year before East Palo Alto's largest landlord lost its 1,800 rental
units to a bank, officials from CalPERS began grilling the real estate
company -- in which they had invested $100 million into -- about its
management practices and strategies, court documents released this week
Among the 1,175 pages that a federal judge ordered to be
made public Monday are a series of testy e-mail exchanges in the spring
of 2009 between the California Public Employees Retirement System and
Page Mill Properties, which had angered East Palo Alto officials and
tenants by taking advantage of the city's flawed rent control law to
substantially increase rents.
Page Mill was supposed to make a
balloon payment of $50 million to Wachovia Bank on Aug. 1, 2009, and
CalPERS officials apparently were getting nervous about its ability to
pony up the money.
An April 17, 2009, letter from CalPERS to Page Mill CEO David Taran outlines several of the pension fund's concerns.
continues to receive complaints from the community and requests for
information and meetings from disgruntled residents," the letter
states. "We believe that the continued controversy surrounding the
property is having an adverse effect on the value of the property and
The letter goes on to state that CalPERS was
"concerned about the performance and stability" of its Page Mill II
investment portfolio. "Simply put, it is unclear to us whether your implementation of the current investment strategy and operation are effective and yielding appropriate results."
It's unknown who wrote the letter because the second page wasn't released.
learning that CalPERS had hired consultants to appraise the rental
properties, Page Mill general counsel James Shore wrote an e-mail April
29 to CalPERS portfolio manager Laurie Weir questioning the move.
"We do not understand why the appraisals are proceeding and feel that finalizing the
appraisals may negatively impact our investments," Shore wrote.
replied on May 26 that "CalPERS is entitled to investigate the assets
in its investment portfolio." And in a subsequent letter, dated June 8,
Weir requested a meeting to learn about Page Mill's "plan for
addressing the $50 million loan pay down due August 1, 2009."
Oct. 21, after Page Mill had defaulted on the payment but was trying to
avoid foreclosure, Taran wrote CalPERS a letter suggesting the company
could reorganize under bankruptcy provisions if additional funding was
But in an Oct. 27 reply, Weir said: "As previously indicated, CalPERS has no interest in providing any additional capital."
1,175 pages of e-mails, letters, reports and financial filings were
released as a result of a lawsuit filed by the California First
Amendment Coalition. The Bay Area nonprofit watchdog said it sued to
learn why CalPERS, the pension fund for state government workers,
invested in the Page Mill Properties II portfolio.
coalition's executive director, Peter Scheer, said his organization
still wants to see the memorandum and partnership agreement for the
deal, which were not included in the documents released Monday.
Documents dating back to the summer of 2006, when CalPERS signed on to
the $100 million investment, were the earliest ones released.
"That was the first thing that occurred to me," Scheer said. "Where is all the stuff that occurred before they signed the
court is still reviewing about 100 records that CalPERS contends is
subject to attorney-client privilege and other exemptions, Scheer said.
In March of this year Wells Fargo Bank, which took over Wachovia, took control of Page Mill's former properties.