The Morning Report
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Wednesday, October 19, 2005 | The City Council chose not to transfer the Fairbanks Ranch Country Club and other city-owned properties to its underfunded pension system on Tuesday, rejecting a proposal to settle a civil lawsuit that argues that the city did not fully fund its pension system for almost a decade.
The council unanimously chose to reject the agreement proposed by plaintiffs’ attorney Michael Conger that would have required the city to transfer nine parcels of city land totaling $130 million. In June, Conger filed the lawsuit on behalf of former city worker William McGuigan, alleging that the city has not paid a financially sound amount into the San Diego City Employees’ Retirement System since 1996.
A lawsuit filed in 2004 by city retiree James Gleason, who was also represented by Conger, was settled after the city pledged to pay an actuarially sound amount into the fund beginning with the current fiscal year. The Gleason suit was grounded in the same evidence that showed the city was underfunding the system, Conger said.
This year’s payment compares with $130 million in the previous fiscal year. The increased payment forced the city to cut back on other day-to-day expenditures, such as library hours, park maintenance and police community service officers. Next year’s payment will likely exceed $200 million.
In addition to Fairbanks Ranch, Conger proposes that Sports Arena Village, the World Trade Center on Cortez Hill and six other undeveloped properties around town be transferred. The nine properties were being used as collateral on making payments that complied with the Gleason settlement, but that ended in July when the city paid $163 million.
Five of the six council members voted against Conger’s proposal, with Councilman Brian Maienschein absent from the closed session meeting.
Councilman Tony Young, who has supported selling off excess public land to raise revenue to curb cuts to the city’s day-to-day budget, said he didn’t want to act hastily. He wanted city management and the City Attorney’s Office to study the action more thoroughly, he said.
“We haven’t had that conversation to my satisfaction yet,” Young said.
Councilman Jim Madaffer also said it was too early to settle the case, although he reiterated that he believes that the pension fund needs to be better funded.
“I agree with the basic tenets of the case, that the city needs to make whole what it has not paid into the pension system since 1996,” Madaffer said. “The real issue with this case is that the city has not even been served yet.”
In its latest round of labor contracts, the city pledged to infuse a lump payment of $600 million into SDCERS by the 2008 fiscal year in addition to annual contributions that over that period total at least $500 million.
– EVAN McLAUGHLIN, Voice Staff Writer