Los Angeles Mayor Antonio Villaraigosa might only have two more months left on his term, but that hasn't stopped him from being a very busy guy, especially when it comes to the city pension plans.
Mr. Villaraigosa made the unusual move of twice vetoing the $15.7 billion Los Angeles Fire and Police Pension System board's selection of William S. Raggio as general manager; Mr. Raggio had been acting general manager since May 2012, when Michael Perez retired.
On April 4, the board hired Ray Joseph as general manager in a 5-4 vote in closed session.
Mr. Joseph had been principal deputy trustee at the U.S. Department of the Interior's Office of the Special Trustee for American Indians from January through December 2011.
“The mayor will not be vetoing that (Mr. Joseph's) selection,” Peter Sanders, deputy mayor, said in an interview.
Mr. Villaraigosa has made his wishes known on the investment side as well.
In January, he asked the city's three pension plans — the $12.02 billion Los Angeles City Employees' Retirement System and the $7.7 billion Water & Power Employees' Retirement Plan and the Fire and Police system — to end investments in companies that manufacture assault weapons.
In October, the mayor asked the three pension plans to add Los Angeles-focused economically targeted investments to their portfolios. The Fire and Police fund and LACERS, with the help of their general investment consultant, Wilshire Associates, are studying the issue.
Mr. Villaraigosa is not the first Los Angeles mayor to show an interest in city-centric investments. In 1998, former Mayor Richard Riordan and Deputy Mayor Rocky Delagillo formed Genesis LA Economic Growth Corp., a public-private partnership that sponsors or co-sponsors a family of real estate funds that make socially responsible investments.
One of its series of funds, Genesis LA Workforce Housing Fund, a real estate fund managed by Phoenix Realty Group, invests in moderate-income family housing in Los Angeles. Genesis Workforce Housing Fund II received commitments from LACERS and the Fire and Police fund, as well as the Los Angeles County Employees' Retirement Association, Pasadena, Calif.
Mr. Villaraigosa also tried to stop the Fire and Police board from reducing the fund's expected rate of return to 7. 75% from 8%
Even so, Mr. Villaraigosa's second veto of Mr. Raggio in a two-sentence letter that failed to include his reasoning took many at the Fire and Police system by surprise.
The staff had sent a letter of support for Mr. Raggio to Mr. Villaraigosa and many at the fund said privately they had never seen a mayor override a board's choice of top executive before.
“I was looking for fresh leadership focused on controlling cost to the city, while providing sustainable benefits to our retirees,” Mr. Villaraigosa said in a statement issued in response to inquiries.
Mr. Raggio “represented the status quo,” added Mr. Sanders, who supplied the mayor's statement.
Mr. Villaraigosa declined to be interviewed for this article.
At the board's April 4 meeting, Mr. Raggio thanked the staff for its support throughout the general manager selection process. Dean Hansell, board president, complimented Mr. Raggio for performing his duties as acting general manager with “tremendous integrity.”
Mr. Joseph was considered but was not selected as a finalist during the board's first search for general manager last June, said George V. Aliano, an elected member of the board representing retired members.
When Mr. Villaraigosa rejected Mr. Raggio's selection then, he stated the board needed to hire an outside consulting firm to conduct the search. The first search had been conducted by the city's internal human resources division.
Following the second search, while Mr. Raggio was the recommended candidate again, Mr. Joseph was a finalist.
“I would think he (Mr. Villaraigosa) would have left it to the new mayor,” Mr. Aliano said.
A runoff election between Los Angeles City Councilman Eric Garcetti and Los Angeles City Controller Wendy Greuel is scheduled for May 21 to choose the next mayor. When the new mayor takes office July 1, he or she will be able to replace five of the board members.
Wayne Moore, an appointed board commissioner who voted to hire Mr. Joseph, said he favored selecting Mr. Joseph all along. Mr. Moore noted that before his short stint with the U.S. Department of the Interior's Office of the Special Trustee for American Indians, Mr. Moore had been deputy director of the New Jersey Division of Investment for two years and before that he helped set up a defined contribution plan at Verizon Communications Inc.
“He's had private sector experience and public sector experience,” Mr. Moore said.