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CalPERS ordered to release Page Mill documents

San Francisco judge upholds information request by First Amendment Coalition, tenant activists

CalPERS must release an eight-inch stack of documents relating to its doomed investment in East Palo Alto apartment complexes bought up by Page Mill Properties, a San Francisco judge ruled Tuesday morning (see ruling).

The giant public-pension fund, which lost about $100 million in the Page Mill investment, must turn over to the First Amendment Coalition reams of correspondence between CalPERS and Page Mill attorneys, San Francisco Superior Court Judge Charlotte W. Woolard ruled. The San Rafael-based nonprofit sued CalPERS in July after pension officials refused to turn over documents relating to the failed investment.

CalPERS had claimed in a petition last month that some of the records in the information request were the "subject of confidentiality agreements designed to protect trade secret/proprietary information" and to prevent disclosure of "information which would make it more difficult for CalPERS to compete strategically in the investment market...."

But Woolard rejected the argument that CalPERS' agreements with Page Mill allow the fund to withhold the requested documents.

"Assurances of confidentiality cannot convert public records to private records," Woolard wrote.

Woolard acknowledged that some of the documents in the public-records request could be subject to attorney-client privilege. But CalPERS, she wrote, "did not identify which of the request documents may be subject to that privilege." She directed CalPERS to produce a "privilege log" by Sept. 24 identifying exactly which documents could fall into this category.

"Not all of the eight inches of the documents withheld by CalPERS are attorney-client privileged communications," she wrote.

Page Mill Properties lost control of its roughly 1,800 rental units about a year ago, shortly after it missed a $50 million balloon payment to Wells Fargo. The Palo Alto-based company had bought the properties in 2007 and 2008 and became entangled in a myriad of lawsuits with the city over East Palo Alto's rent-control ordinance. Wells Fargo, which took over ownership of the properties, reached a settlement on the lawsuits with East Palo Alto last month.

City officials and tenant activists accused the company of engaging in "predatory equity" after it bought the Woodland Park properties and then spiked rents, prompting many tenants to move out. Page Mill is also facing a lawsuit from a group of investors who have accused the company of securities fraud and deception.

Peter Scheer, president of the First Amendment Coalition, said the group launched its lawsuit because it wanted to learn more about the pension funds Page Mill investment, which he called a "terrible black eye" on a fund with a reputation for socially conscious investments. He noted that Page Mill's rent increases and opposition to East Palo Alto's rent-control laws, which were part of the company's plan to gentrify the neighborhood, led to displacement of lower-income tenants.

"We're concerned about how they make their investment decisions," Scheer said. "We wanted to know what analysis led CalPERS to the conclusion that they should enter into a highly leveraged, undercapitalized investment of this kind."

Karl Olson, attorney with the San Francisco-based firm Ram & Olson who represented the First Amendment Coalition, called the Tuesday's ruling "extremely gratifying."

"It's kind of a David-and-Goliath victory whenever a small nonprofit organization sues the nation's largest pension fund," Olson said. "I think this is a situation in which the public interest in the disclosure of documents was extremely strong.

"Whenever you see such a significant loss of money, the public certainly has a right to know what happened."

Comments

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Posted by Chris Lund
a resident of another community
on Sep 15, 2010 at 9:30 am

Please visit www.epa-tenants.org for more information on CalPERS' role in Page Mill's East Palo Alto investment.


Like this comment
Posted by Watcher
a resident of East Palo Alto
on Sep 15, 2010 at 10:41 am

Good. This is very good. This means that the true actions of Page Mill Properties and CalPERS can be revealed. Despite what the uninformed naysayers on this board have said in the past, the activists, city officials and tenants involved in unraveling the myriad complex schemes of Page Mill Properties have seen their intuition borne out by evidence. Now it's time for CalPERS investors to also have a chance to know what's really been going on with their money.


Like this comment
Posted by FAC-Should-Stick-To-Its-Mission
a resident of Greater Miranda
on Sep 15, 2010 at 11:47 am

> Peter Scheer, president of the First Amendment Coalition, said the
> group launched its lawsuit because it wanted to learn more about
> the pension funds Page Mill investment, which he called a "terrible
> black eye" on a fund with a reputation for socially conscious
> investments

While Scheer's group has taken on a number of "First Amendment" issues that have benefited most people, this lawsuit is clearly way off the mark of any "First Amendment" issues. Clearly Scheer has an agenda here, and it's not one that aligns with most of his group's typical work.

CalPERS did lose a lot of money; it's a shame that the State isn't auditing this organization from top-to-bottom and left-to-right. But the fact that Page Mill was trying to help clean up a town that needs a lot of work will probably not get much visibility in his investigation.

For those of us who appreciate his truly "First Amendment" work, let's hope that he doesn't drift into becoming some sort of left-wing, anti-development (or redevelopment) ideologue.


Like this comment
Posted by Watcher - to FAC
a resident of East Palo Alto
on Sep 15, 2010 at 1:09 pm

It'd be great if you were willing to learn more about Page Mill's scheme in EPA. They had no intention of cleaning things up - it was a predatory equity scheme. Things are not "cleaned up" because Page Mill left a huge mess - legally, morally and physically. The coalition's desire to access the docs is so that they can help figure out what Page Mill was REALLY up to. They broke dozens of laws, victimizing tenants, citizens, taxpayers, CalPERS investors, banks.


Like this comment
Posted by Outside Observer
a resident of another community
on Sep 15, 2010 at 5:33 pm

There are 3 things Cal Pers needs to do:

Stop "socially conscious" investing.

Get back the 1.9 billion Pete Wilson stole in 1991. Get it back with interest.

Get all the employer contributions that were waved throughout all the Dot Com boom years.

Page Mill is noting compared to how politicos have misguided and raped Cal Pers.




Like this comment
Posted by Just a thought
a resident of East Palo Alto
on Sep 15, 2010 at 5:33 pm

The coalition's desire to access the docs is so that they can help figure out what Page Mill was REALLY up to.

Ok, so even after you find out, what will you do with the information? What's the end game? What does knowing the information do to advance FAC's position?


Like this comment
Posted by Watcher
a resident of East Palo Alto
on Sep 16, 2010 at 9:59 am

Just a Thought - taxpayers are for losses in this CalPERS/Page Mill Properties scheme and this means these schemes are of public interest to understand. It also means that figuring out how to prevent this in the.

CalPERS made even more costly investment "mistake" but the Page Mill one is of extra interest to locals since so many of us, including beyond E. Palo Alto, are effected.


Like this comment
Posted by Larry Smith
a resident of Palo Alto Orchards
on Sep 16, 2010 at 12:26 pm

Good good.
As a member of PERS for many years, I was shocked to see that it was a backer of Page Mill Properties, especially when I fully support its policy on responsible investing. We need to know how and why PERS got involved in such a despicable and irresponsible endeavor. The fact that it took a lawyer and a COURT ORDER to get them to release public records pertaining to this makes me suspect that the current leadership may have something to hide. PERS has a responsible to the public, the state, and its members to own up to this and take corrective action.


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