The California State Teachers’ Retirement System is inching toward a decision about whether it should build a $300 million office building in West Sacramento on its riverfront campus.
The teacher pension fund has been looking at how it should expand since a 2014 study projected that CalSTRS had a long-term need for more office space than its 9-year-old tower could provide.
On Friday, its board looked at proposals that would allow CalSTRS to proceed with a construction plan, rent space in downtown Sacramento or buy a building.
Several board members suggested they wanted more information about financing and alternatives CalSTRS staff did not present, such as renting space for a decade before constructing a headquarters.
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“We need the time to make the right decision,” board member Joy Higa said.
CalSTRS in 2016 set aside $8 million to develop expansion plans. At that time, it projected constructing a five-story, $226 million office building and parking structure.
Since then, projections for construction costs, energy-saving features, and West Sacramento development fees have climbed.
Board member Paul Rosenstiel said CalSTRS should not rush into an expansion because of those trends. He noted an economic downturn could strike and change the fund’s assumptions.
“I don’t think the reason we should be moving is because of cost increases,” he said. “We should move forward because we need the space.”
A representative from the California Teachers Association told the board that CalSTRS has not communicated well why it’s looking at an expansion less than a decade after it moved into a 17-story tower. CalSTRS, a $225 billion pension fund, is considered underfunded because it has only about 70 percent of the assets it would need to pay all of the benefits it owes to its members.
Another representative from the Retired Teachers Association asked the board to get a second opinion on costs from the state Department of Finance and to air the proposal before lawmakers in a budget hearing.
“This does continue to be a very sensitive issue because of the optics, so when we raise it, it’s typically not regarded in a positive light,” CTA lobbyist Jennifer Baker said.
West Sacramento City Manager Aaron Laurel, meanwhile, urged CalSTRS to continue developing its riverfront campus rather than rent offices in downtown Sacramento. He characterized the CalSTRS headquarters as the linchpin of his city’s riverfront development plans.
“Personally I’d like to look out a window and see a beautiful river instead of a freeway,” he said, comparing the CalSTRS campus to a hypothetical site in downtown Sacramento.
The board did not commit to a plan, and is scheduled to discuss the expansion again in November.