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Interesting story from yesterday's NY Times article.

It looks like the assumption used is very ambitious: "It would all work as long as the payroll grew by 5 percent every year — which it did not — and if the pension fund earned 9 percent annually on its investments."

 

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Many pension funds plan their solvency on 8 percent-ish returns.

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mapen said:   Many pension funds plan their solvency on 8 percent-ish returns.
  Those are common, but sound more like long term insolvency plans to me.  They have half their money in fixed income earning almost nothing, so it takes some really big equity market returns to bail them out.  

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Oregon has similar problems with their pensions for gov workers.

http://www.oregonlive.com/politics/index.ssf/2015/11/pers_costs_...

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This isn't news for anyone in Dallas. The 200m museum tower project was way too "public" and "obvious" a failure even though it was not a significant percentage of their shortfall. It lit a flare off though, because it sits in the middle of the Arts district and all of Dallas can SEE it. If they had kept to investing in other states and countries for splashy things then maybe it would have gone unseen longer.

NOBODY is buying into that tower, its location is amazing but its not really "walk friendly" and its prices are too high in an already overloaded high end condo market. There is an overpass on one side and then a ramp OFF that overpass blocks 2 more sides from easy access to the arts district.

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My take-away from this was disgust at the sheer amount of "It's not MY fault!" It even ended with a guy basically saying, "Yeah, I voted for the plan, but we all knew it was too good to be true. Oh well!"

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cKGunslinger said:   My take-away from this was disgust at the sheer amount of "It's not MY fault!" It even ended with a guy basically saying, "Yeah, I voted for the plan, but we all knew it was too good to be true. Oh well!"
  
The real issue was the "plan" is controlled by the STATE and not the city.  So the city (which only has a few representatives in the Senate) is fighting with a lot of Reps who don't have a horse in the race.  But the shortfalls and BLAME are going to land on the CITY.

It is a mess, and isn't going to get better.  Their plan is eventually have to meet reality -- no you don't get to retire at full pay at 50 anymore.  Sure, feel free to sue..  that will just mean even LESS money in there before we have to default on something.  

To put it in perspective the units in Museum Tower START at 1.2M in DALLAS.  For 1600 Sq ft  -- and dues are $1200+ month.  Units at the Azure (the most recently built comparable building) are half that much for similar sizes.  (Azure has some smaller units that are a third of the price)  The "W" suites are similarly priced.  There are not THAT many millionaires+ looking for high rises versus inventory already.  

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xerty said:   
mapen said:   Many pension funds plan their solvency on 8 percent-ish returns.
  Those are common, but sound more like long term insolvency plans to me.  They have half their money in fixed income earning almost nothing, so it takes some really big equity market returns to bail them out.  

  Thank the Fed Reserve for this. Bail out the feds and punish the savers..

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Maybe related to the Dallas' economic struggles - I've always wondered what causes the number of abandoned buildings in Dallas.

The first time I landed in Dallas - and went out for lunch from work, I was struck by how de-populated it was. I actually asked my colleague if that day was a local holiday for some reason. He was equally surprised at why I asked the question.

After a little bit of back and forth later - it turned out that a large number of buildings are abandoned. As luck would have had it - all four of the closest buildings on four sides if our office building were abandoned!! Hence the walk through the "bunkers" also had a bit of an "eerie" feeling to it right in the middle of the day!!

In most metro cities - available space like this smack in the middle of downtown can't sit for a day before they are redeveloped!! Houston does not have the eerie, de-populated feeling at all. I wonder what is so unique about Dallas!!

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esteinbrenner said:   Oregon has similar problems with their pensions for gov workers.

http://www.oregonlive.com/politics/index.ssf/2015/11/pers_costs_...

  
Oregon is no worse than most any other pension.    In fact its better than typical.

Dallas has a funding ratio of 45%.    Oregon is around 80% as of 2015 which is actually better than average for a state pension.

older data but OR was in top 10 in 2011 :
http://www.governing.com/gov-data/state-pension-funds-retirement...

There are lots of underfunded private pensions too.   typically 78% :
http://www.pionline.com/article/20160706/ONLINE/160709945/corpor...

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jerosen said:   
esteinbrenner said:   Oregon has similar problems with their pensions for gov workers.

http://www.oregonlive.com/politics/index.ssf/2015/11/pers_costs_...

  
Oregon is no worse than most any other pension.    In fact its better than typical.

Dallas has a funding ratio of 45%.    Oregon is around 80% as of 2015 which is actually better than average for a state pension.

older data but OR was in top 10 in 2011 :
http://www.governing.com/gov-data/state-pension-funds-retirement... 

There are lots of underfunded private pensions too.   typically 78% :
http://www.pionline.com/article/20160706/ONLINE/160709945/corpor...

  Social Security is underfunded too.

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cameron2003 said:   
jerosen said:   
esteinbrenner said:   Oregon has similar problems with their pensions for gov workers.

http://www.oregonlive.com/politics/index.ssf/2015/11/pers_costs_...

  
Oregon is no worse than most any other pension.    In fact its better than typical.

Dallas has a funding ratio of 45%.    Oregon is around 80% as of 2015 which is actually better than average for a state pension.

older data but OR was in top 10 in 2011 :
http://www.governing.com/gov-data/state-pension-funds-retirement... 

There are lots of underfunded private pensions too.   typically 78% :
http://www.pionline.com/article/20160706/ONLINE/160709945/corpor...

  Social Security is underfunded too.

  
And so are most peoples 401k's.

 

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jerosen said:   
 
And so are most peoples 401k's.

 

  ??????/

rightly or wrongly, the whole point of 401k is a defined contribution plan that doesn't have problem of underfundedness that defined benefits plans do

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needhelpplease said:   
xerty said:   
mapen said:   Many pension funds plan their solvency on 8 percent-ish returns.
  Those are common, but sound more like long term insolvency plans to me.  They have half their money in fixed income earning almost nothing, so it takes some really big equity market returns to bail them out.  

  Thank the Fed Reserve for this. Bail out the feds and punish the savers..

  Blame the Fed for carrying out its mandate, to fight inflation and keep unemployment low?  

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puddonhead said:   Maybe related to the Dallas' economic struggles - I've always wondered what causes the number of abandoned buildings in Dallas.

The first time I landed in Dallas - and went out for lunch from work, I was struck by how de-populated it was. I actually asked my colleague if that day was a local holiday for some reason. He was equally surprised at why I asked the question.

After a little bit of back and forth later - it turned out that a large number of buildings are abandoned. As luck would have had it - all four of the closest buildings on four sides if our office building were abandoned!! Hence the walk through the "bunkers" also had a bit of an "eerie" feeling to it right in the middle of the day!!

In most metro cities - available space like this smack in the middle of downtown can't sit for a day before they are redeveloped!! Houston does not have the eerie, de-populated feeling at all. I wonder what is so unique about Dallas!!

  
Dallas has always had issues with sprawl -- instead of re-doing older buildings (from Class B to Class A grade offices) someone will build a new area (Los Colinas and Plano/Frisco are the more popular) instead.  Plus a lot of the really old building in the core are old enough to be "protected" but not particularly worth expensive renovations.  Some are iconic like the old Dallas High School by Pearl Station downtown.  Its boarded up but every few years someone dusts off a plan to renovate it as the "core" of a revitalized area.  Last one may even stick.  Same thing with Union Bankers building (designed and built by the son of Booker T Washington as a bank for the African American population) which is getting the repurpose hammer after being literally left to rot for decades.  One of the big developers in town made a big push about 5 years ago or more to buy up everything in Deep Ellum they could and that parcel is a keystone.

But yes, there are TONS of midrise older building in the core with either tainted ownership or its owned by someone that bought it as a future land investment and not a building.  For years First Baptist was buying every parcel near their church as it came up.  A few years ago they tore down blocks of old buildings for a garish new "worship center."  They moved VERY fast from announcing to demolition just so that the preservationists could not intervene.  Not that the old 30-50s era brick midrises were anything special, they would have likely been unable to block it anyway.

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