>Date: Sat, 24 Jul 1999 08:31:16 -0700 >To: Colleagues: >From: Neal Peirce <[EMAIL PROTECTED]> >Subject: Column: Invest in Our Cities, Not Timbuktu? >X-Status: > > NEAL PEIRCE COLUMN > For Release Sunday, July 25, 1999 > > Copyright 1999 Washington Post Writers Group > > > INVEST IN OUR CITIES, NOT TIMBUKTU? > > By Neal R. Peirce > > > SACRAMENTO-- Why should America's public pension funds -- the life >savings of America's state and local government workers -- be invested >overseas, when better returns are often available from investments in our >own cities? > > That's the kind of disturbing question that Philip Angelides, >California State Treasurer since last January, has been asking. > > It turns out that CALPERS -- the California Public Retirement System >in which Angelides plays a key role -- has $35 billion invested in 48 >counties worldwide. Altogether, U.S. public pension funds now hold $242 >billion worth of foreign stocks. > > Yet Angelides, monitoring reports for the massive pension funds (value >$240 billion) his office manages, noticed a big flow in Indonesian and >depressed Japanese securities. In some cases, CALPERS' 2-, 3-, and 5-year >returns from so-called "emerging markets" has even been negative. > > "It's amazing to me," says Angelides, "how American investment in >volatile overseas areas is a given' of our capital markets, even while our >own emerging markets -- inner cities, minority small businesses -- are so >often written off as risky and troublesome." > > Yet there are ripe opportunities, he notes, for "infill" development >in cities. The federal Community Reinvestment Act, he adds, proves that >lower-income, minority residents, given a chance to borrow for a home, "will >work hearts out to pay it off." > > Yet when Angelides asked a group of investment bankers why they hadn't >set up a secondary market in loans to small and minority firms, paralleling >the "Wall Street-ization" of today's large real estate investment packages, >their answer was the idea never occurred to them. > > It's not the first time we've seen such anomalies. In the 60s and >70s, as American capital rushed into questionable (and later disastrous) >Latin American investments, our inner cities were effectively "redlined" to >exclude home mortgage loans. Later, the multi-billion dollar savings and >loan scandals were perpetrated by institutions that pumped money into >fast-expansion suburbs while ignoring older cities. > > But past may not be prologue, if Angelides has his way. A 45-year old >former developer and state Democratic chairman elected Treasurer last fall, >Angelides has decided California faces a grim future unless it starts to >rebuild its decaying older cities and curb wasteful and environmentally >risky sprawl development at the urban fringe. > > In June Angelides went on the road across California selling his >newly-issued "Smart Investments" report. He argues California should set >clear, strategic goals for investing its billions of public infrastructure >funds and pension monies. > > His own offices administers $450 million in yearly tax credits to >construct affordable housing, and Angelides has abandoned his predecessor's >lottery system of allocation. Instead, he's instituted smart growth >incentives -- extra points for projects within a quarter mile of transit, or >walking distance to an elementary school, or in a depressed area with a >holistic community redevelopment process underway. > > Angelides' central thrust is to avoid a "two Californias" future of >estranged economic classes and races. It's the closest thing to a true >vision for California, observes veteran Sacramento Bee columnist Peter >Schrag, that any statewide official has articulated since Gov. Pat Brown >left office in 1966. > > Initial reception is positive. Bank of America CEO Hugh McColl >arranged an Angelides briefing before 25 top business leaders in Los >Angeles. Angelides pitched his approach to credit rating agencies, >investment bankers, the Silicon Valley Manufacturing Group and a "Smart >Growth" conference staged by the regional San Diego Association of >Governments. He also received long and sustained applause when he spoke >before Gov. Gray Davis' Commission on Building for the 21st Century. > > Angelides is getting welcome signals partly because old growth >assumptions -- the idea it's OK to build on greenfields and ignore the >cities -- are falling apart under the pressure of growth boundaries, hostile >voter initiatives, traffic bottlenecks and land shortage. > > Sunne McPeak, president of the business-led Bay Area Council, welcomes >Angelides' initiatives because her council's already strong for sustainable >development. It's a lead partner, for example, in a Community Capital >Investment Initiative to foster development in 46 of the Bay Area's most >economically-depressed neighborhoods. > > Will officials in other states pick up on the smart growth investment >strategies? An early signal may come from this week's(July 29-31) annual >conference of state treasurers, meeting in Portland, Ore. > > Custodians collectively of trillions of public funds, the treasurers >traditionally focus on fiscal prudence and caution. Some may be startled by >Angelides' idea-- that intelligent, strategic investing for states' futures >means curbing sprawl and reinforcing cities. And investing more at home and >less in Timbuktu. > > But coming from the State Treasurer of California, and with growing >smart growth constituencies in their own states, it's an idea they'll have >to take seriously. > >
