former president of Auxiliary 16, a group of retired Chicago Public School CPS administrators. She was the president of the Retired Teachers Association of Chicago or RTAC about six years ago. She is known to speak out at board meetings about important issues for retired members such as health insurance and opposed the pension board’s decision to move its offices because of cost.
Her speech to vote against the Sterling investment was followed up by Arthur Fumarolo, another retired teacher and former principal and member of Auxiliary 16 who is well informed about pension issues.
“Everthing (Pat) Kubistal said I wanted to say,” he said via zoom. “I know there are others who agree with her. Please do not get involved in this investment.”
CTPF Director Carlton Lenoir addressed the Board after the public participation to say they have only made an initial step to explore the opportunity to invest in the probject. Many of its original investors out pulling out due to a poor commercial real estate market and the politics swirling around the controversial TIF funded development.
Lenoir said the Fund relies on its experts to make any investments and if any recommendation is made it will come before the Board of Trustees to vote on. One Trustee asked if Sterling Bay was seeking a $50 million investment, but a staff member said no amount has been determined.
CORE and Members First Trustees voted to explore the opportunity to invest in the Lincoln Yards project at a May 23, 2023 investment committe meeting. However, CTPF VP Jacqueline Price Ward questioned Sterling Bay’s massive infrasture needs which necesitated getting Tax Incredment Financing money from taxpayers for a private investment and retired Teacher Trustee Maria J. Rodriguez asked why Sterling Bay was able to circumvent the usual time it takes to present such an investment opporunity to the Board.
The Chicago Teachers Union CTU protested against the Lincoln Yards TIF in which the city gave Sterling Bay $1 billion in taxpayer money to a private developer at a time when the city said it did not have money to put a nurse and social worker in every public school during its 2019 contract fight. The union organized a massive protest in which teachers and activists were arrested.
I questioned the Sterling Bay investment as a teacher delegate at our last House of Delegates Meeting in June. Leadership suggested writing up a resolution to oppose the Sterling Bay invesment and delegates would then vote on the resolution.
The Board Trustees also discussed the Watch List in which certain money managers are placed on a warning list due to poor investment results or staff turnover. Investment Chair and Teacher Trustee Phil Weiss said Dimensional Fund Advisors DFA was removed from the list. In response to Trustee Rodriguez’s question if the Pension Board was working on reducing the fees of money managers, they stated William Blair reduced its fee by $85,000.
During public participation a retired teacher asked for a medical rebate after she had to undergo a costly heart operation during Covid and pension staff said they received her letter and it is under review.
Executive Director Lenoir said the Fund has collected all its contributions and they expect to received $250 million from CPS through the tax levy. They currently have $20 million cash on hand so they do not have to liquidate assets and their total is close to $11.9 billion as the markets improve.
CTPF staff said the market today is showing better returns thanks to the top five tech companies (Amazon, Google, Apple, Facebook, Microsoft) after it fell 19 percent in the fourth quarter of 2022. They said it is important to be patient and not make drastic decisions. The Fund has reduced its international exposure and focused more on fixed income. While inflation has dropped to about 4 percent, the Fed interest rate is still high to reduce volatility.
“Where is Ariel,” asked Retired Teacher Trustee Mary Sharon Reilly.
In addition to being on the Watch List due to poor performance, Ariel’s director Mellody Hobson also chairs Starbucks, which is involved in a vicious anti-union fight. CTU President Stacy Davis Gates said the CTU may make a resolution for delegates to vote on to denounce Ariel’s ties to Starbucks.
The CTPF investment staff told the Board that Ariel has a very conservative profile, and they did not do well in 2022. They said Ariel’s investment strategy, “has been very challenging historically for this type of investment.” They also said Ariel has had high personnel turnover with some key members who have left which is why they are on the Watch List.
The next CTPF Investment Committee is Aug. 22, at 9:30 am. and on Aug. 4 there will be an Investment Committee first Friday meeting.