- The Washington Times - Tuesday, December 18, 2001

BALTIMORE (AP) Mayor Martin O'Malley has persuaded Baltimore's pension boards to make a concerted effort to invest locally for the first time in years, ending a long-standing fight between Mr. O'Malley and retirement system officials.
Pension officials are considering investing heavily with local money managers and also are exploring the possibility of investing some pension fund dollars in local companies and projects, the Baltimore Sun reported Sunday.
Critics of the local investment plan said there are risks, including local politics influencing where money is spent and the chance that better financial opportunities elsewhere could be missed.
The Fire and Police Employees' Retirement System has begun interviewing local money managers and the Employees' Retirement System might follow suit in coming months.
A lot of money is at stake. The two boards oversee a combined $3.3 billion. The fire and police fund has about $2 billion of that.
The total assets are more than the city's entire annual operating budget.
Mr. O'Malley has aggressively promoted local investing as an option for pension funds. He made a personal appeal to the board in June and even blocked some retirement fund contracts until he got his way.
Mr. O'Malley sees the money as a potential economic tool. Local investment firms could receive hundreds of millions of dollars in pension fund business and the money also could boost local business and real estate projects.
"We have a tremendous amount of investing power in city pension funds and, provided that we make fiscally sound investments that will pay the highest possible return it only makes sense that we should maximize that power by doing it locally," Mr. O'Malley said.
The fire and police board investment committee has spoken to money managers from T. Rowe Price, Legg Mason Inc., Mercantile-Safe Deposit & Trust Co., and Morgan Stanley Dean Witter & Co., which has a Baltimore office. Officials also hope to interview at least 10 other firms.
One of the firms being promoted by Mr. O'Malley is owned by Baltimore-based entrepreneur Nathan Chapman. The firm is one of a handful of minority-owned businesses that the mayor has urged the city pension boards to hire.
EChapman Inc., however, is already in danger of being fired as a money manager by the state pension fund for poor performance. Mr. Chapman gave a presentation to the fire and police pension board Thursday but did not return phone calls for comment.
Representatives of both pension boards said political connections will play no role in deciding where funds will be invested locally or who will manage them.
Stephan Fugate, president of Local 964 of the Fire Officers Union, which represents ranking firefighters, and chairman of the fire and police pension fund, said having too many political connections might hurt.
"If indeed there is even a hint that recommendations are coming from a political figure, let's say, that's a huge strike against them," Mr. Fugate said. "There's not going to be any political influence," he said. "Nor am I going to be one punishing people because there may be a political connection."

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