When Florida Chief Financial Officer Alex Sink went to New York City last week to speak on managing state pension-fund investments, she didn't include Stuyvesant Town in any PowerPoint presentation.
Florida's pension fund lost $266 million in that infamous real-estate deal, and New Yorkers are still laughing about it.
As one of three trustees on the State Board of Administration which oversees Florida's pension-fund investments, Sink signed off on the ill-fated scheme in 2007.
The house of cards came tumbling down in 2009 when project developers defaulted.
Sink and the SBA weren't simply random victims of an unforeseen housing bubble. Memos dating back to 2007 detailed the risks at "Sty Town," including soil contamination, lawsuits, cash flow problems, and the fact that most of the units were rent-controlled.
Sources told Sunshine State News that the venture was considered a "joke" by New Yorkers who knew that the 60-year-old, unair-conditioned Stuyvesant Town and adjacent Peter Cooper Village could never justify the $5.4 billion investors paid for the 80-acre complex north of the East Village.
Sure enough, Florida, which had a 5 percent stake in the project, lost its entire $266 million investment when the buyers couldn't cover their $3 billion mortgage.
While Sty Town was going down, reports surfaced that the two lead investors -- Tishman Speyer Properties and BlackRock Realty -- had connections to the SBA and trustees Sink and Charlie Crist.
BlackRock, a Florida pension-fund manager whose majority owner is Bank of America, Sink's former employer, gave $500 to Sink for her CFO campaign in 2006. Two Tishman executives each donated $500 to Crist's 2006 campaign for governor.
Sink, who has questioned the financial dealings of her gubernatorial opponent, Rick Scott, declined to comment for this story.
But subsequent reports have questioned the ability of SBA trustees, including Sink, to competently oversee the state's multibillion-dollar investment portfolio. Sink herself has proposed a series of changes, including ethics reforms for investment advisers, managers and members of the Investment Advisory Council, the creation of an audit committee and enhanced reporting at quarterly SBA board meetings.
"The buck stops with the trustees, Sink said in July. We do a disservice to our police officers, firefighters, teachers and other state employees who entrust their retirement to our pension fund if we do not ensure the strongest oversight possible.
In truth, Florida's SBA wasn't the only public entity suckered in New York. Fannie Mae, the California Public Employees' Retirement System and even the Church of England were taken.
No doubt the CFO wants to put this boondoggle behind her. But for many, irony lingers and questions nag when she heads to the Big Apple to impart money-managing wisdom at the Pillsbury Public Pension Policy Forum Series -- just miles from the financial carnage at Sty Town.
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Contact Kenric Ward at kward@sunshinestatenews.com or at (772) 801-5341.
