Stocks, Bonds and Real Estate Figure in Retirees’ Portfolio : Government: The county pension fund earned a 14% return last year. Some say directors should not invest in certain industries.

In an affluent, wooded community outside Portland, Ore., the tenants of an upscale strip mall write out their rent checks to Ventura County’s retirement fund.

And in a small suburb outside Washington, D.C., a Safeway, Pizza Hut, Taco Bell and several other establishments lease space monthly--also from the county’s retirees.

Moving to ensure that the county will have enough money to pay the pensions of its employees, Ventura County Retirement Assn. has diversified its investments to include seven properties across the country.

And the retirement association’s holdings do not stop at real estate.

The board has also authorized bankers to invest $430 million in the stocks of scores of businesses--including Exxon, the telephone company in Spain and the corporation that owns Caesars Palace.

Overall, $790 million of the county’s retirement fund is tied up in real estate, stocks and bonds. Last year, the payout to 2,300 retired county employees was $32.4 million.

Although the market value of real estate owned by the retirement association has dropped over the last few years, the other investments have yielded large returns for the 9,000 retired and current county employees enrolled in the pension plan.

The retirement association earned a 14% return on its investments last year, exceeding its 8.2% goal.

But while retirement board members say their main goal is to make sure the ventures make money for the fund, their investment strategies have come under sharp criticism.

Critics question whether the county should use retirement money, generated from tax dollars, to buy shares in businesses ranging from tobacco firms to oil companies.

One developer blasted the retirement board for not buying any properties in the county.

Hal Pittman, the county’s treasurer and tax collector and member of the retirement board, said he understands the concerns, but added: “You could have so many special interest groups that you can’t invest in anything that is profitable.

“Our primary responsibility is to make sure the fund is healthy. If we don’t earn anything, we’ve got a big problem.”

He said the county depends on the advice of investment banking firms on how to invest its money. In most cases, the bankers--and not the association--decide where to invest the money. However, the nine-member retirement board sets the policies.

In addition to Pittman, the members of the panel include Supervisor Maria VanderKolk; Albert Harris, a Ventura financial adviser; Vernon C. Markley, a court bailiff; Stanley Bunce, a retired realtor; John J. Crossan, a certified financial planner; Duane Dammeyer, an assistant public defender; Ken Oelschlager, an assistant county assessor; and Charles Moore, a retired county fire captain. Bruce Mandell, also a county fire captain, is the alternate to the board, which meets twice a month at the Government Center.

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The board members are either elected by the county employees and retirees or appointed by the Board of Supervisors.

“Our objectives are to keep our portfolio as diversified as possible so not all our eggs are in one basket,” Dammeyer said. “But we are conservative.

“We do not invest in junk bonds. We do not invest in shaky investments. We have limited our stock investments to large companies. And we have tried to diversify the types of real estate we have.”

Since 1986, the county retirement association has been slowly acquiring strip malls, business complexes and distribution centers.

Outside Seattle, Miller Beer’s distributing company set up its headquarters in a building owned by the county retirement association. Across the street from the Thunderbird International School of Business near Phoenix, students sip coffee at a doughnut shop in a small mall belonging to the pensioners.

The county retirement association also owns an office building in Fullerton, which serves as a distribution center for Samsung Electronics and Aladdin Mills Carpets, and an office building in Riverside, where several financial firms and other businesses lease 48,000 square feet.

In San Jose, the association owns a 207,397-square-foot distribution center used by a national trucking company.

The county’s investments pale in comparison to those of the state Public Employees’ Retirement System, which represents 684,781 active members and 257,307 retirees.

The state system owns or is part owner of 1,000 properties, including 800,000 acres of timberland across the country, two office towers in Hawaii, the Sherman Oaks Galleria and scores of other shopping centers.

Because of the recession, however, the market value of the state association’s properties has dropped from $5.7 billion to $5 billion.

By comparison, the value of Ventura County’s properties has dropped from $50 million to $42 million.

Despite the losses, Dammeyer said he believes real estate will prove to be a sound investment. Last year the county pension group received $3.6 million in rent from the tenants of its properties.

“There was a time a few years ago that real estate was far outdistancing other investments,” Dammeyer said. “There is no reason to expect that the cycle won’t repeat itself.”

However, Bob Goetsch, president of the Ventura/Santa Barbara Chapter of the Assn. for Commercial Real Estate, criticized the county for failing to purchase local real estate.

“The county needs to take a look at what they might be able to do locally,” Goetsch said. “If it takes a little extra effort, they ought to make the extra effort.”

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Pittman said the board has not ruled out investing in Ventura County; the investment firms simply have not suggested any properties here.

“Tell me about some good deals,” Pittman said. “We are not opposed to (investing in Ventura County). We are just looking for the best deals.”

Supervisor John K. Flynn said the county’s search for the best investments has helped the fund grow from $100 million in 1981 to nearly $800 million today.

“We’ve had such a good investment policy that in 1989 we were able to give all the retirees a $108 increase in their pay,” said Flynn, who served on the retirement board for 14 years. “It’s due to prudent investments. There’s a lot of people who have benefited from that.”

The association’s stock portfolio includes holdings in almost every type of business. According to the county records, the association has invested $13.1 million in the automobile industry, $4.7 million in the tobacco industry, and $5.3 million in the oil industry.

The association holds $2.8 million in stock from tobacco giant Philip Morris Cos. Another $2 million is invested in Exxon Corp.

Meanwhile, the retirement group also has invested $2.1 million in Toys R Us Inc. and $2 million in Walt Disney Co.

Neil Moyer, president of Ventura County Environmental Coalition, questioned whether the county should be investing in the oil and tobacco industries.

“I think it’s high time for all governmental bodies to review their investment strategies,” Moyer said. “They need to be consistent with the social ideas of the community and good public policy. There should be a disconnection with some of these firms.”

Ventura County Retirement Assn.

Real Estate HoldingsThunderbird Plaza

Glendale, Ariz.

The retirement association purchased the 32,398-square-foot building in 1986 for $3.5 million. Its current value is listed at $2 million. The center includes a doughnut shop, a dance studio and a video store. The county received $80,069 in rent from the center last year.

Chicago Avenue Business Center

Riverside, Calif.

The 48,000-square-foot building was purchased in 1988 for $5.3 million. Its market value is now listed at $3.4 million. The office building is leased by several financial companies, including Security Pacific Housing and Commonwealth Mortgage Corp. It brought in $153,675 in rent last year.

Oswego Village Center

Lake Oswego, Ore.

The 87,466-square-foot building was purchased in 1989 for $9.4 million. Its market value is now listed at $8.7 million. The strip mall is leased by a half-dozen stores and businesses, including an Albertson’s grocery store, an ice cream shop, a coffee shop, a drug store and a bookstore. The retirement association earned $771,776 in rent last year from the center.

Lincoln Distribution Center

Kent, Wash.

The 169,635-square-foot building was purchased in 1989 for $6.02 million. The property is now worth $6 million. Miller Brands distributes Miller Beer from the center. Last year, the county earned $533,667 in rent.

Lewis Business Center

Fullerton, Calif.

The center includes two buildings totaling 180,918 square feet. The association purchased the property, used as a warehouse and distribution center, for $9.5 million in 1990. It’s now valued at $6.4 million. The tenants include Samsung Electronics Co. and Aladdin Mills Inc., a carpet manufacturer. The county earned $847,907 in rent last year.

Ringwood Distribution Center

San Jose, Calif.

The 207,397-square-foot center was purchased in 1991 for $8.2 million, the current market value. The property is leased to Contract Transportation Services, a privately held regional trucking distributor. Last year, the county earned $825,474 in rent.

Courthouse Plaza Shopping Center

Fairfax City, Va.

The 83,170-square-foot shopping center, purchased in 1982 for $7.7 million, is centrally located within the affluent Fairfax County area of suburban Washington. Tenants include Safeway grocery store, Pizza Hut, Taco Bell, a bank and a drugstore. Last year, the retirement association received $397,923 in rent.

Retirement Assets

Investment breakdown of the $790 milion of the Ventura County Retirement Assn.

Stocks: 54% Bonds: 39% Real Estate: 6% Note: Numbers do not add up to 100% because of rounding.

Source: Ventura County Retirement Assn.