Source: The Advocate (Baton Rouge, La.)
A Louisiana police retirement system may be getting out of the golf-course business. Attorney Randy Zinna of Municipal Police Employees Retirement System, or MPERS, confirmed that trustees are studying the possibility of selling Olde Oaks Golf Course in Haughton and the Club at Stonebridge in Bossier City.
He referred all further questions to board Chairman Henry Dean of New Orleans, who did not return numerous calls to his office Thursday and Friday.
Dean, reached early Friday afternoon at his home, declined to comment.
To date, MPERS has spent nearly $15 million to buy and renovate the Olde Oaks and Stonebridge. The two courses combined lost another $500,000 this year, and the retirement fund has yet to recoup a penny on the purchase.
The revelation that MPERS is considering selling the properties comes after an independent audit, made public last week, concluded the board violated the law and its own rule through its real-estate investments.
The review discovered nearly $1 million of golf-course money in bank accounts that aren't federally insured as required by state law, and cited several money-management problems.
The audit also indicates MPERS has gotten thousands of dollars in loans to cover operating expenses at the two courses this year. At the end of the fiscal year, Olde Oaks owed $66,100 on its loan; Stonebridge, $30,000. That's on top of six loans totaling hundreds of thousands of dollars for equipment - including a $465,000 loan for Olde Oaks and another $85,558 loan for Stonebridge.
MPERS manages more than $1 billion in retirement assets for 9,500 full-time police department employees throughout Louisiana.
Its investment decisions also affect residents in Baton Rouge and elsewhere in Louisiana because of the amount cities must contribute to ensure retirement benefits for their officers. Municipalities pay 21.5 percent of their payrolls to fund MPERS - up from 9 percent just three years ago. Some have had to forego hiring additional officers or buying equipment like guns and patrol cars to pay that bill. The system remains under investigation by the Louisiana Attorney General's Office and the legislative auditor for its investment practices and land purchases. Three Louisiana police chiefs also filed a class-action lawsuit against MPERS earlier this year, asking a state district judge to appoint someone else to manage the fund and stop it from investing as much as $30 million in a Texas land deal known as Boot Ranch.
That project calls for developing more than 3,500 acres of undeveloped land in Texas Hill Country into the "Augusta of Texas."
A business plan describes transforming the ranch near Fredericksburg, Texas, into a "world-class" golf course and clubhouse and developing surrounding property for exclusive homes.
The independent audit concluded MPERS ignored its own policy against investing in undeveloped real-estate when it got involved in that deal. It isn't clear, however, whether trustees are considering pulling out of Boot Ranch as well. At a meeting last week, Zinna told the board the project had met its obligation of $9 million in sales by Dec. 1.
The lawyer told trustees that Boot Ranch has sold eight corporate memberships at $250,000 each, 18 individual memberships at $150,000 each and eight lots for nearly $6.2 million.
When asked by one trustee, Shreveport Police Chief Mike Campbell, whether all of that was "money in hand," Zinna said it was not.
A contract notes that if lot sales and golf memberships fail to bring in $9 million by Dec. 1, $18 million by June 2005 or $27 million by December 2005, MPERS will pull out of the project.
There is some evidence, meanwhile, that trustees may be growing anxious about that investment as well.
The fund has decided to pay $100,000 this year to a Shreveport-based firm, Hand Construction, to keep an eye on the development, documents obtained through a Louisiana public records request show.
Last week, Dean said trustees were in talks with a "very wealthy" potential partner to take on some of Boot Ranch's financial burden. Dean and other trustees also criticized the lack of progress reports from the project's manager, Shreveport-based professional golfer Hal Sutton. Sutton, who was the 2004 Ryder Cup captain, also manages Olde Oaks and Stonebridge. He also has a $180,000 annual endorsement and consulting contract with MPERS, and stands to make millions off Boot Ranch if it is successful - even though he has not invested money in it.
Sutton's manager, Gilbert Little, was unavailable last week to comment on trustees' complaints or the possibility that MPERS is considering selling its two Louisiana courses.
News that Olde Oaks and Stonebridge soon may be on the market won praise from the retirement system's staunchest critics.
Baker Police Chief Sid Gautreaux, one of those who sued MPERS earlier this year, said he hopes the idea is supported of a majority of trustees.
"All three investments are costing the system money," Gautreaux said. "We're just pouring money down an empty hole with both courses, and my fear is that the same thing is going to happen in Texas."
Gonzales Police Chief Bill Landry said the decision likely was prompted because trustees "have come to realize it's not a profitable business to get into." "What's sad about it is that if the courses are sold, they'll probably break even; but, I think chances of recovering the expenses to upgrade these things are gone," he said. "I won't be completely satisfied until they've redirected their investments to better serve the members they represent."