OFFICIAL PRIVILEGE

DOCUMENTS

PRODUCED 9/30 12010

Document6
 From: Carrillo, Diego
Sent: Monday, June 22, 2009 1:26 PM
To: Pacheco, Brad
Cc: Weir, Laurie
Subject: FW: Scanned doc

Attachments: DoC[1].pdf

Brad,

Laurie has made some edits to the attached Pagemill document. Please review.

Thanks,

Diego

From: Rodrìguez, Bianca

Sent: Monday, June 22,2OO9 11:39 AM
To: C.anil¡o, D,ego
Subject: Scanned doc

Hey Diego,

Here is the document you requested-

ffi
Docll].pdf (32 KB)

Thanks,

Ãtb
CalPF.RS

Bianca Rodriguez
lnvestments - Global Real Estate
Tel: (916)-795-2254
bianca_rodriguez@calpers.ca. gov

PM-0058
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PM-0059
 Page I of2

Langhi, Taryn

From; Brand, DulcieD. [dulcie.brand@píllsburylaw.com]

Sent: Tuesday, June 09, 2OO9 8:54 AM
To: Weir, Laurie; ericschlenker@gmail.com
Cc: Warren Otto; Pottle, Randy
Subject: RE: Page Mill

Were you aware of this?

h-tlp;/¡ryu¡u.n-erçs.f yne-!v.Ðç.o-!./brcaltnW9-wsl9iJ2-5-16?þ-Z

Dulcie D. Brand I Partner

Pillsbury Winthrop Shaw Pittman LLP

Tel: 2'13.488.7244 | Fax: 213.226.4364

725 South Figueroa Street, Suite 2800 | Los Angeles, CA 90017-4506
Email: dulcie.brand@pillsburylaw.corn

Fro m : Weir, La u rÍe [ma ilto : La urie-Weir@ Ca |PERS.ca. gov]

Sent: Monday, June 08,2009 5:24 PM
To: Brand, DulcÍe D.;'ericschlenker@gmail.com'
Cc: 'Warren Otto'; Pottlg Randy
Subject: FW: Page Mill

here is warren's memo. he did a great job, but it needs to be edited for public consumption. if we could get this
by noon lomorrow pst, it would be greal. thanks L

From: Warren Otto [mailto:Otto@sbfund.com]

Sent: Sunday, June 07,2009 6:41 PM
To; Weir, Laurie
Cc: Schlenker, Erîc; Doug Sturiale; Josh Callahan
Subject: Page Mill

Laurie, I've attached a word document entitled "Page Míll Summary" for your review and edíting as need be. I

really struggled with this document, ljust am not sure what its main purpose will be- So I wrote it as though it
were intended for an elected representative with a natural interest in CaIPERS and its investments, but also wìth
an interest in the weffare of the people of East Palo Alto.

Itried to keep this document short, but it's impossible to do Page Mill justice without a fair amount of facts,
background and context. As you can see, l've tried to make it as current as possible, so the reader will
understand how precarious the investment ís now, wÍth the portfolio performing so poorly and the debt pay
down looming. Feel free to circulate this draft however you wish to solicit feedback from others you want to
involve in the document.

l'll be in all day Monday should you want to discuss this document at alf, but feel free to edit it however you
wish to make ¡t serve íts purpose. I'll be in our SF office Tuesday afternoon and all day Wednesday, and then in

PM-0129
 Page2 of2

'your neck of the woods most of Thursday.

Regards, W.

The contents of this message, together with any attachments, are intended only for the use of the
individual or entit5r to which they are addressed and may contain information that is legally privileged,
confidential and exempt from disclosule. If you are not the intended recipient, you are hereby notified
that any dissemination, distribution, or copying of this message, or any attachment, is strictly prohibited.
If you have received this message in error, please notify the original sender or the Pillsbury tù/inthrop
Shaw Pittman Help Desk at Tel: 800-477-0770 x4860 immediately by telephone orby retum E-mail and
delete this message, along with any attachments, from your computer. Thank you.

+ Intemal Revenue Service regulations generallyprovide that, for the purpose of avoiding federal tær
penalties, a taxpayer may rely only on formal written advice meeting specific requirements. Any tax
advice in this message does not meet those requirements. Accordingly, any such tax advice was not
intended or written to be used, and it cannot be used, for the purpose of avoiding federal tax penalties
that may be imposed on you or for the purpose of promoting, marketing or recommending to another
party any tax-related matters-

-_.-_------

PM-0130
 Page I ofl

Langhi, Taryn

From: Wanen Otto lOtto@sbfund.com]

Sent: Sunday, June 07,2009 6:41 PM
To: Weir, Laurie
Gc: Schlenker, Eric; Doug Sturiale; Josh Callahan
Subject Page Mill
Attachments: Page Mill Summary - 09,06.08.docx

Laurie, l've attached a word document entitled "Page Mill Summary" for your review and editing as need be. I
really struggled with this document. ljust am not sure what its main purpose will be. So I wrote ìt as though it
were intended for an elected representative with a natural interest in CaIPERS and its investrnents, but also with
an interest in the welfare of the people of East Palo Alto.

Itried to keep this document short, but it's impossible to do Page Mill justice without a fair amount of facts,
background and context. As you can see, l've tried to make it as current as possible, so the reader will
understand how precarious the investment is now, with the porl.fol¡o performing so poorly and the debt pay
down looming. Feel free to circulate this draft however you wish to solicit feedback from others you want to
involve ín the document.

l'll be in all day Monday should you want to discuss this documeni at all, but feel free to edit it however you
wish to make it serve its purpose. l'll be ín our 5F office Tuesday afternoon and all day Wednesday, and then ín
your neck of the woods most ofThursday.

Regards, W.

PM-0133
 Page MilI Summary and Update
June 8,2009

Þackground and Context

PageMill Properties II (PMP-II) is a limited partnership, capitalized with $116 million of

committed equity anð a8242 million loan from Wachovia (now V/ells Fargo), reflecting an
overall leverage ratío of approximately 68 percent.

PMP-II is managed and controlled by the general partner, Page Mill Properties (PM), a private
company controlled byDavid Taran.

CaIPERS has committed $100 million, or 86 percent, of the total equity, $95 million of which
has been funded as of June 8th,2009. The remaining equity has come from a number of private
high-net-worth individuals and David Taran.

Over a tv/o-year period ftom2006 to 2008, PMP-II acquired a lmge and diverse portfolio of
properties in East Palo Alto in 101 separate transactions encompassing:
a) 1 l4 parcels of land, dispersed throughout 180 acres in East Palo Alto
b) 185 buildings with an average age over 50 years
c) 1,810 residential units of all shapes and sizes, including l7 single family resídences
About 1,600 of the 1,810 residential units are subject to East Palo Alto's Rent Stabilization
Ordinance, which limits rent increases in occupied units to a rate roughly equivaìent to the Bay
Area's overall rate of inflation.

Since acquísition, PMP-II has spent about $14 million improving the properties and the
Woodland Park neighborhood in which they are located.

The properties were acquired as real estate values were peaking throughout the country. A year-
end 2008 appraisal estimated the value of the properties at $250 million, representing a drip in
value of about 29 percent. This valuation reduces the value of the partnership's invested equity
by 93 percent, from $ I l0 million to $8 million.

A more recent discounted cash flow analysís of the portfolio, which takes ínto account the
portfoiio's recent operating performance and status, estimates its value at less than 8225 million,
which would render the partnership's equity rvorthless, and indicate that the lender will not
recover its full loan principal.

PMP-II's $242 million loan has a $50 million pay down due August 1,2009. The partnership
does not have the equity required to meet this obligation, which could throw the partnership into
bankruptcy and ìikely liquidation.

PM-0134
 Original Stratew

PM's original strategy was to aggregate a large number of properties in the Woodland Park
neighborhood of East Palo Alto and add value by:
a) Improving the properties and neighborhood
b) Bringing below-market rents to market and raising overall rent levels
c) Evicting tenants engaged in drug-dealing or other criminal activities to improve the safety
and resident profile of the properties
d) Controlling large contiguous land areas in East Palo Alto and change the zoning if
possible to profìtably redevelop some of the properties
e) Consolidating the ownership of many small properties into one large investment, for
which a REIT or other institutional investor would pay a premium

PM believed it could successfirlly execute its strategy and exit the investment before the
partnership's loan became due in 201 l. lt believed a successful execution of this strategy would
enable it to sell the portfolio for over $400 million and generate a retum of 13o/o to lTYo for its
investors.

East Palo Alto's Rent Stabilization Ordinance

One of the keys to PM's strategy was to boost revenues by bríngíng below-market-rents to
market within the bounds of EPA's Rent Stabjlization Ordinance (RSO). This ordinance sets a
"legal maximum rent" for each occupied unit which goes up every year, regardless of whether
the landlord chooses to raise the rent or not. Over the years, many previous landlords did not
raise rents, allowing the "legal maximum rent" to rise well above the actual rent being charged.
PM's strategy was to raise the rents of these units to the maximum allowed, which, in many
cases, resulted in dramatic rent increases and absolute rents which were beyond the ability of the
existing tenants to pay. As a result, many tenants vacated their units or were evicted when they
could no ionger afford the rent.

PM did not anticipate the social and political fallout from its actions. As the evictions mounted,
tenant groups formed to protest thc rent increases and the City of East Palo Alto began to
actively resist PM's efforts to raise rents. The city and the Rent Stabilization Board took actions
to slow down and block PM's efforts to raise rents. PM fought back with a series of lawsuits
which have all prevailed, and have cost EPA hundreds of thousands of dollars in legal fees,
which the city cannot afford.

However, these fìghts have also cost PMP-II dearly. Not only has PMP-II incurred lcgal fees,
but the city's tactics slowed PM's ability to rent units, as units car¡not be improvecl or rented
without pennits. As a result, the partnership's vacancies have soared to over 400 units (22o/r),
rvhich costs PMP-II over $500,000 per month in lost revenue-

PM's most aggressivc tactic has been to sue the city to remove about 1,200 units from the
jurisdiction of the RSO, under a provision of the RSO that allows units to be removed from its
control if a suffìcient amount of capital has been spent rerlovating the unit. PM is arguing that ìt
has spent the capital required to trigger this release.

PM-0135
 Should PM prevail in this legal action, it would gut EPA's RSO, as it rvould remove a sizable
majority of the total number of units in EPA's rent stabilization program, and make it much more
difficult to administer as the program woulcl no longer generate sufficient fees to pay for the
costs of administering the ordinance. This lawsuit is still pending.

What Went Wrong

Besides the legal troubles with EPA and the negative publicity from the tenant groups which
have tarnished PM's reputation, the economic downtum and credit crisis have severely impacted
the partnership's strategy.

The economic downturn has forced many lower-income households to double up or leave the
Bay Area altogether, reducing demand for housing and causing rents to drop- The rents forecast
by PM to drive the value of its properties up are simply no longer achievable. A slow and
gradual recovery in rents is now forecast for the Bay Area. Also, the reduced demand has
contributed to the porÈfolio's high vacancy rate whích is very costly to PMPJI. The high
vacancy rate will contribute to PMP's very poor economic performance in2009, where propefy
operations are now expected to generate only S5.9 million in net operating income,77 percent
below PM's budgeted-amount of $20.0 million.

The credit crisis has dramatically increased the cost of credit and virhrally eliminated the
availabilíty of credit for large real estate transactions. This development makes the looming S50
million Wachovia loan pay down problematic, at best. Unless Wachovía grants PMP-II an
extension to this pay down, the lender will seize the property and likely proceed with a
liquidation which, in today's environment, would generate proceeds of less than5225 million.
And even if Wachovia grants the partnership an extension, the properties generate so little cash
that PMP-II wíll eventually face a liquidity crisis and be forced to sell its properties at vaiues
insufficient to repay the lender.

CaIPERS's RÍqhts, Position and Statuq

As a limited partner, CaIPERS has no rights to manage or direct the affairs of PMP-II. CaIPERS
staff llave met with PM on several occasions to voice their concems over PM's actions which
have aggravated East Palo Alto and displaced many low-incorne residents. In addition, CaIPERS
fonned a dedicated team of staff and consultants to evaluate PM and identifo steps required to
make well-informed decisions on the inveshnent. There has been no evidence of wrong-doing or
illegal actions by PM, yet the manager's actions have and continue to aggravate EPA and create
an impression of "predatory equity" investing, which bríng it negative publicity and, by virtue of
CaIPERS's investment in the PMP-ll, bring CaIPERS adverse publicity.

Per PMP-lI's limited partnership agreement, CaIPERS has no rights to direct or control the
affairs of the partnership as a limited partner. However, per the partnership's original
documentation, CaIPERS negotiated for, and was granted, the right to replace PM as the
partnership's general partner at àny time after January 28th , 2009. CaIPERS has carefully

PM-0136
evaluated this right, and may yet exercise it if necessary, but to date has refrained from doing so
due to the potential liability which would come with such replacement and the risks of having to
take over the operations of the partnership. Replacing PM is especially problematic now, given
the $50 million loan pay down due August 1,2.009 and the partnership's poor operating
performance and high rísk of bankruptcy-

In the last month, PM has approached East Palo Alto and invited the city to engage in mediation
to sort out their differences. Given the partnership's impending capital crisis, it is not clear what
can be gained from this mediation, which will undoubtedly take many months and whose
outcome is uncertain, at best. CaIPERS continues to believe that its interests are best served by
maintaining its status as a limited partner in the partnership and carefully monitoring the
situation as it develops-

PM-0137
 Page I of I

Langhi, Taryn

Frorn: WanenOtto[Otto@sbfund.com]
Sent: Tuesday, June 02, 2OO9 12:34 PM
To: Weir, Laurie; Schlenker, Eríc;Stocking, Barbara; Yrure, Edward;Pottle, Randy;Eliopoulos,
Theodore; Alexander, Judy
Cc: Mateo, Michele; Bow, Sharol
Subject: Page Mill,

I am working with Michele to coordinate meetíngs in your offices next Thursday afternoon on Page Mill, ,

; but ljust wanted to give all of you a heads up that we're hopíng to meet with you then from 1 pm
through 5 pm.

Parts of each of these meetings will be ímportant for Ted and Randy to attend, namely:
1- Page Millvaluation and recommended strategy - say 20 minutes.

REÐÆGTEf}

4,
dr
i+
'..;
::

Additional emaíß regarÕlrrg these meetings will come from Michele as she and I work together to get them I

scheduled.
t

PM-0149
 CALIFORNIA PUBLIC EMPLOtræES,
RETIREMENT SYSTEM"
PAGE MILL PRO
INDEPENDENT A ANTS'REPORT
ON APPLYING A

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PM-0306
 CALIFORNIA PUBLI c. BtVl pr,oyEES' RETIREMENT sysrEM
.: PAG-E MILL FROPERTIES II, L-P.
INDEPENDENT ACCOUNTANTS, REPORT
. ON APPLYING AGREED-UPON PROCEDURES

TABLE OF CONTENTS

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PM-0307
 5'6,*rft Nl iLñrn

Mr. LarryJensen
Chief Officer of Audit Selwice
California Public Employees' Retirørient Systern
Sacramento, CA

INDEPENDENT ACCOLINTANTS' REPORT

At the request of the Califomia Public Employees' R

have performed the Real Estate Partner Program
program on Exhibit I, with respect to Page Mill
Illy 26,2006 by and among Page Mll
or "General Partner') and CaIPERS.

The procedures, which were agreed to by C

The Partnership was 9, dev-eJoþ, renovate, operate, manage, hold for

ln ''.¡4diigct inte¡ests in real property located in the
Uni rifl-ç,1rtial, industrìaJ, retail, hospitality, office and other
We
of at
CaIPEB totaJ
investm is July 2006 through Jnly 26,2009-

This en app.!$ agreed-upon procedures was performed in accordance with the

attestation ls:i!êstablished by the American lnstitute of Certified Public
sta
Accountants. The iency of the procedures is solely the responsibility of CaIPERS.
Consequently, we make no representation regarding the sufficiency of the procedures
eíther for the purpose for which thís report has been requested or for any other purpose.

Findings and recommendations have been documented begrnning on page 3 of this

repod.

Squln, MllNrn, Prrunso¡¡, Mln¡¡lon r ìùØrLLrnvso¡¡, LLP

Lt::íirj i:'ti,ti;i: ii:ir¡,1¡¡.'l'¡i, ; i:'"',:itti;i.:¿ët',:t't,..\,:,:,;r,,,i í.i;¡r¡l; -ii¡;,; ;1.;;
-fhircl
4100 r\ícwport Placc f)rivc, Floor: Ncw¡rort Beach, CA 926ó0 3655 Nobcl Drive, Suitc 500: San D;ego, CÀ 92t22
Tel, 949.221.2999 i I: ax, 949 -222 -2989 Tcl.858-597.a 100 i Fax: 858-597-4ttl
Vjci¡silc., .,t'..\,\r,.)-.:r:.lici:l rìi,r.( 4,,ri

PM-O3OB
 ùlr- Larry Jensên.
Chief Officcr of Àudit Service
Page2

We were not engaged to, and did not perform an examination, the objective of which
would be the expression of an opinion on the specjfied elements, accounts, or items of the
Partnership. Accordingly, we do not express such an opinion. FIad we performed
additional procedures, other matters might have come to our attention that would have
been reported to you.

This report is intended solely for the use of CaIPERS and Page Mill and is not intended to
be, and should not be used by anyone other than those specified above.

Newport Beach, California

February 29,2008

Squar Milner Rcal Estate Seryiccs, GP

PM-0309
 Executive Summaryof
Findin gs and Recommeiäafions
for . :t:,'
Page Milt Propeities.ll, L.p,,

Squar Milner RËal Estarc Sejvices, Gp

PM-0310
 ':'''..'. .:.':.
CALIFORNIA'PUBTICEMP.LOYEES'RETIREMEÑTSYSTEM '' J ' i

PAGE MILL PROPERTIES II,L.P.

INDEPENDENT ACCOUNTAÌ'ITS] R.EPORT oN APPLYING AGREED-UPON PRocEDUREs

STATE OF CALIFORNI.A PUBLIC EMPLOYEES' RETIREMENT SYSTEM

Executive Summary of Findings and Recommendatiorx

Paee Mill Properries II. L.p.

I;evel 'Manager FundsJAssets Managed
Manager PageMill @.
Investment Findíngs/Recommendations Auditee Response Auditor
Comment
l) The Private P The LPA and-.PPM make clear
lacement We concur
Memorandum (PPM) c alls
for that the G",çjñNqt Partner has with
investrnent diversification s o that no the dis.s,f-fion ù formulate managernent's
more than 20% of i rggregate invesÍdÉ'fit#,b-rratesy
":!l:
rcr.*,i-'i-
and that corrective
maximum commitrnents arr : made in the ?:ártnerShiü1.ì¡does not need action plan.
any one investnent. The Pa rtnership 'esï ln property
Page Mill acquired 89 assets in r singþ ¡ of real rkets or
Properties II, neighborhood. See Comn rent¡@.1" ':,* achieve

L.P- below for further informatic ,n. 'i,,i1 . No one

Þìrmership Ëiceeds
We recommend :he LP 2Ùu/ti: qf
aggr e9ate maximum
Advisory Committee fu.rnrallv
cominittrents and there is no
approve the apparent $'ffis"ís the LPA or
I --vgæ=tl
the diversification
| ":æ&l #JJur the
åu "$'iegarding
'?e-gåël =Pffigship's investment
I
diviffiíh cation requirern enrs.

Investment Auditee Response Auditor

Comment
1,2),,Thg Invi$rgnt ilightïeþts in lThe lcn¿s '¿t" intemut We concur
I each of :ttrq Investrngnt Committee I documents maintained by the with
I Memoraräla;(l'IcMdi?¡:w€ reviewed I General Part¡rer and have not management's
I include the oþporhrnÍ¡f to purchase I been distributed to or relied corrective
f.ille property ,at: approximately 40% I upon by CaIPERS or other action plaî.
I
below markef:asking rates. Three of I thira parties. The language
I the six propefties selected for review I was meant to be a broad
Page Mill ' were 'acquiied for prices slightly description of the marker
I
Properties II above tlre appraised vaiue- See I oppornrnity. The ICMs have
L.P. Comment (1) below for further I been updated to better reflect
infonnation. that intent and to clarifo that
acquisitions would be below
We recomlnend that paee ,.,, I current or potential value
improve the manner i" *ti"' iujr I (rather than belor'v market
ICM is prcpared, using information I asking prices).
and due diligence data specific to I

the unique nature ofeach asset. I

Sqmr Milnr Ral Esrare Seryices, Gp

See Inclependent ÅccounloTtls' Report on
Á pp lv i n g A gre ed - Upon Procei u res

PM-0311
T

CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM

PÄGE MILL PROPERTIES II, L.P.
INDEPENDEN'T ACCOUNTAÑÎS' REPORT ON APPLYINC
ÁCNNTU-UPON PROCEDURES

STATE OF CALIFORNI.A PUBLIC EMPLOYEES' RETIREMENT

SYSTEM
Executive Summary of Findings and Recommendations

Page Mill Properties II. L.p.

lcontinued)

Investment Findi ngslRecommendations Auditor

Auditee Response
Comment
J) yage
Mill charges the partnership These fees were verba$ 'We
I concur
for property management, leasing approved by the CalpERS with
and redevelopment fees in addition portfolio mana5er at an Lp management's
to the Management Fees. The Advisory Cor¡¡ìnîhee meeting corrective
Agreernent allows for these types of held at CâIPERS offices in action plan.
fees subject to the review ofthe Lp
Page Mill Advisory Committee. See Comment
Properties II (8) below for further information.
L.P.

We recommend that any fee chargei

beyond the Management Fees be
documented in the next Lp Advisory
Committee meeting. ,Ë,,r,ro_
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renrs: .:;-1,
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Conrments:
.r.,;il:jÊ,, =_,r;+ $.
l. our review I

""tìt+itreo.."-tæå-ffii{ng lffinership's (i) i nvestor capitat accounts,

(ii)venctorç""r*.i$lti¡.J50$n*ig.oi;ffi
the
andliv¡u"quir"apropertìes.
z¿.!.1i,,
2. Page Mill
*o'nagem"nË'1,;p.,¡gvìded copies of poricíes and procedures for the
aecounting and property mãiffient fuictions.

3. We fbttg4 no exceptions as to the manner in whích capital accounts are managed or

reconciled (including records associatecl with booking capital contributions,
allocations, oî distributions).

4. We founci no exceptions as to the manner in which vendor

contracts were managed.

5' Our review of the Partnership's books and records for accuracy,
cornpìeteness,
timeliness and general compliance with GAAP requirernents
resulted in no
exceptions-

Squr Milncr Real Est¡re Scryiccs, Gp

See lndependent tlcco.tnlonß' nepoil o,t
/1 pplyí n
9,1 grc cd- Upon p rcced ures

PM-0312
 CAIIFORNIA' PUB I ;I C EMPLOYEES''RETIREM ENT SYSTEM
PAGE MILL PROPERTIES II, L.P.
INDEPENDENT ACCOUNTa-lvrs] RXPORT ON Appl,yrNc Ácnnno_woN pRocEDURES

STATE OF CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT

SYSTEM
Executive Summary of Findings ancl Recommendations

Pase MiIl Pionerties II. L.p.

lcontinueel)

6' The PPM provides a definition of Fund Investments as

follows: ..The Fund intends
to invest in and to acquire direct or indirect interests in a range
of property types,
including residential, industrial, retail, hospitality, office and
other propefies,,. The
PPM provides a definition of Inveshnent Limitaiions as
follows: ..unless otherwise
approved in the discretion of the LP Advisory Committee,-lhe
Fund will not invest
mo¡e than 20o/o of its commítments in uny ón, Investmát".-As
orr" may literalþ
interpret that none of the 89 residential qll i" ¡urt palo Alto, violate the
diversification th¡eshold, one may also ""qúi*itioor,
ìnterpret: the';ll;ctive concentration of
investment assets in a single neighborhood does,'in fact, violate
the threshold. As
calPERS holds voting rights on the Lp Advisory.committee,:t*apr;;;;;i;
have zuggested that page.Min formalry gb¡l- I-Þ eauisorf
õ**iiri*
remedy the apparent ambiguity of the diversification
Ìanguage. .
"î;;";;il;
7. V/e seleCted six properties for review, .

# Above oZ
%o Below
Address: Units Annraisal Acg- Priee Market Market _
1-8 Newell Ct. 221 $ 34,700,000 '$ 35,411,s51 2.Lyo
s 5,:,945,439 4.4%;o
s 3,89s,000 l6.2yo
$ 2,0s1,842 3.6yo
s 996,226 9.4yo
s gt2,8g1 33_6yo

"'ìii¡'''
røirr provided its lnçiffil"irt committee Memoranda (..ICM')
f+e9 for each of the
IClr-4sr'" were prepared by page vìil prior ro
:tl_ Pi,:P"ttt"r'. . Tr. individuar
acquisiti-ons and included "boirer-plate,, ianguage (sarre write ui for
each of the six
properties) suggesting- that eacll of the investlnent assets
were being purch ased 40To
below market value As reflected in our above analysis, three
of the properties were
acguired at a price above the appraised fair market value
and none were purchascd
for prices thar were 40%o beìor.v the appraiseci value_ The use of ..boiler_prate,,.
Ianguage is misleading when used in undlnvriting clocuments
such as the ICMs. The
PPM provides that "Page Mill employs a thorough due
diligcnce and conservative
undenvriting process to determinè the value of potential
învestments, involving
asset lnanagement, leasing, devcloprlent, construction,
property management, and
finance disciplines to examine prorp"ctive i¡rvestment to ánsure that it meets
mjnimum underwrìting standards, "u"ú physical/structural,
envjronmentar a'd legal
requirements". We obsetve that industry standard would
call for each ICM to be
draftecl with inforrnation crescribinþ the u'ique nature
representing the irigh level of ciue diligence the General
of the asset, better
Partner plecìged to conduct
Squar Milner Reai Estate Senices, Gp
See !ndependcnt /ccountants' Re¡ton o,t
ó- Ápp l.vi ry Å greetl - tJpon pt oced u res

PM-0313
 PIIGE MILL PROPERTIES II, L.P.
INDEPEN DENT ACCOUN'I'ANTS' REPORT ON APPLYING AGREED- UPON
PROCEDURES

SÏ',{]'E OF CAI-IFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM

Executive Summary of l-indings and Recommenclations

Paee Mill Properties II. t.p.

(continued)

8. The PPM provides for an lnvestment Management Fee a¡d allows for other property
related fees to the Advisor, or an affiliatq provided the terms are at least as
favorable to the Partnership as the terms reasonably-expected to be available in an
arm's length transaction with an independent third ,p*y- The cumulative fees
incur¡ed from JuIy26,2006 (inception) rhrough the of2007 are:

Amount in
Type ofFee Method of $1,000's
Investment Managernent Fee l.5o/o of Avail $ 1,909
Property Management Fee Greater of
ìr¿'l*-'.
ofproj y revenuesii,.l::iji' 690
Leasing Fee Greater of h's rent or
3%o of aggregale 241
Construction Management Fee Greatcr of ,5%ó of cost of
labor or$10O 278
RedevelopmentFee .:..: ,;,,., 3%o of the project budget 4,019
. ,j-:,r:.
..:::
.riÊ"
::
tjr. i:;r
$ 7.137
rr':, , .j',.
,; :..1;r ì.
..,r;;...:r.
.

''. -ií;,'i!r::i.'....i. :, ... ,..-....u

i!ï'
.:Ì:.-r..
.::. !r
',-;.:.'i. -.
'ii 1;r:'=l

Sguar Milner Real Brare Seryics, Gp

See lrulependen t,4 ccot n tan t.t' Repoú on
ilppl-,tin g A grced-Upon Prccecl ures

PM-0314
 CALI FORNIA PUß LI C EM PLO YEES' RBTIR-ET,'I
TNi SYSTE M
I PACE MILL PROPERTIES II, L.P.
INDEPENDENT ÀCCOUNTANTS' REPOIT
ON APPLYINC ÁCNUBN-UPON PROCEDURES
EXIIIBIT I

CatpERS
REAL ESTATE PARTNER PROGRAM APPLIED TO
' PAGE MILI. PROPERTIES II, L.p. (..FLIND II'),
AND RELATED
AGREEMENT OF LIMITED PARTNERSHIP
(THE'?ARTNERSHIP AGREEMENT,)

The scope- of the agreed-upon procedures engagement

to be conducted on page Mill
Properties II,L.P. ('.Fund II') is as follows:

A. Matters Relating to partnership Govemance

.. .,.,.i
l' Conduct an entrance conference with Page Mill officials
to discuss the
scope of the Agreed-upon- procedu¡e.s, the, status
of the existing
-tr,E
investment properties and pr**"á for purchase- ni."urr
time1ineforcompIetionofthe¡eviäw..:...-..
-those

2. obtain and review the partir¿rsþip Ag¡evment and aü.amendments

_ thereto_ Obtain and review 'the, Confidential privaie pù";;;;
Memorandum for Fu¡d II (the "Ftind II ppM,). Note
any inherent
contradictions and/eir terms of the Paftngrship Agreement
that do not
confonrr to the Fund'II,ppM or industry.sr*au.ar;
incrude ,u-*ury
of findings.

3- obtain,and-¡eview axy management'a-ereement between

Mi[ Advisors, LLC (the "Investrient Advisor"); through Ir
Fund and
Page
which
mana.gement'"agreement, Fund II may deregate
certain of its
operational d-r¡ties and responsibilities ro,rt"ïu"rr-"ni""ãrr.år.
Review the'duties a¡d responsibilities delegated to
the Investment
and,¡¡ote any inappropriate deregauoris; incrude
{d.y¡sor a summary of
:' findings. observe the lever of asset
management or 'roan management fees payabre -unug.rn"rrt, portforio
under trre Fund II
Agreemênt; reconcire fees paid to date andioiacc*ed
to date.
4- Review calpERs' capitar commitment to Funcr
Ir, note amount funded
to date, remai'ing capital comlnitment, if any, and timetable ancr
condirions under which carpERS may be cailed'io
advance ,ã¿lii*"r
funds In those instances where capital has been returned,
examine the
conditions, if any, under which the General partner may reca¡
sucrr
funds; report findings.

Squar Miltrcr Real Esrate Scn ices, Gp

See )ndepen<lent ÅccountoDts. Repon otl
Ápplyin g Ag reerl- Ltpo n p roccd u res

PM-0315
 '. .......:.- jr.'. .j .. .;,. I -.

PAGE MILL PROPERTIBS II, L.P.

INDEPENDENT ACCOUNTANTS' REPOR'T ON ÂPPLYING ÂGREED-UPON PROCEDURES
EXI.IIBITI

5. obtain and review policies and procedures rerating to the management

of capital accounts and note inherent weaknesses; include u r**ury
of findings and recommendations to strengthen procedures. Review
most recent reconciliation of capital accounts, noting capital
contributions, allocations, pa¡rments made to the Investm"r,iAduisor,
and appropriateness of same as called for in the partriership
Agreement; include a summary of findings. Obtain support for
contributions and distributions made by calpERS by/to Fund II
investors; veriff that base and/or incentive fees paid to the Investnent
Advisor were calculated pursuant to the...p"-'iiitnership Agreernent;
inspect financial model used to apportion* distrbutiàns îo insure
consistency with the Partnership A rt findings.

6. Obtain and review policies and

of vendor serr¡ices and note i
of findings and
random sample of third
with policies; note any affi
findings.
.'';l;jii:

7. Obtain, review and do.crunent polícieJi!{ind*proceaures relating to

accounting methods, intemal. qentrols and:níaintenance of Fund II's
books and records and note inhersnt woak;esses; include a summary
of findingç qnd recommendations to strengthen procedures. obtain and
re¡iew the 'pãrflrership's books and records and report conditions,
Which contradict in-place procedures; focus accuracy, on
completeness, timeliness and compliance with GAAP requirements.

8. oblain and review policies and procedures rerating to the process used
to apÞrove portfolio investments; note any contradictions to industry
standáids; note policy weaknesses and make recommendations as
necessai¡r to strengthen policies and procedures.

9_ obtain and review policies and procedures rerating the management of

tbe portfolio investments in Fund Il, noting *.ãkn.rr"s oi policies
inconsistent with industry standards; include a summary of findings
and make recommendations to strengthen policies found to be weak.

Squar Milncr Real Estrtc Sclviccs. GP

Su Inl ap entl e n t .,l ccotn tan t.t' Re lìor. t o n
tlpp lyi n 9 .4 grc ed - Upo n P roced u ¡es

PM-0316
 '., -:.j-'. , : {-'' :.-, ,, . : --:,
CALI TFORNIA
FORÑIN PUI
PUN I, Tò NNIiiO.VEËS' RNTTREMEN T
SYS TEM
PAGE MILL PROPERTItrS IL L.P.
¡NDEPENDENT ACCOUNTANTS' REPORT ON
APPLYING AGREED.UPON PROCEDURES

10. Review the portfolio inveshnents to assess consistency

and compriance
with any investment-mix criteria estabrished urrdei tÈe rarråership
Agreement; note inherent contradictions to the guidelines
set fofh in
the Parrnership Agreement.

11.
9..91"i1
and review (i) rax firings, (ii)
quarrerry financiar statemenrs,
(iii) the two most recent quartãrly r.pórt, on Fund II activities
and
individual investments' (iv) any investment taffic logs, (v)
rist of
acquired/disposed assets, and (vi) quarterry statement
of fees paid by
Fund II; note the Generar p*orá'r timeliness. ir pr"pJö
documents a¡rd/or delivering same to interesied puii"r;'r"pon
*"r,
findings. Review and recalculate manageme¡rt fees to tne
lníestment
Advisor and determine compriar"" wiú the partnersh¡
Ãg.""rn*,.
Review the detailed generar re{eer ai the portforio t"ua
and/or unusual transactions-
îo, urg"
,. .'
._",
.. .

12. Review the General partnei's"organizational chart to deteinnine

plac-e key managers arê consistentrwith
if in-
those set forth in'tir" pirri *¿
nageShip Agreement; identifu kej managers not consistent
l-he with
those cited in the PpM or the partnérshiþ agr".*"nt;
report findings.
,1'
13. Review insurance coveragè maintained by Ftrnd II; report
fìndings.
14- ership's:general obligations and responsibilitjes
under
of Scotlærd subscription line of ;edir ($90 million)
aster mortgage with Wachovja Bank- Focus
on the
Fpliance rvith its obligations as a borrower, the
the loans and jts reìationship with the
lètermjne the permitted level of mortgage
PPM and the Partnership Agreement, -aàd
ip's compliance with the same.

.i.

Squar Miìncr Rql Esr¡rc Scryices, Gp

See Indcpcnlenr Åccountants' Report où
A pp l¡tin 9,1 greed- Upon proced u
rcs

PM-0317
 B. Matters Relating to Asset and Loan Management

l. obtain and review project file with focus on the process emproyed
to underwrite the lhe
individual investments; note inconsistencies with
Fmd II's standard poricies and procedures used to underwrite
qualiffing investments. Focus on matters including the commitment
letter/memorandlm of understanding; purchu." *ã sare agreement;
development or business plans; underwriting processj due
dirigence
performed; and closing process; sarnpre six- aìquisitions and
,"po*
findings. Interview the Fund II investment officei(s) who manage the
invesünents- -

2. obtain and review Fund II abstract '(if uay) of the documents

evidencing the individual i
the asset management
investment. Review In
management and loan
each investment; report
Focus on matters including
administration; site- þspections;
t¡ansactioirþ. Obtain and review
administration file for each
Advísors complianbe. with its asset
lloi p$+f,.,,-"t as to the mónitoring of
wìih policies anit procedures.
variance reports; draw
tion of real estate tax

performance; and, sales a_qd/iif ìeasingÉprogress. Interview

the
Invltrnerrt.t officer's in-charge of asiet management and roan
administrdtion functioni; report on sufficienJy of staff and
qualilìcations thereof; report on the investments' performance
versus
the acqui sition underwriting.

Squar Milncr Re¡J Estarc Sen'ices, 6p See lndependcnt /ccountants Repu-t on

Á ppl.vitt g A greetl -Upon prc ce th n es

PM-0318
 Page I ofl

Langhi, Taryn

From: Wanen Otto [Otto@sbfund.com]

Sent: Monday, December0S, Z00g 12:31 pM
To: Weir, Laurie; Eliopoulos, Theodore
Gc: Stocking, Barbara
Subject: Page Mill

I am scheduled to meet with David raran this wednseday at pm

2 in his palo Alto office. During my time with
him, we'll take an hour or so to tour the properties. I understanå
think we should coordinate our aclivities on'Page Mill as much
t¡'åiJ";;i;;ffiil;ïi;iJ#';i the mee.ns. I
pã"riol". I think it is in calpERS,s best ¡nterest
lo fight this battle on one front, with us workingilosely togethet ""
ruãÀinåt we represent a united front to David.
The main purpose of my meeting is to get as much ínformation
as t can out of David before the relationship
deteriorates further- I want to better un-derstand the economics
or wr,ãi page Mill owns and what David,s
expectations are' I'd also like to get him to tell me. what he thinks
hË ãpiioñ" are in this situatiòn, if I can get him
to put his suard down enoush to do so. lwittbe abte.to share everyth;itìË;;;;'i]"]ïi'Thursday
aflernoon in your offìces. lf there is anything we want me to know 6erorà.1
see David, please call me on my cell
630 441-8387. I'm in chicago today, but *ii be in sF tomorrow
and wednesday.

< t.rQ t1^t

^

PM-0323
 CalFER9
GONFIDENTIAL
lnvestment Office
P.O. Box2Z49
Sacramento, CA 95912_27 49
(e16) 795_3647
FAX (916) 795_3e65
Telecommunications Device for the
Deaf - (9i 6) 7gS_3240
.
Date: January 29,2OOB
To: Members of the lnvestment Committee

From: Ted Eriopouros, senior rnvestment

officer
Bob Langhi, portfolio Manager
Laurie Weir, portfolio Manaier

Subject: page Millproperties

Litígation
Attorney Client privileged Communication

The purpose of this memo is to provide

background information on two investment
that commíttee mem¡ers may read
ffXff^n,os about in tÀe press or otherwise
hear

RË&&ürHw

Galifornia public Employees, Retirement

Lincorn praza East - 400 e str"åi,cuiiJE4g'' System
- sacramento, cA 9s8r4 i

4l

PM-0333
 PAGE MILL PROPERTIES II, L.P.

ln 2006 CaIPERS Real Estate entered into an investment pgrtnership committing $100
million to Page Mill Properties ll, L.P. Page Mill has amassed almost 100 existing
apartment buildings in East Palo Alto aggregaling ovei' 1,800 units housing over 6,000
residents. Page Míllembarked on a building rehabilitation program, including new roofs,
se¡sm¡c upgrades, and ímprovement to common areas and landscape.

Page Mill has recently come under harsh criticism for raising rents on tenants who are
primarily low income and working familíes. Community leaders have expressed fear that
Page Mill's strategy may include replacing some of the last available affordable housing
with more expensive housing stock.

All of Page Míll's properties are under East Palo Alto's Rent Stabilization Board which
limits frequency and size of rent increases. ln response to concems that Page Mill might
increase rents, the city proposed to restrict the ability of Page Millto do so. (Allowable
rent increases under the rent stabilization ordinance is in dispute.) Page Mill reacted by
increasing rents up to their understanding of allowable rents the week before Christmas.
I

The City Council passed an urgency ordinance imposing a six-month retroactive rent
treeze on rent controlled apartments. ln response, Page Mill has filed a lawsuit in San
Mateo County Superior Court to force the city of East Palo Alto to rescind the urgency
ordinance. The Court has agreed to hear the case and ordered an expedited process for
reaching a conclusion. A hearing is scheduled for February 21,2007.

Staff has conveyed concern and disappointment to Page Míll for their recent actíons.
Notably, staff has told Page Mill that the investment of CaIPERS funds should not result
in the involuntary displacement of low income or work force households. Staff ís
currently seeking legal advice on CaIPERS' rights under the partnership agreement, and
has asked to meet with Page Mill to reiterate our concerns.

The Page Mill rent increase and litigation has generated a lot of press, and a few calls to
CaIPERS Office of Publíc Affairs. Public Affairs has referred all calls to the Real Estate
Office. Staff has received a Public Records Act request which has been fon¡rarded to
Legal for response.

Questions regarding these issues should be directed to Ted Eliopoulos at (916)795-

3647 and Pat Macht at (916) 795-3850.

cc: Russell Reed

Anne Stausboll
Pat Macht
Peter Mixon

PM-0334
 CaIPERS
CONFIDENTIAL
lnvestment Office
P.O.Box2749
Sacramento, CA gSB12-27 49
(e16) 7es-3647
FAX (916) 795-3965
Telecommunications Device for the Deaf _ (916) 795_3240
Date: December 2,200g
To: Members of the lnvestment Commiüee

From: Ted Eliopoulos, Senior lnvestment Officer

Laurie Weir, portfolio Manager

Subject: Page Mill properties Update

Attorney Client privileged Communication

ln January of this year, staff provided the lnvestment Committee with

a merno that
outlined CaIPERS investment partnership with Page Mill Properties
Fund ll (please see
m"I9 attached). The memo summarized rent incieases, litigation between'Þage
Mill
and the city of East Palo Alto, and critical pless resutting'froå-tr*
The purpose of this memo is to update the lnvestment Cämmittee
¡ñrÀ-tr*"t !ir"t"gy.
on recent events
relating to Page Mill.

BACKGROUND

ln 2006 CaIPERS Real Estate entered into an investment partnership

committing $100
million to Page Mill Properties ll, L.P. Page Mill has amassed
almost 100 existing
apartment buildings in East Palo Alto aqgregating ovel1,800
units housíng ou"¡- 6,000
residents' Page Mill embarked on a nuiã¡ni rerrãuititatíon program,
including new roofs,
seismic upgrades, and improvement to common areas and
tanãscape.
Page Mill has come under critícism for raising rents on tenants
who are primarily low
and working families. Community leãders rrave expressed
i199t"
Mill's strategy may include replacing some of the last availåble
concern thaí page
affordable housing with
more expensive housing stock.

California public Employees' Retirement System

Lincoln Ptaza East - 400 e street, si¡te e¿aoo , sacrañento,
ca 95814

PM-0336
 RECENT EVENTS

Page Mill and the city of East Palo Alto have sued and
countersued one another five
times thus far. The stanford community Law clinicrepresented
the tenants in one of
the court cases against bolh Page Miil ánd east pan
Álià, page Milt has prevaited in
each case' ln response, East pã¡o Rtto has partnereo
wùn the city of Berkeley for
advice and assistance on.how to improve the administration
of East pato Alto,s rent
stabilization ordinance. The stanfoid commun¡tt
further in new litigation efforts- The te¡ants
ü; ðil"ic intends to press their case
álso represented by Tenants Together, a
"re
tenant rights group headquartered in San Francir"o.'--.-

staff has maíntained open communication with Page Mill and

all interested parties. ln
August of this year staff met with Tenants Togethei and
tenants from the apartments to
hear their comments and concerns. The tenáts relateà
ùsues including high rent
increases, lack of timely responses to requests for
maintenance and repairs, and injuries
that have occurred resulting from lack of äppropriatá
máintunance. They provided staff a
booklet titled Homeless Now that outlines rent íncreases
and habitabilíty issues.
over the past three months, staff has had several conversations
with a tenant who
appears to be a stanford law student that is involved with
the stanford ComÁunity Law
clinic' He informed staff that there are calPERs systám members living
in some of the
Page Míll apartment units. He also stated that the Law
c¡ini" is drafting a letter to
calPERS warning.against predatory investment practices.
The letter is based on a New
York city comptroller letter to invesiors-regarding the peter
cooper Village pro¡iect.in
New York city (as you are aware, calPERb ís añ
investor ín the peter cooper project
through our partnership with Blackrock). The Law
cliníc áxpects the letter will be signed
by congresswoman Anna G- Eshoo, oi california's
14th c.irrgràräi"*i¡irir'äi tr,-v
hope the letter will atso be signed by Senators Boxer
and Feinstein, and other local
elected officíals such as the Mayor ót rast Palo Alto.
thã.letter wilt most likely be
to Board President Rob Feckner and tnvestmånt committee
fl[o;utu"o chair'ieorge

on August 18, 2008 ReaJ Estate staff presented the Strategic plan
lmplementation
update to the lnvestment Committee in closed session.
Th"e update included staf¡s
identification of Page Míll as a non-strategic urban
Program partnership that is identified
for evaluation' The agenda item noted investment purtiur"
to act as consultant advisors
to assist staff with this process. Subsequently, staff
has retained the services of
stockbridge as consultant, and Pillsbury wínt-hrop as
outs¡de legal counsel for page Mill.
The consultant and counsel will advise rtuff on ialPERS'
rights under the partnership
agreement_

startÍng in November 2008, staff has spoken several

times with representatives from
sElU that state that their members are tenants in Page
Mill owned properlies. SEIU
intends to participate in efforts to raise awareness
of tenant rights and demands. SEIU
notes that this effort will be coordinated around
the horiday season.

PM-0337
The other Page Mill investors consist of a parallel fund that is a group of high net worth
individuals. Staff has spoken with several of these investors, each of which has
expressed support for Page Mill's strategy-

On severaloccasions, mindful of CaIPERS role as limited partner, staff has spoken wíth
and conveyed concem and disappointment to Page Mill foi their recent actions. Notably,
staff has told Page Millthat the investment of CaIPERS funds are not intended to result
in the involuntary displacement of low income or workforce households. page Mill
contends that they have done nothing inappropriate, all of their actions are lðgal, and
their investment strategy is performing as anticipated.

ln conclusion, staff has met wíth and heard the concerns from interested parties. Staff
has hired consultants for evaluatíon and recommendation of the page Miil investment
partnership. Staff continues to work closely with the Legal and Communicatíons
offices
on the Page Millmatter. Staff will keep the lnvestment Commíttee informed as actíons
are taken relating to the Page Mill investment partnership.

Q-ue-stions regarding these issues should be directed to Ted Eliopoulos at (g16) 7gS-
3647.

cc: Anne Stausboll

Pat Macht
Peter Mixon

PM-0338
þ 5itus [ompanies

Suu¡lany R¡poRrorrxe Due Drucrnce on

Peer M¡rl pRopERr¡Es Fur,¡p If
pRep¡Rro ron CrlpERS
ns or 27 fuw 2OO6

Overview

calPERs'shift in philosophical and strategic real estate portfolio

allocation
ls at
the vanguard of building what might ¡ã terme¿ as the Modern
Rear Estate
Portfolio- These strategies are incrusrve of Emerging Managers
ãnJimerging
Markets.
Long ago adjudicated as an Altemative Asset Class,
real estate has only
been more abre to standardrze and gain cerbin efficiencies:whidr recenüy
have the
capabilit¡es of being quantifled and du-pricated. However,
the fact ãi tuon-core
exceedrng @re invesrments adds a more comprex
;r;"1;;;;g;ment an¿
monitoring dimension. we have approached the assignment
with this in mind.
The scope of situs' due dirrgence conducted on page
Miil propeftres Fund II
included review and analþs of rerevant documents pertaining
to the page Miil
Fund II; discussion with page Miil properües, cro .åg"ãiõ'th;¡, b"åground,
fund strategies
.operauons; atong with the
and_
recommendations pertaining
formation
to fund manag;ment and investment.
of our

In.conducting the due dirlgence of page Miil Fund II, we began with a review of
subscríption documents for the fund includlng:

1) sunstar-Propert¡es, L.p. confidentiar private pracement

Memorandum " dated
ZO00 (earlter proposed Fund name of page Mill nroperties
lpril
2) The Pag-e Miil properties fl, Ln.¡
II updated rxecTi¡ve summary or'xey'íerms an¿
oJ pr¡ncipal Terms as of July 2006; and
lyTruw
3) Page Mill Properties Investment nund power point presentatíon
documeñt.
Additionally, we compared the strategic plans for page
M¡ll Fund II to the
graphical anarvses compreted by carpERS as of qJurt"i 1n zooãoï èãlöEis, n"ur
Estate Poricy Ranges and Ailocat¡on Est¡mated Net
Return universe. we
:oip1gg the targeted prans foi page Miil Fund II to the broad
ánges idenüneo
by caIPERS regarding reverage, risklnd brget retums
and benchmarks.
we.compiled certain topics for discussion with the
cFo of page Miil properties
and dlscussed those poínts with Terry Lee, on July 21,2006.
additional supporting documentation'and current refeiences
We ,.qréiJ
ro, p"q" Miri-"
principals for our review and anarysis. These
additionar documents included a
representative investment committee memo/ business plan
for a o¡screerfuno
¡nvestment and a staffìnq chart for Rage t"tití properties
derineating tne particuta,
functions and ti0es for direct emproyees, consurtants
and conùactors.
we conducted research on page Miil propertÍes and
Divco west properties, as-
well as on affìriated fìrms and ¡ndividuars w¡th which page
Mill h., ,trut"õiá
relationships.

Situs S ùa teg ic d vìsors

A Page I ConñdÐtiat

PM-0644
[!e !itul fompanier

we reviewed the history and current performance of page Miil Fund I

as
presented in the ls quader 2006 ínvestor report.

our summary report presents signiñcãnt highrights of our due dirigence findings
and recommendations to GIpERS pertainiñg io consideration ofi prospective
¡nvestment ¡n Page Mfll Fund IL

Situs SùategÇ Advisors Page 2

PM-0645
Ihe Jitu¡ [rrrnpanies

Our due diligence findings are presented in the following sections:

I. Executive Summary
II. Overall Fund Strategic plans
il. Fund Tactical Plans ¿nd Methods of Execution
IV. Affìliates to the Fund and Intenelationships
V. History and Track Record of Fund principals and Managers
VI. Transaction Sourcing Methods and Market Access
vII. Organizational and Reporting structure

our abstract document of pr¡mary fund subscrrptton docurnents and summary of

key terms is included in the Appendix to this report

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PM-0646
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5ìtus fompanies

L Executive Summary

Summary of Fíndinqs

Page Miflhas deveroped an above average and welr documented strategy

in the
subsøiption documents provided. rne Þpt"r is very articurate and werr
thought
out.

Page Mill management describes a competitive advanbage due

to a deveroped
external network for sourcing of-transactions.

eage Mill strategy ls predrcated on the continuation of a successful

lhe rocus on
core Plus assets and realizing- varue through creaüve tact¡car programs
plans. and

It ¡s to note that the length of rime proposed for Ínvestments ¡s

'mportant
consistent with prudent pranning for thrs asset dass-ås opposed to not traving
adequabe Ume for a project to mature.

The representative invesbnent committee memq which also acts

as a business
plan is very complete, professional and depicts a great measure
of çare.
Fund subscriptíon documents present a reasonabre and consistent
management
and investment phirosophy with similarry pranned JV investment suuãures
ano
long-term value.added approach to eage t iilt Fund I.

Summarv of Conclusions and Recomrnendations

The FundS defined focus on ereven tecf¡norogy drrven markets

may regu¡re
broader overall backing of market trends and reãi estate martet
rJndailentars in
order to make investment decisions and source opportunities broadry
throughout
this range of target markets.

The addition of Fund staff wíth sore focus on the asset-specific

strategies may
prove benefìcial as investments are added to the portfoiio;
tnerery-Ëìsening
relíanee on externar parties for imprementation' o, .ánito¡Ã-g oi ass"t
performance.

Proactive discussion and marketing of the Fund,s ínvesbnent critería

may
generate a stronger flow of potential deals from the
Þrgeted tecr,nãtoty-oriven
markets in which Fund principals have not yet invested.

Due to the limited staFf resources on the Fund team, a strategy

of consistent
monitoring of market fundamentals and real estate trends w¡tñin
t¡e targeted
markets rnay prove benefìcial to an efficient evaluation of
specífic proposals for
investment and risk management of on_going investments.

Broader strategic partnershíps for fìnanciar consurtÍng and asset

management
should be proactivery investigated as part of thJ market Àoniio¡,ig u"¿
transaction sourcing process across the ereven targeted technorogy
áriven
markets.

Situs Slràtegi. Adv¡sors Page 4 Conl¡deitidl

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f itus [ompaniel

Si I us S tra tegic A d uisots Page 5

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The lirus [ompanies

II. Overall Fund Strategic plans

In consideration of the overall strateg¡c plans of the Fund, we evaluated the

following criteria:

- investment strategy and m¿rket niche

- cornpetitive advantage ofthe partnership
- expected returns
- ability to execute the strategy
- plan to add vðlue to investments on ð strdtegÍc, financial and operating
basis
- prior investments sourced and performance in previous investmenLs
- level of competition for lnvestments withln markets
- planned average holdlng period for investments
- ldentlfled risks and planned management of risks
- long term vision and mission
'Htohllqhts

The planned focus on_technology drlven markets orlginated over 15 years ago
with Davíd raran, cEo of page Mill properties, through his recognition of
dynamíc u.s. markets affected by the trajectory of technòlogy broadly and the
resulting real esrdte investment opportunib'es due to shifu in demand ano zuppty
within these technology driven markets, as well as the growth and dislocation of
participants in the technology sectors.

The fund will focus on new opportuníties created from growth in 11 rargeted
bechnology driven markets across the u.s., with focus oñ changing real estate
requ,rements among companles involved in blotechnolog¿ healthcare
technology, consumer technology, and the network of suppliers to ãacr, of these
sectors.

The Fund's goal is to target coreplus ínvestrnents which the cFo defines as
"less speculative or opportunistic" and more basic opportun¡ties to create value
through focus on repositloning, redevelopment or conversion along with actual
development of real estate assets ¡n order to create addit¡onal value. Through
closely associated sourcing channels, most opportunities are identjfied through a
network of local market contacts w¡th awareness of off-market opportunities
such as local governmental representatives, corporate leaders, real estate
owners and investment brokers. As such, compeb't¡on for targeted investment
opportunities is described by the CFO as minimal.

The planned term for ¡nvestments is an average eight to ten year horizon, with a
targeted IRR of t2 to 14 percent achieved through adding value to core assets
acquired and repositioned or realigned over the holding period.

The fund structure is similar to the page Mill Fund I in terms of a limited number
of investors, tradit¡onal General parlner/ Límited partner format, and
monetization of investmenls over the life cycle of the Fund. The previously
proposed public exit or conversion to a REIT is not part of the current Fund
strategy.

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þe Situs [rrrnpanies

Management is cunently in discussions with calpERS as a strategic investor in

the Fund as well as three or four addÍtional investors, curreni plans are to
finalize the Fund structure with calpERS, prior to further discussions wÍth
additional lnvestors. The target of g300 miliion will be acquired in stages, as
investment opportuníties are identified and funds can be deployed.

The long term vlsion and mission of the managemenl team is to contínue their
success from Page Miil FundI with a consisteni investment strategy of apprying
their on-goíng entrepreneurial approach to value creation in bevelopment
opportun¡t¡es in technology driven U.S. markets.

Conclusions

Page Mill has deveroped an above average and welr documented strategy in
subscription documents provided.

Page Mill management describes a competitive advantage due to a developed

extemal network for sourcing of-transactions.

The Page Mill strategy is predlcated on the continuaUon of a successful focus on

Core Plus assets.

The targeted leverage and returns of the Fund are consistent witl¡ calpERS'
expected net return universe for core plus and Value Added investments which
lie in the range of 7.5 to 15 percent, based on leverage within a range of 25 to
65 percent.

3 out of 5 team members in management for page Mill Fund II were newly hired
in 2006.

The Fund's defìned focus on eleven technology driven markets may require
broader overall backing of market trends and reãl estate market fundamentals in
order to make investment declsions and source opportunities broadly throughout
thís range of target markets.

Fund subscríption documents present a reasonable and consistent management

and investment philosophy wíth similarly planned JV lnvestnent structuås and
long-term value-added approach to page Mill Fund L

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litut Iornpanies

III. Fund Tactlcal Plans and Methods of Execution

In consÍderation of the tacUcal plans and methods of execution for page Mill
Fund II, we evaluated the following critería:

- investmentguidelines
- planned deal pipeline
- leverage targets
- financial modeling and anal;als of proposed deals
- preparation of buslness plans on prospective investments
- review of investrnent approach and decision making on proposed
¡nvestments
- approach to value cJeation
- monitoring and management of investments

Hlohliqhts

The fund Þrgets lnvesùnents with a total potential vatue range of g25 to g50
mllllon, Minimum equity investment parameters are not prescribed, with the
exception of a general contribution threshold of greater than g5 milllon.

The management team has an established deal pipeline of investnents and

routinely reviews ínvestment opportunities generated from a variety of sources.
Management descrlbes the lnvesbnent review and acquisition process as a
disciplined approaci to consider the investmenÇ development, managernent and
dlsposition horlzon. Leverage is planned not to exceed 50 percent of the assets'
stabilized values.

Potential acquisitions are evaluated through a formal written investment

committee memo/business plan, which includes analysis of the market
opportunity, the specific lnvestment opportunÍty and the financial structure of the
deal, fìnancial modeling and underwriting. Bus¡ness plans focus on the
conseryat¡ve case with evaluation of both down side and up side scenarios. The
process for decìding to invest will involve the agreement and sign off of the three
senior leaders of the management team - David Taran, Terry Lee, and Jim
Thompson.

Preparation of financíal modeling, deal undenrrriung and development

management ís a collaborative effort with two external entities. A consulting
flrm led by scott Smithers, previously Director of Development with Rage Miil
Fund I, and Mariposa Real Estate Advisors are the two fìrms, which support the
fìnancial analysis, development and asset monitoring for page Mill properties.

significant management time is dedicated to narrowing the pipeline down to an

estimated unlverse of deals the fund would closely consider. The cFo repoas
that out of an estimated 100 deals considered, approximately 20 deals are
examined more closely, 5 are intensely evaluated, and an estimated 2 deals may
be consummated.

S¡t us S lrd tegk A d visors Pdge I Connddttidl

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fht 5itus fompaniel

The Fund does not plan to add staff pursuant to new investments, but rather rely
on external strateg¡c partners to support on-going investment analytics and
monitoring requirements.

Conclusions

The management team reviews a signifìcant number of potential investments,

which may or may not meet their investment parameters, due to the flow of
deals from a variety of sources withín their target markets.

Financial modeling and development expertise ls provided by entities external to

the current Fund management team.

we have reviewed a representative business plan for a prospective lnvestment,

provided by Page Mill propertíes, basect on our requesÈ to review the
methods of
execuuon for prospective lnvesùnents. we were provided with the ¡nvestment
committee memo for one asset, the. clift Hotel. The presentation appeared
complete and well docurnented, Éying out a due diligen.u ,rr'náry, ü,"
structure and plan of implement the transactíon, a market óverview for the hotel
as well as an altematlve use plan.

The investment decision-making process is described as thorough . and

collaborativg with focus on opportunities to add value through develãpment,
redevelopment, management and leasing sbategies, and prãnctive piopertv
management.

The addition of Fund staff with sole focus on the asset-specifìc strategies may
prove beneficlal as investinents are added to the porúoilo; thereby Éssening
reliance on external parties for implementation' or monitorinj of asset
performance.

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The Situs fompanier

IV. Affiliates to the Fund and Interrelationships

In consider¿tion of affiliates to the Fund and interrelationships, we evaluated

the
following criteria:

- General Parher commitment to the Fund

- alignment oF interests with partners
- strucfure of the managemenÇ advisory fee
- flow of disblbutions to the Limited padners
- information regarding the principar Terms of the Fund and partnership
govemance issues
- investor reporöng criteria and schedule
- enUties octemal to the Fund requ¡r¡ng flme of Fund principals

Hiqhliqhts

The Geneml Partner will commit 3 percent of the aggregate commitments

of the
umited Parùrers, not to e<ceed gl0 million. nage Mii Aãvisors, an affìliate of
the
Geneml Parùter, will serue as the Fund,s investment adyisor.

The General Parb'¡er is required to devote substantial and appropriate time

and
attention to satisff the stated obJectives of the fund.

The structure of the asset management fee to the General partner from
Limited
Partners includes l.s percent per annum of unfunded commitments during
the
lnv.estment períod (except that Limited partners committing at least g75
million
will pay 1'25 percent per annum) or 1.5 percent per annum of funded
commitments.

Distibutable proceeds attributable to investments to the partners, including

the
General Partner, are apporiloned pro rata In accordance with their respective
percentage interests.

An advisory committee wiil be established by the General partner, together

with
representat¡ves from th_e Limited partners, to meet semi-annuáry
[o approue
matters concerning the Fund.

The planned report¡ng structure for the Fund to Limrted partners incrudes
annuar
audited fìnancial statements and a statement of changes in the net asset
of Fund; quarterly report¡ng of the Fund's baranðe sheet, varue of value each
investment, distributions to the General partner, performarrce measurement
retums; and monthly reporting on operatíons and cash flow.

Third parÇ appraisals are contracted at the discretion of the Generar partner
and
are provided to Limíted partners as received.

The General Partner acknowledges on-going responsibilities, in addition

to the
Page MÍll Fund rl, to page Miil properties, prio,r rear estate investments,
co-
investment opportunities with page Mill properties, fundraising
and marketing
activities of various funds, and monetization of investments ¡n pæe Mill
Fund I.

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e Iitu¡ [ompaníes

Conclusions

current responsibirities of David raran and page Miil management

invorve the
on-going moneUzation ol'the page Mill porúolio.

The structure of the page Milr Fund II has been revrsed

based on negotiation
with CaIPERS fo a formaisimtlar to the funì l. --.

Although Page Milr has on-going responsibirifles

to prior and rerated
entities, the
ovenll activities of Ínvestment, monitorlng, varue creat¡on,
management and
disposition rema¡n the consisteni objective.

Situs Stràtegk Adwsors

Page I I

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ïhe fitu¡ [ornpanier

V. History and Track Record of Fund principals and Managerc

In cons¡deration of the history and track record of Fund prrncipars and

Managers,
we evaluated the following criteria:

- current performance of page Mill Fund I

bacþround and references for Fund prlncipals
- prior en$ties led by Fund principals
- references provided by Fund management
- potential conflicts of lnte¡est between the General partner, Investment
Advisor and earlier invesbnenÇ and the Fund

Hiohliohts

According to Fund manage.ment and page Miil properties Investor

Report as of
ls.Quarter 2006, page l'r¡lt nao 13 inriesbnents under runugur"nl, four
of
whích are scheduled for sale ln the second quarter of 2006.
I

The Page Mill properties lnvestor Report as of ld euarte r 2o06 presents ôn I

unrealized IRR on current investments that range between 19.6
to fi.+ percent ì
and a realized IRR on four investments ranging irom 3r.7 to gi.l p".-."r,t. :

Page Mill investments are concenÞated rn the san Francisco Bay

area, Denver
and suburban Boston and are characterized as office/ R&D and noieLuiéts.= -'

fees paid to the General partner, as Investment

*t:tTpg^Tent
I"'quarter 2006 were versus for quarter
Advisor, for
9529K 9610K 1* 2005.

Property management, commissíons and construction management fees

_leasing
are also paid to DWPS, an affìliate of the General partner. Feei earned by
affìliates of the General partner are subject to review by the Lp
Advisory
committee to ensure charges are at leait as favorabre as an arm,s
rength
transaction with independent third parties.

The following references for David Taran and page Mirr properties
were provided
to us for contact:
- Tad Taube, president, Taube Investments Inc.
Diane Ferguson, Senior V¡ce president, Royal Bank of Scofland
- Michael McCoolç Former Director of Real Estate, CalpERS.
Additional famíliar individuals were also contacted as well as public
data being
collected on Fund.principars through research services such as Lexus
Nexus.

Prior entities led by David raran include Divco west properties, various joint
ventures w¡th fnsiltutional investors and opportunity funds, eage
Mitt properties,
Page Mill Fund I, among other investments_

Page Mill Properties, Lp or page Míil Fund I was page Miil,s

fírst institutional
pr¡vate real estate fund whose read investors inclu-ded
CarpERS, cqLsrns,
OPERF, Yenzon, SpMT, and TNO.

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Ihe Siru¡ (ompanies

Potential conflicts of interest between the General partner, the Investment

Advlsor and earller investments and the Fund may arise ln connection with the
allocation of investment opportunities among various enuties and the Fund IL
confllcts may arise due to competition for tenants, buyers of fund invesEnents,
or services offered by service providers to any partiqJlar invesbnent. confl¡cts
may arise due to ü¡e allocauon of managemenls ume, services and functions
between the Fund and other investments and projects.

Conclusions

Investigation into the history and track record of Fund princìpals fndlcated that
as experlenced GB and Investrnent Advisors, they understand the various issues
of confllct of interest as regards fidudary responsibilities and have adeguate legal
representation to guide the process of conflicl adjudication. Add¡tiona¡V. the -Lp
Advisory committee establlshment allows for ã forum to deal with'knornn
confllcts.

The current performance of page Mill tund I and on-going consistenry of

leadershlp by Davld raran, wlth his prior educaüon, trainrng and experience
should mitigate any stgnificant problems which may become ,aln¡fest.

conflicts of interest may an'se and should be monitored uy ine Investment

Advlsory committee as approprrate. These types of conflrcts óay not be unique
to the initiation of tund II, and page Mill has a track record of áchieving above
target returns for lnvestors irrespective of these potential conflicts and dãmands
of Ume for various proJects extema¡ to fund invesbnents,

Situs Strategrc Advisors Page 13 ConÍiæntiat

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lhe 5itul [ornpanirs

W. Transaction Sourcing Methods and Market Àccess

In consideration of the transaction sourcing methods and market access, we

evaluated the following criteria:

- strategy for identifoing metro regions/ areas for rear est¿te investrnent
- network for deal flow and expected competition for deals
- development of conÞcts within target markets
- proactive sourcing of real estate investment opportuniües
- marketing of lnvestment criteria for the Fund
- monitoring of technology developments withln target markets
- monitortng of real estate fundamentals withln targret markets
'Hlohllqhts

ïarget markets lnclude eleven regíons/ areas which are characterized by

informaöon and biotechnology companies and actívities. t"tanagementb goal
iå
to maintain strong partners and relationships with parties in tñese areas who
deliver þotenöal t-ansactions as well as off-market deål prospects to eagã r,riil.

Management acknowledges the strongest bias and deepest relationships

are
located within northem california, which aliows page Mill to maximize
the
eff¡ciency and effectiveness of thelr investment activiuel in that region.

Due to recognizable, high profile investments in other markets and indusby

awards which have been.received, page Mill also has strong relationships with
business partners and deal sourcing contacLs in southem califãrnia and Denver.

The Fund will focus on ma¡nta¡ning a network of contacts and partners within
the
areas where Page Mill would consíder investment. These contacts include
financial institutions, brokerage and agency representatives, corporate
relationships, and public aovernmental officials. The Fund w¡ll seåk to source
off-market deals with superior tnvestment potent¡al via these contacts in targeted
markets, whlch often are not competitively bid and enable in-depth plannlng
and
analysis of the situation.

Management admits to a lack of high level monitoring of overall market

fundamentals or real eÉtate market conditions within ihe eleven targeted
technology driven metro regíons for real estate investment. Due to the nature
of
transaction sourcing methods, deal flow to page Mill is based on existing
relationships. we would also suggest additional proactíve evaluation of market-
wide trends and events as well as identification of additional local and regional
property owners previously unknown to page Mill.

Transaction sourcing methods are reportedry substance focused, not market

focused; the Fund will often create investment strategies due to the
opportunities determined through discussions with the exisring contact network
within the targeted markets.

SitDs Strdtegk Advtsors Pdge 14 Con/î&ntidl

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 (.Þ

e Situ¡ [ompanies

The Fund does not activery engage in the marketing of their ínvestment
strategy
or real estate investment criteria.

Conclusions

Fund principals maint¿in strong vis¡bir¡ty in the markets in which page

Mill and
predecessor entities have participated ln significant
real estate ínvestrnent
activlties.

In the rema¡nder of the targ€ted technorogy driven markets, a more proactive

approach to networking and deveropment of a broad basá or con-tácts
muy
present new opportunities to page Mill Fund II.

Proactive discussion and of the Fund,s investment criteria may

generaùe a sbonger flow of-markeüng
potentiar dears from the targeted technorogy driven
markets in which fund principals have not yet invested.

Due to the limited staff resources on the Fund team, a strategy

of consistent
monitoring of market fundamentals and real estate bends w¡thi;
the targeted
markets may prove beneficiar to an effìcient evaruation or speãnc piõJsats
ror
invesbnent and risk management of on-going invesbnents.

Markets whích are new. target.markets to page Miil, based on the technorogy
lriven focus phirosophy, wirl require extãnsive proactive research and
investigation to develop a network of proprietary contacts on which
rely to deliver a broader breadth of off-market opportunitieitheworÜ,y
Fund c¿n
or
consideration.

In many u.s. real estate markets, management views the abundance of

capibal
pursuing few high quality deals as a significant risk. The pund
needi ho unrrr"
strategic advantage in the participation of off-market invesbnens, *Àict
aìe not
aggressively seller marketed.

The demonsbated success of.tJ'e. Fund in gaining market access

and develop¡ng
the transaction sourcin! methods within certai-n markets rristoriáìtf-sucn
as
Denver and san Francisco, should be discussed to determine 'i¡,ã
o,ort
advantageous methods for efficientry and effectivery sourcing dears
ià nã* turg"t
markets.

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[!e 5itus (ompanies

VII. Organizational and Reporting Structure

In consideration of the organizationar and reporting structure of

the Fund, we
evaluated the following criteria:

- organizaUonal structure of Fund staff and management

- roles and responsibirities for staff and principars-or tne run¿
- work frow and division of responsrbilities among the
statf of the Fund
- hiring plans and key posiöon successíon plans
- structure of reporting on fund rnvestments to umited partners
and ¡nvestors
Hiqhliohb

Page Mrll sÈaff consists.of a team of approximatery ten

coleagues incrusive of
three principars, certain support ùo the core team is achieved
from externar
outsourced.service províders and consurtants. page Mirr run¿
does not plan
it ,nuÅrgur"nt
to add signrflcant staff over Üle rund ¡nvestmeni Áoi¡zon, ano
seeks to mainbain a strong core team supported uv "
.onrumÀl;"rb.,uä
Review and discusslon of the Fund's staffing pran rndicated
that no Future
staff¡ng plan was available.

Management has a history bf maintaining parbrers for

deveropment, asset
management and property management *rrough the structuring
år tniro party
contractors and JV ínvestors relationships.

Maintenance of a strong and- smail core team, with reriance

on extemar partners,
is perceived to allow page Mirl to manage óperations in a frexrbrã, ecãnom¡car
and effective manner.

Preparatlon of fìnanciar modering, dear underwriting and deveropment

management is a collaboration effort with two extemal
eñt¡ties. A califomia _
based consulting firm red by scott smithers and Mariposa
neal ¡staie-Ádvisors
are two firms which support the financiar anarysis, oevetofmãni'Jnd
asset
monitoring for Page Mill properUes

Representative partnerships for_ asset management have

historically included
relationships with RREEF North America, us *!il as rocar
market-basãå òroærry
management firms.

Formar hiring plans or key positìon succession prans have

not been prepared by
Page Mill for the Fund.

The planned reporting structure for the Fund to L¡m¡ted partners

incrudes annuar
audited financlal statements and a statement of changes in
the net asset
-oi value
of Fund; quarterly reporting of the Fundt b¿rance sheet, varue
each
investment, distributions to the Generar partner, performance
me¿surement
retums; and monthly reporting on operatíons and cash flow.

Third party appraisars are contracted at the discretion of the

Generar partner and
are provided to Limíted partners as received.

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Conclusions

Page Mill plans for marntaining a small core teåm

with reriance on external
consultants and partners allow for intense focus
on new deal evaruation and
sbateg¡c focus of adding value to core challenged assets.

Requirements for Fund staffing should be evaruated

as assets are added to the
Fund portforio andl or as rnvestments are Þrgeted
from certaín technorogy
driven markets, which are new to page Mill.

strategic partnerships for financiar consurting and asset

management shourd be
proact¡vely invesUgated as part of the riarket
monitoringi and hinsaction
sourcjng process in technology driven markeÈs new
to page Mill.
Key positlon successron prans shourd be discussed
as part of the ptannrng for the
overall lnvesbnent horízon for the Fund.

The^ reporting súucture outlrned for fund investments appears

cons¡stent with
fund investrnent repordng and lnstitubonal reporting guidelines.

on-site.rgvtgw of the operations, work flow and staffing

of the Fund was not
included in the due diligence process.

Sr t us S ttd teg i ( A dv¡sors Page 17 Connæntidl

PM-0660
 ,lñ

tj9
litul (onrpanies

App¡¡¡n¡x To rHE
SuMMnny Rrponr oF THE Due D¡ucrNcE oN
Paee Mru- pRoprnr¡rs Fuwo If
Pnrpenro ron CalpERS ns or 27 Juw 2OO6

S¡tus SÌrd teglc A dviers Pdge l8

PM-0661
 M
CaIPERS CONFIDENTIAL

Mernorandum
Caljfomia Public Employees' Reùrement System Date: January 13,2O10

To: lnvestment Committee

From: Theodore Eliopoulos

Senior lnvestment Officer
Real Estate

Subject: PAGE MILL PROPERTTES il, Lp

The purpose of this memo is to update the lnvestment Committee on recent

events regarding Page Mill properties in East palo Alto_

ln September, a receiver was appointed by the San Mateo Superior Court at the
request of Wells Fargo Bank to oversee the management of Pãge Mill Froperties'
rental units- The receiver, David wald, hired lnvestors' property services io
manage the property. Our consultant, Warren Otto, of Stockbriðge Capital Group
reports that Page Mill management claims that it is not making añy further efforts
to regain control of the properties and has no involvement in the aisets ín any way
other than to respond to occasional informational ínquiries from the receiver.

ln October 2009, Page Mill inquired whether CaIPERS would consider committing
$25 million of additional capitatto the page Mill investment (beyond the g100
million already funded) which they represented would be neäessary to negotiate
with Wells Fargo on the maturity of the existing $240 million loan. CalpEñS staff,
with the concurrence of its consultants, decideà against investing additional money
in Page Mill.

on January 6, 2010, notíces of rrustee sales were posted for each of the 101
properties owned by Page Mill properties Fund ll (pMp ll). Each notice
lists
indebtedness of $239 million whÍch is the total outstanding principal balance of
the
Wells Fargo (Wachovia) loan as of August, when the loan went into default. All
of
the properties are cross-collateralized.

California Public Employees' Retirement System

www.calpers.ca.gov

PM-0692
lnvestment Committee
January 13,2A1O
Page 2

The Trustee Sale is scheduled for February 1,2a1o. The bank may choose to bid
its loan balance at the sale and if it is not outbid, it could take ownership of the
properties which would terminate any Page Mill properties Fund ll (including
CaIPERS) ownership of the properties.

We understand that Wells Fargo is in díscussions with Bridge Housing to manage

the property following the Trustee Sale. As one of the leading affordable housing
providers in the state, Bridge has the capability to effectively manage this projeci.
CaIPERS has no involvement in these discussions.

Staff and its consultants will continue to monitor this investment through its
resolution. Staffwill update the lnvestment Committee as soon as more complete
information is available

Please contact Ted Eliopoulos at (916)795-3647 wtth any questions that you have
regarding this matter.

cc: Anne Stausboll

Peter Mixon
Pat Macht
Joe Dear
Ken Marzion

PM-0693
 CONFIDENTIAL
lnvestment Office
P.O,Box2749
Sacramento, CA 9581 2-27 49
(916) 79$3647
FAX (916) 795-3965
Telecommunicalions Dev¡ce for the Deaf - (916) 795-3240
Date: January 8,.?91.Q ffi
To: Members of the lnvestment Committee

From: Ted Eliopoulos, Senior lnvestment Officer

Subject: Page Mill Properties ll, LP

Attorney Client Prívileged Communication

cc: Peter Mixon

The purpose of this memo is lo update the lnvestment committee on recent events
regarding Page Mill Properties in East Palo Alto.

Background

J.l çgple.TÞ9r, .?-.rgggiver-was appointed. Þy lhe spn Va!e.o_ $yp9¡í9q Çp_uf*allbe¡sg!g9!.' -_

Detetßd: OnXX Page MitlÌnquired
of Wells Farqo Bank to oversee the manaqement of Paoe Mill Proôeities' rental unils. whether CaIPERS would cons¡der
mm¡ting add¡tional.æp¡tat to the
The receiver. David Wald, hired lnvestors' Propertv Services to manaqe lhe properlv. Page Mill Inveslrnent (beþnd the
our consultant, warren otto, of Stockbridge Gapital Group reports that page Mill $100 mlllion already funded) whtch
they represenled would be necessry
management claims that it is not making any further efforts to regain control of the to negotiate with Wells Fargo on lhe
propertíes and has not involvement in the assets in any way other than lo respond to mâturity of the existjng $240 mil[on
loan- CaIPERS staff, on the
occasíonal informational inquiries from the receiver- recomrendaùon of ¡ts consultants.
did not seejusliflcation in invesùng
any addìtifiel money in lhis
ln October 2009, Paqe Mill inquired whether CaIPERS would consider committinq S25 Inveslmeri. f
million of additional capital to the Paoe Mill inveslment (bevond the g.t00 million alreadv 'tl
funded) which thev represented would be necessarv to neqotíate with Wells Faroo on the
maturitv of the existinq $240 million loan. CaIPERS staff, on the recommendation of ìts

California Public Employees' Retirement System

Líncoln Plaza East - 400 Q Street, Suite E4800 - Sacramenlo, CA 9SBi4

PM-0695
 Recent Events

on January 6,20'10, notices of rrustee sales were posted for each of the 101 properties
owned by PMP ll- Each notice lists índebtedness of $239 million which is the total
ortstanding principal balanc.e of the wells Fargo (wachovia) loan as of August, when
the
loan went into default. All of the propertiés áre ôross-collateralized.

The Truslee Sale is scheduled for February 1,z}rc- lf the bank chooses to
credit bid its
loan balance at the sale, it could take ownérship of lhe properties which
would terminate
any PMP ll ownershíp of the propeñies- calpERS owns eðø or pt\4p ll which would
exlirpuìsh.any of our equity in the project since the v?þe of tþ p
below the loan balance-

we understand that wells Fargo is in discussions with Bridge Housing to manage the
Property following the Trustee Sale. As one of the leading ãffordable-housing piovÍders
intheSanFranciscoBayArea,Brid.geJpsl.¡:eçepabili(vIo_effectivety_r_npfrgõçthig
property which would greafly benefìr the residenti ano _ - 'r--
$eaiériommliniry.
Althouoh Bridge Housíng. is one of manaqers in its urban proqram. carpERS_is
Del€tedr
pursuinganyfurtherinvo|vementintheproperty.- l-,g!. .. . ..

,i1."_T.r19
-"r .qoJ!.rl,gn,*.ryJ'çol,in.u.çtg,,r,pn',o.
tni" ,nu".,mqn, ,l.rorg,l !,ç ,çgo,u,jp!. AttæH pteæe fnd a
Staffwillupdatethelnvestmentiomm¡iieeãõIbonãJffi--.'.. -- __ Delet€d:
n€B story lhat appeared in The
available. Mercury Neffi on June 3 reoardlm
Page Mitl. The article stateithat
-
Page Mill lEs sent lease tem¡nation
Please contact Ted Eliopoulos at (916)795-3647 with any questions that you have notices to sevtraltmanls imlud¡no
ælþisl aod organízer Ctris Lurxt. -fl
regarding this matter.
Deleted: has stârted an ¡Nesttoetion
of lhe lãcts

PM-0696
 From: Wanen Otto [Otto@sbfúnd-com]
Sent: Tuesday, December 29, 2009 3:S2 pM
To: Weir, Laurie
Subject: RE: Follow up on public cornment - page MÍll / PCV-ST

Laurie, I caught up wich .rim shore yesterday and have an update for you. There's really
not much t.o report. !üe1ls Fargo is proceeding cauLiously and has noi sought ownership åf
the property. The bank has also t.oned down the licigatión activity, as you would expãct,
but has not uniformly given up on the various lawsuiLs initiated ¡y-page Mill againri epe.
operaEions at the property leve1 appear poor, wi.th all the at.tendãnt problems: crime,
t.rash, vandaì.ism, etc. . '

Don'È hesitate to ask for anythingr else you need on page MilI or anyLhing e1se.
Happy New Year, tÂr.

P-s. Hope you're féeling better; you sounded very congested last time we talked.

-----Original Message- ----

From: hleir, Lauríe [¡nailto :Laurie_Vrleir@CalpERs. ca. gov]
Sent: Monday, December 28, 2009 2:43 pM
To: úùarren Ot,to
Subject: RE: Fo11ow up on public comment. - pag,e Mill / PCV-ST
Hi tùarren,
{ope you had a great christmas holiday! r look forward to discussing page Mílt er al in
the New Year- Best and tha¡ks for all yoür great work. L
-----Original Message- ----
F'rom: Vüarren Ot.t.o lmailLo:OttoGsbfund.com]
Sent.: Thursday, December L'7, 2OO9 9:57 ptu
To: Vùeir, Laurie
Cc: Schlenker, Eric
Subject.: RE: Follorr up on public corûnent - page MilÌ / PCV_ST
Sure. Ï'tl get an update-from-Page-Mil1 as best r can- haven,t been real frienå1y
since we told them you had no interest in losing any more'fhey
money.

-----Original Message.-----
From: l¡ùeir, Laurie Imailto:Laurie_!rteir@Ca]-pERS. ca. govJ
Sent: lvednesday, December l-6, ZOOq 1:50 pM
To: l¡Iarren Otto; Schlenker, Eric
subject: Ft¡t: Fol-low up on public conment - page Þrill / pcv-sr
Hi t^rarren,
r know Eric has asked you for draft Page Mill update for L.he Board. rf you coutd put a feh¡
paragraphs together we wÍ11 take it from there. (l know you have nothing better io do.-.)
Thanks L

-----Original Message- ----

'rom: Pottle, Randy
Sent: Ttesday, December 15, 2OOg B:12 pM

ffiffiffi&ffiTffiffi
PM-0708
 Call in infonnation for Pagemill meeting Page I of2

l-anghi, Taryn

From: WanenOtlo[Otto@sbfund.comJ
Sent: Tuesday, Decernber 16,200S 7:09 PM
To: Weir, Laurie
Subject: RE: Page MillAgenda

Laurie, I'll lead or follow, as you prefer. I heard from Page Mill about the East Palo Alto group that appeared in
Sacramento yesterday. Needless to say, Page Mill is concerned about all of this, as they should be (a líttle late,
maybe?). Page Mill called me to ask if I had heard anything about it, and expressed their concern. lt was easy
for me to tell them I knew nothing about it, as I had not heard anything about it until they called.

Feel free to call me at any time or look for me before the meeting, as I will be in your offices no later than g:30
am. See you then, W.

From : Weir, Lau rie [ma ilto : La u rie_Weír@Cal PERS. ca.gov]

, Senh Tuesday, December 16,2008 6;48 PM

' To: Warren Otto; Carrillo, Diego; dulcie.brand@pillsburylaw.com; Plasencia, Javier; Pechtel, Patricia
Cc: Mateo, Michele
Subjech RE: Page MillAgenda

We appreciate your willingness to lead the díscussion. I think Ted will want to take the lead based on disiussions
that occurred in lC yesterday. Thanks again. L

From: Warren Otto [mailto:Otto@sbfund.com]

Sent: Tuesday, December 16, 2008 6:38 PM
To: Carrillo, Diego; dulcie.brand@pillsburylaw.com; Plasencía, Javier; Pechtel, Patricia
Cc: Weir, Lauríe; Mateo, Michele
Subject: Page Mill Agenda

Attached hereto is the agenda for tomonow's meeting with Page Mill Properties- I will be.arriving in CaIPERS's
offices around 9 am to prepare for the meeting, which is scheduled to start at 10 am. I intend to
moderate/orchestrate the meeting to make sure we get through the agenda by noon, when an investor's
conference call with Phoenix regarding the San Diego Smart Growth Fund is scheduled to begin. I intend to keep
the meeting on a good pace so we don't dwell too long on some of these issues, which could be discussed
endlessly if we let them drag on.

Should any of you need to talk to me before the meeting, I can be reached on my cell phone at 630 441-8387. )

From: Carrilfo, Diego Imailto:Diego_Carrillo@CalPERS.ca.gov]

Sent: Tuesday, December 16,2008 5:42PM
To: dulcie.brand@pillsburylaw.com; Warren Otto; Plasencia, Javier; Pechtel, patricia
Cc: Weir, Laurie; Mateo, Michele

c lao t-^1
^

RËfrþ&ffirËffi
PM-0769
 Call in information for Pagemill meeting Page2 of2

Subject: Call in information for Pagemill meeting

For those who may be calling in, l've placed the inlormation needed below:

Callin # - 80G3693190
Pass code - 27788

Thanks,

Diego Carrillo
'lnvestment Officer
Global Real Estate
CaIPEBS
400 Q sl. LPE 4800
Sacramenlo, CA 95811
(91 6) 795-9236 (direct)
(e1 6) 7e5-3965 (fax)

PM-0770
 ,'*Þ r
.l
r¡:l

- .,'

Situs [ornpanies
27 )uly 2OQ6

Mr, Jose McNeil

Porúollo Manager Global RE
CaIPERS
CaIPERS Uncoln Plaza East
400 Q Street, Suite 4800
Sacramento, CA 95814

Dear Jose,

At your request, the s¡tus companies/srtus Realty seruices/situs strateglc

Houston Advisors has conducted the due diligence process in analyzing the proposed
investrnent fund, Page Mill Properties II, L.p. or page Mill Fund II.
New Yorh
our scope generally included the revÍew and analysls of relevant documents
pertain¡ng to the Page Mlll Fund II; discussion with page Mill properBes, cFo
BoEd Rdton
regarding the fund and the Principals'historical background, and fund strategles
and operations; our conclus¡ons pertain¡ng to Fund investment and'management
London are included herein.

The report encompasses the researc̡ and analysis we cornpleted, inclusive of

the following actions:

a. Document review of the fund and summary of key terms

b. Analysis of overall fund strategíc plans
c, Analysis of fund t¿ctical plans and methods of execuüon
d. Analysis of affìliates to the fund and interrelationships
e. History and track record analysis of fund principals and marngers
f. Analysis of transaction sourc¡ng methods and market access
9. Analysis of organizational and reporting structure
h. Dlscussion with fund management

Although our observauons and conclusÍons are contained ín the body of the full
report, the basic highlights are as follows:

a' The PPM is very articulate, well written and gives a clear picture of the page
Mill strategy and rationale of the Gp and Fund.

b. The time horizon for the Fund holding periods are well thought out and gives
4éó5 louthwest freewa¡
in our opinion, prudent and adequate tirne for execution-as opposed to having
Housron, TX 71027 to resort to more hectic strategies.
il3.il61140
lax:l13.il6)ll46 c- Earlier returns of GP predecessor funds are good and consistent with
competent execution and management.
ww.iifusros.rom

Global Real Estatc Cor&uldng

PM-0827
 ; '--q
:.:4

fhr Situl [ompaniar

d. Investment Committee Memoranda are considered adequate and detailed for

due diligence purposes and additionally act as business plans for guiding
execution for operations and sùategies.

e. We concur that technology driven markets are an excellent niche in that the
earlier slow adoption period seems to have passed (e.9. broadband orders are up
33o/o ov€r last year) and additionally, naar opportunities in telecommunications,
biomedical, wireless, nanotechnologíes, etc. are experiencing growth and
assimilation, which are capable of producing several opportunities as part of the
real estate "supply chain'.

f. We were particularly impressed with the collaborative senior staff method of

evaluation and the concept of alignment, which we agree is paramount ln the
esbablishment of good execution of plans and projects.

We have endeavored to make recommendatlons within the body of the report in

which we hope will be useful to CaIPERS and the Fund.

Highlights of some of those recommendations are:

Usted, as a risk to the Fund is the huge quantity of capital looking for
transactions. Sourcing of"off markef'transactions tend to be ineffìcient and
generally based on close prior relationships. We would recommend looking
into an executable marketing and public relations plan to gain visibílity in
some of the less familiar technology drlven target markets. As real estate is
generally a local activity and some 650/o of propedies are not "instifutíonally''
owned, we would recommend as one possible sfrategy, surveying local
target markets to ldentify real estate owners and operators, whlch are not
nationally known and may be ready to move into a more instifutional format.
It has been our experience that each locale has at least a few key "players"
which fall into this category and should be identifiable.

b. Although we believe that Page Mill is adequately staffed at lnception, we

would recommend that a clear organizational chart and structure ¡s eltant,
with a defined staffing plan whlch anticipates fuhrre growth-as it would not
be incongruous for Page Mill to become a billion dollar real estate operaUng
organization.

There are a few items that we are not yet in receipt of or completed namely:

o Financial information of Príncipals.

o Final LP terms, which we understand have been negotiated.
o Return phone calls from some references.

These will be completed as they come in and data forwarded on to you.

PM-0828
 .Jfl
'Év tß
Ihe Iitus [ornpanies

Based on our scope of work in this assignment and our review, we fìnd it
reasonable that calPERS move forward with its contemplated lnvestment in page
Mill Fund II, L.P.

We have approached this assignment withtn the context of our view that
"calPERs'shift in philosophical and strategic real estate portfolio allocatjon is at
tln vanguard of building what míght be termed the Modern Real Estate portfolio
.-.(whidr) adds a more complex asset management and monitoring dimension.,,

We are pleased to have been of service to C¿lpERS on this engagement. please

let us know of any questions or comments you have r:egardÍng this report.

Cordially,

Stephen R. Ganns
Managlng Partner
S¡tus Strateglc Advlsors
For Situs Realty Serv¡ces

PM-0829
 April,__,2009

VI,A EMAIL AND FEDERAL E)PRESS

David A. Taran
Page Mill Properties
480 Cowper Street, 2nd Floor
Palo Alto, CA 94301

RE: Page Mill Properties II, L.P.

DearDavid:

I am writing on behalf of the Califomia Public Ernployees'Retirement System ('CaIPERS') in

respoose to the letters you sent to Ted Eliopoulos on March 20, March 25 and Apnl2,20Q9
about Page Mill Properties II, L.P- (the '?artnershíp"). So that the proper parties will receive
your coffespondence on a timely basis, piease direct future correspondence about the Parrnership
to me.

Thank you for providing updates on your position on the issues wíth the Cify of East Palo Alto
and the tenants who reside in the Parbrership's properties- We believe it is in the best interest of
the Pafnership that you mend your relationships with both groups, and we encourage you to do
so expeditiously. CaIPERS continues to receive complaints from the community and requests
for information and meetings from disgruntled residents. TVebeüeve that the continued
controversy surrounding the propertyis having an adverse effect on the value of the property and
its prospects.

You are coffect that we at CaIPERS a¡e'\¡vorking 'overtime' to protect CaIPERS assets," but we
are particularly concerned about the performance and stability of the Partnership. Simply put, it
is unclea¡ to us whether your implementation of the current invesbnent strategy and operation of
the projecl are effective or yielding appropriate results. We understand, for example, that alarge
number of the units have been vacant for several months and that the curreirt vacancy level
exceeds 20 per cent, which is much higher ihan that of the overall market. The losses from these
vacancies are harmful to the Partnership as a whole, and as a lirnited pahner in the Partnership,
we ¿ìre concemed about the effect of sustained vacancies on the financial performance of the
property.

We are also deeply concerned about the $242 million loan from Wachovia Bank (now Wells
Fargo). We understand that the loan has a $50 million pay down requirement due August i,
2009. While we understand that you are negotiating with the lender in hopes of extending the

70149765?v4

PM-0962
due date, we are not confident, given the present state of the creditmarkets, that your
negotiations will be successful. Accordingl¡ we have asked you to detail your plans for
adãressing the August 1,2009 obligation. We receivbd your $mmary response dated April i0.
Your limiied response suggests that you do,not have a plan to mariage the maturity of this loan
and that you have not adapted your management of the Partnership to present economic
circumstances. This matter is of grave concem to CaIPERS. Because of the ímportance of this
loan to the continuing viability of the Parrnership, we hope that you rviil provide us with your
detaiied plans in the very near future'

Please keep us informed of your progress. CaIPERS is continuing its financial review of the
Partnerships and reserves all applicable rights and remedies.

Sincerely,

I.aurie Weir

cc: Ted Eliopoulos

7Qla97652v4

PM-0963
 April _, 2009

Ðru+FF

David A. Taran
Page Mill Properties
480 Cowper Street, 2nd Flôor
Palo Alto, CA 94301

RE: PageMill Properties II, L.P.

Dear David:

i am writing on behalf of the California Public Employees' Retirement System ("CaIPERS") in

response to the letters you sent to Ted Eliopoulos on March 20, March 25 and Apnl2,2009
about Page Mill Propertíes II, L.P. (the'?artnershiy''). So that the properparties will receive
your coÍespondence on a timely basis, please direct future correspondence about the Partnership
to me.

Thank you forproviding updates on your position on the issues with the City of East Palo AIto
and the tenants who reside in the Partnership's properties. We believe it is in the best interest of
the Pa¡tnership that you mend your relationships with both groups, and we etlcoruage you to do
so expeditiously. CaIPERS continues to receive complaints from the community andrequests
for information and meetings from disgruntted residents. We believe that the continued
controversy surrounding the property is having an adverse effect on the value ofthe property and
its prospects

You a¡e correct that we at CaIPERS are "working 'overtime' to protect CaIPERS assets," but we
are particularly concerned about the performance and stabilify of the Partnership. Simply put, it
is unclear to us whether your implementation of the current investment strategy and operation of
the project are effective or yielding appropriate results- We understand, for example, that tåe

@ large n_umber of the unit

months ând thât the c
{nat of tne ovefalt m . The losses from these vacancies are harmful to the Partnership as a
whole, and as a limited partner in the Partnership, we are concemed about the effect of sustained
vacancies on the financial performance of the property.

7Ot4916s2vA

PM-0964
 We are also deeply concemed about the $242 million loan from Wachovia Bank (now Wells
Fargo). We understand that the loan has a $50 million pay down requirement due A.ugust l,
2009. While we understand that you are negotiating with the lender in hopes of extending the
due datg we are not confident, given the present state of the credit ma¡kets, that your
negotiations will be successful. Accordingly, we have asked you to detail your plans for
addressing the Augtst 7, 2009 obligation. +e¿aterou*+e@is'

aateA anrit tO. Vou response suggests that you do not have a plan to manage the
maturity of this loan and that you have not adapted your management of the Parlnership to
present economic circumstances. This matter is of gr Because of
the importance of this loan to the continuing viability of the Partnership, we hope that you will
provide us with yourdetadc¿ plans in the very near future.

Please keep us informed of your progress- CaIPERS is continuing its financial review of the
Partnerships and reserves ail appiicable rights and remedies.

Sincerely,

Laurie V/eir

cc: Ted Eliopoulos

701491652v34

PM-0965
Document co DeltaView on Tuesda 14,2OOg 3:49:03 PM

nten¡ro ven S ite ://LAG atewav/U S NW/7 01 497 6 52 I 3

ite://LAGatewav/US NW701 497 6521 4
Double Underline Bold

PM-0966
 Attachment

dþ,
..'-_iir.'t..1'
-- ç-.1 ;. r ,¡\.¡\

CONFIÞENTIAL
lnvestment Offlce
P.O- Eox2749
Sacramento, C A 9Sg1 2-ZZ 49
(916) 79s-3647
FAX (ef6) 79s-3s6s
Telecommunicaüons Ðevice for the Oeaf _ (9f 6) 7g5l324l
Date: January Zg,2OOg
To: Members of the lnvestment Committee

From: Ted Eliopoulos, Senior lnvestment Officer

portfolio Manager
Fob Langhi,
Laurie We¡t, portfolio Manalei

Subject: ' Page

Mill properties Litigation
Attorney Glient priviteged Communication

The purpose of this meT.9 is to.provide background

ínformation on two investment
g;j;;rsnins that committee members may rèao about in rÀe press or othenryise hear

ffiffiffi&ffiTffiffi

California public Employees' Ftetirement

System 9_3

PM-0967
 i
I
I

Attachment

PAGE MILL PROPERTIES II, L.P.

.í,\
-<:..'

ln 2006 CalPËHS Real Estate entered lnto an investment partnership committing $100
million to Þage Mill Properties ll, L.P. Page Mill has amassed almosi 100 existing
apartrnent buildings in East Palo Alto aggregating over 1 ,800 units housing over 6,000
residents. Page Millembarked on a building rehabilitation program, including new roofs,
seismic upgrades, and improvemeht to common areas and landscape.

Page Mlll has recently come under harsh criticism for raising rents on tenants who are
primarily low income and working famifies. Communig leadèrs have expressed fear that
Page Mill's strategy may include replacing some of the last available affôrdable housing
with more expensive housing stock.

All of Page Mill's properties are under East Palo Alto's Rent Stabilization Board which
lirnits frequency and size of rênt increasqs. page Mill might
Jn response to concerns that
increase rents, the cÍty proposed to restrict the ability of Page Millto do so. lAttowaUtõ
rent increases under the rent stabilizâtion ordinance is in dispute.) Page Milireacted by
increasing rents up to their understanding of aflowable rentsihe week before Christmas.

The City Council passed an urgency ordinance imposing a six-month retroactive renl
lreeze on rent controlled apartments. ln response, Pagã Mill has filed a lawsuit in San E

Mateo County Superior Court to force the city of East Palo Alto to{escind the urgency
ordinance, The Court has agreed to hear the case and ordered an expedited process for ¡
t
reaching a conclusion. A hearing is scheduled for February 21, ZOO7. I

Staff has conveyed concern and dísappointrnent to Page Millfor theír recent acilons.
Notably, staff has told Page Mill that the investrnent of CaIPERS funds should nol result
in lhe invbluntary displacement of low income or work force households. Staff is
currently seeking legal advice on CaIPERS' rights under the partnership agreement, and
has asked to meet with Page Míll to reiterate our concerns.

The Page Mill rent increase and litígation has gengrated a lot of press, and a few calls to
. CaIPEFìS office of Public Atfairs. Public Affaírs has referred allcalts to the Real Estate
office. Staff has r¿)Òeaved a Publíc'Records Act request wtlffr trãs b";" i;ürded to
Legal for response.

Questions regarding these issues should be directed to Ted Eliopoulos at (g16) 7gS-
3647 and Pat Machr at (916) 795-38s0.

Russell Reed
Anne Stausboll
Pat Macht
Peler Mixon

94

PM-0968
' RE: P.age Mill - Discuss David Feldstein's concerns Page I of3

Langhi, Taryn

From: Brown, DannY

Sent: MondaY, June 08,2009 3:50 PM
To: Weir, Laurie; Macht, Pal
Cc: Eliopoulos, Theodore; Moreno, Melaníe; Fitzpatrick, Charles; Marzion, Ken
Subject: RE: Page Mill - Discuss David Feldstein's concerns

The meetiñg with Ruskin's office is scheduled for 3:00 p.m. on Wednesday. Who should I check with to see if Ted
or Joe are available?

From: Weir, Laurie

Snt: Sunday, )une O7,2009 9:23 PM
To: Macht, Pat
Cc; Eliopoulos, Theodore; Brown, Danny
Subject: Re: Page Mill - Discuss David Feldstein's concerns

Ted will return Wednesday. I am nol sure of Joe's schedule. Do we know when mtg will be? L

From: Macht, Pat

To: Weir, Laurie
Cc: Eliopoulos, Theodore; Brown, Danny
. Sent: Sun Jun 07 18:43:35 2009
Subject: RE: Page Mill - Discuss David Feldstein's concerns

I think Ted or Joe should go to the lra Ruskin meeting.......l would like to go along as well. But we should have a
premeeting belorehand. .

PatrÍcia K. Macht
Assisfanf Ex ec utiv e Offi ce r
Office of Puhlic Affairs
p^q!.__ø_Asht.@qa-lryIS..c--a,!L-o-ÌL
91 6n95-3850; fax : 9 I 6/795'3507

From: Weír, Laurie

Sent: Friday, June 05, 2009 3:15 PM
To: Brown, Danny; Manion, Ken; Macht, Pat
Cc: Eliopoulos, Theodore; Pottle, Randy; Plasencia, Javier; Schlenker, Eric; 'dulcÍe,brand@pillsburylaw,com';
'Ono@sbfund.com'; Moreno, Melanie; Pottle, Randy; Eliopoulos, Theodore
Subject: Re: Page Mill - Discuss David Feldstein's concerns

We will do our best to have a memo to you Monday. Thanks L

From: Brown, Danny

To: Weir, Laurie; Marzíon, Ken; Macht, Pat

PM-1001
 ' RE: Page Mill - Discuss David Feldstein's concerns Page2 of3

'.' Cc: Elíopoulos, Theodore; Pottle, Randy; Plasencia, Javier; Schlenker, Eric; Brand, Dulcíe D. ; Warren Otto ;
Moreno, Melanie
Sent; Fri Jun 05 14:34:04 2009
Subject: RE: Page Mill - Discuss David Feldstein's concerns

Hi Laurie - lra Ruskin's offrce called today and would like to schedule a meeling for next Wednesday. What is the
status of the response lhal is being prepared.

From: Weir, Laurie

Sent: Tuesday, May 26,2009 l:.47 PM
To: Mazion, Ken; Macht, Pat; Brown, Danny
Cc: ElÍopoulos, Theodore; Pottlq Randy; Plasencia, Javier; Schlenker, Eric; 'Brand, Dulcie D.'; 'Warren Otto'
Subject: RE: Page Mill - Discuss David Feldstein's concerns

We will have a draft by Thursday that we will share with PaÌ Macht on Friday. L

From: Mar¿lon, Ken

Sent: Thursday, May 21,2009 l:18 PM

To: Macht, PaU 8rown, Danny

cc: Weir, Laurie; Eliopoulog Theodore; Pottle, Randy; Dear, Joe; M¡xon, Peter; Plasencja, Javier

SubjecÈ RE: Page Mill - Discuss Dav¡d Feldstein's concerns

Laurie please work wíth Public Affairs ín preparíng a response. Pat your insight would be appreciated here.
Danny I concur with you that if we get called by Ruskín, it be only CaIPERS that meets with him. Laurle the
response should be one we could use for other members as well should any contact us.

From; Mach!, Pat

sent¡ Wednesday, May 20,2009 5:05 PM
To: Brown, Danny; Maaion, Ken
Cc: WeÍr, Laurie; Eliopoulos, Theodore; Pottle, Randy,' Dear, Joe; Mixon, Peter; Plasencia, Javier
Subjectl RE: Page Mill - Discuss David Feldstein's concerns

Thanks for checking this out. Actually I know Member Ruskin and if we need to go talk to him, please be sure to
have me included. He used to work as a contractor for my office in his previous life. He is supportive of CaIPERS,
bul I can undersland why, unaided by what we know on lhe other side of the story, he would be concerned.

Patricia K. Macht

Assistanf Exec utiv e Offi c er

Office of Publíc Affairs

p?-t_naçbf@1c._e.lJ¿e.r_s-ça-,gpu

91 6/795-3850; fax : 91 6/7 95-3507

PM-1002
 RE: Page Mill - Discuss David Feldstein's concerns Page 3 of3

From: Brown, Danny

S€nl: Wednesday, May 20, 2009 5:0r pM

To: Mãr¿¡on, Ken

cc: weir, Laurie; Eliopoulos, Theodore; potue, Randy; Dea¡, Joe; Mixon, peter; Macht paç plasencia, Javier

Subject: RE: Page M¡ll - D¡sojss Dav¡d Feldstein's concerns

Tlhanks Ken -

lf,q¿ q chance to speak with David Felderstein and I think that we are gefling a head or ourselves a lilile bit. So
far he has only received one inquiry and it was from Assembly Member-RusÈ¡n's offíce. He wãnts us to
be
prepared in lhe event we get called into Ruskin's offìce and hê hopes we can make ¡t go away quie¡y.
He does
not recommend we visil Ruskin unless asked

According to David, Ruskin's office has heard the tenants side of lhe slory, so the purpose of calling us
is would
be to find out whether there is another side of the.story to delermine if lhé tenants tomplaints uãlid. My
knowledge of lhe issues is really limited to what I havé heard during public comment at the Board"r" meetinjé.
My recommendation is that.jn the ev_ent we get called into Ruskin's offìce that we be prepared to go in
there
alone. lt wouldn't hurt to talk to the GP with the goal of coming up with a response that Éoth CalpERS and the
Gp
is comfortable with. But I don't see-any advantag*e in bringing f-nu'ep with us'at this point becårre
the end of
the day if Ruskin feels lhe tenanls íssues are valid he hai nò real recourse against tile Gp. lnstead "t he is going to
want to know what can calPERS do to rectiry the situation or why is Ca|PERS involved in such as
investment.

How do you want to go about preparing a response?

- Danny

PM-1003
. Langhi, Taryn
From: Macht, Pat
Sent: Friday, February 20, 2009 2:14PM
To: McKinle¡ Clark; Pacheco, Brad
Gc: Weir, Laurie
Subject: Page Mill statement

The following statement should be used with any media who call about Page Mill until ffurther notice:

"CaIPERS has met with Page Mill, and varlous interest groups interested in this fund. We have expressed our concerns
about the ¡nvestment to Page Mill. ln addition, we have retained consultants to advise us on the issues raised. Our staff
wll continue to evaluale the situation."

*Pat Macht

PS. lf reporters continue to persist, you may invile them lo check back in 30 days.

Palrícía K; Macht
,Assisfanf Executive Officer
OffÌce of Publîc Affairs
pat m acht@calpers,ca.g-ov
91 6/Ì7 95-3 8 50 ; fax : - I 1 6ff 9&3507

PM-1010
 Page I of3

Langhi, Taryn

From: SchJenker, Eric

Sent: Friday, March 06, 2009 5:26 PM
To: Weir, Laurie
Gc: 'Warren Otto'
Subject: RE: Letler lo Page Mill

Laurie,

Here is the letter:

March 5,2009

David Taran

Page Mill Properties

Re: Page Mill Properties ll, LP Debt

Dear Mr. Taran:

ln reviewing our portfolio debt maturities, it has come to our attent¡on that the $242 million Wachovia
loan encumbering the property partially owned by Page Mill properties ll, Lp ("pwp ll,,) has a
$50
million pay down due August 1,,2009. As Sgs million of our $tOo m¡llion equity commitment to pMp ll
has been funded, we are concerned about the par:tnership's ability to meet this debt obligation.

We have seen nothing from you indicating how you intend to handle this debt payment and, given the
state of the credit markets, are concerned about the risks this debt maturity poses for our par-tnership
investment with you.

Could you please share with us your plans for handling this debt maturity and how this debt maturity
could impact our partnership's strategy?

Thank you,

Laurie Weir

P\A-1011
 'From: Schlenker, Eric
Sent: Thursday, June 18, 2Oe9 3:24 pM
To: Macht, Pat
Cc: Pacheco, Brad; Weir, Laurie
Subject: RE: today's Fair Rent Coalition national press release re CaIPERS and Wells
Fargo
involvement in Page Míll properties ll

Attachments: page mill summary 061109.doc

page mill summary

061 109.doc (...
pat,
llere is the fact sheeE, you requested.
eric
-----Original Message--- r-
From: Macht, pat
SenÈ: Thursday, June !8, 2OO9 l_:52 pM
To: SchÌenker, Eric
Cc: Pacheco, Bradt Weir, Laurie
.Subject: RE: E,oday's Fair Rent Coalition national press release re CaLpERS and WeLl_s Fargo
inwolvement in page MiIl propert.ies If
!Ùe are working on a vanilla message box to give to the board in light of Lhis,.._Eric
;end me the facL sheet we pepared for nuskin, r^re can -
use that as a starting poÍnt.. Bord
.rembers may ask for something if Lhey receive calLs from this..thx

>Patricia K. Macht
>Assistant Executive Officer
>Office of PubLic Àffairs
>pat_machtGcalpers . ca . gov
>916/795-3850; fax: 91.6/'t95-35O7
---- -Original Message-----
From: Schlenker, Eric
Sent: Thursday, June IB, ZOO! 1:43 pM
To: Macht, Pat
Cc: Pacheco, Brad; Weir, Laurie
subjecL: FW: today's Fair RenL coarition national press reLease re calpERs and wells
invoLvement in page Mill properties II Fargo

FYI

-- --:Origina1 Message- ----

From: t¡/eir, Laurie
Sent: Thursday, June LA, 2OOg 1:38 pM
To;'Otto@sbfund.com' ; .dulcie.brandGpiJ_lsburylaw.conì, ; Schlenker,
.JavÍer; Eliopoulos, Theodore; poLtle, Randy Eric; plasencia,
Subject: Fw: today's Fair Rent CoaLition nátional press release re CalpERS
involvement in page Mill propert.ies Il and tdelfs Fargo

Eric. Please forward on Lo pat machc ancl her team.

---- Original Message -----
om: Christopher Lund <cpLund@grnail.com>
r'o: rubenxLGaol'com <u'ubenxrGaol-com>; cromero-ezln@yahoo.com <cromero_ezJ.ngyahoo.com>;

PM-1015
 The open letEer to caIPERs highlighted in the release can be founcl at:

..,http: / /www.epa-tenanLs.orglimages,iCalp¡Rsopenletter.pdf
BesE,
Chris

Christopher Lund, ph_D.

Corrnunications program Direct,or
EPA Fair Rent Coal-Ítion
lrlârh¡. epa- tenants . org
4L5-845-7 447
cplundGgrnail . com

PM-1016
 Page Mill Summary
June 1I,2009

Backq¡'ound and Context

CaIPERS is a limited partner investor in Page Mill Properties II, L.P. (the "Fund").
' $l l6 million of total committed equity in the Fund
' Managed and controlled by its general partner and the operating company Page Mill
Properties ("Page Mill'), which are both controlled by David Taran
r As a limited partner, CaIPERS has committed $100 million (86% of the roral equity); of
which $95 million has been funded to date.
' CaIPERS has limited rights and ability to control the operations of the Fund.
I Remaining l{Vo of equity is from high-net-woÍh individuals, the general partner and its
¿rffìliates.

Page Mill's Stratesy and Operation

' From 2006 to 2008, acquired a diverse portfolio of properties in East Palo AIto with
approximately 1,800 various residential units
' Upgrade the properties and boost revenues by increasing rents to the maximums allowed
under East Palo AIto's Rent Stabilization Ordinanee
In some cases, rent increases were dramatic resulting in:
o Vacancies and evictions
o Protests by tenants and other interested parties
' Page Mill also pursued litigation with the City and otlers regarding its ability to raise
rents.

Other Financial Issues

The economic downtunr and credit crisis have also severely impacted the Fund's strategy and
fìnancial condition.

, Reduced demand for housing causing:

o Declining rents
o
High vacancy rates for the properties
. Dramatic increase in the cost of credit
Limited availability of credit for large real estate transactions
CaIPERS' Status and Role

In light of the issues raised by the implementation of the Fund's investnlent strategy, CaIPERS
formed a dedjcated teanr of staff and consultants to regularly monitor and evaluate the Fund and
. identify steps required to make r¡,ell-infomed decisions on rhe invest¡nent. CaIPERS staffand
consultants have been:

' Meeting with Page MilJ to express CaIPERS concerns regarding the implementation of
the investtnent slrategy and the damage to the Fund associated with Page Mill's actions
' Meeting with intereste<.I parties including representatives of tenant organizations and
raising those concenls wjth Page Mill as warranted
. Monitoring and evaluating the Fund's perfonnance

PM-1017
 I

From: Pacheco, Brad

Sent: Thursday, June 18, 2009 3:25 PM
To: Schlenker, Eric; Macht, Pat
Cc: Weir, Laurie
Subject: RE: today's Faír Rent Coalition national press release re GaIPERS and Wells Fargo
involvement in Page Mill Properties ll

Attacbments: PageMill.06.2009.ppt

E
PageM¡11.06.20O9.p
pt (61 KB)
Attached is a message box that we drafEed for E,he Board. Pretty shraight
forward. Let us know if t,his looks ok

-----Original Þfessage--- --
From: Schlenker, Eric
Sent: Thursday, June 18, 2009 3:24 PM
To: MachE, PaÈ
Cc: Pacheco, Brad,'Þ¡eir, IJaurie
Subject: RE: today's Fair RenE, CoaLiE.ion nac.ionaL press release re CaIPERS and l¡Jells Fargo
involvement in Page MiI1 ProperEies. If
Pa E,

¡ere is the fact sheet you.request,ed.

Eric
--- --Original Message-----
From: MachE, Pac
Sent: Thursday, June 1,8, 2009 1:52 PM
To: Schlenker, Eric
Cc: Pacheco, Brad; lVeir, Laurie
Subject: RE: today's Fair Rent CoaliE.ion nacional press release re CaIPERS and !üe1Is Fargo
involvement in Page Mil1 Properties II
are working on a vanilla message box to give Eo t.he board in J.ight of thi.s... -Eric -
l^re
send me Ehe fact sheet we pepared for Ruskin, ure can use tha! as a start.ing point. Bord
members may ask for something if Èhey receive caLls from chis..ctrx

>Patricia K. Macht.
>AssiscanÈ Execucive Of ficer
>Offi-ce of Public Affairs
>paE_machE @calpers. ca . gov
>976/795-3 850,' f ax: 976/195-3507

-----Original Message-----
From: Schlenker, Eric
SenL: Thursday, June 18, 2009 7:43 PM
To: Macht, PaL
Cc: Pacheco, Brad; hleir, Laurie
Subject; FW: today's Fair Rent CoaliLion national. press release re Ca1PERS ancl Wells Fargo
jnvolvement in Page Mill ProperE.ies II
FYT

PM-1019
 Þ

-----Original Message-----
From: l¡teir, Laurie
SenE: Thursday, June 18, 2009 1:3g pM
To:'OtEo@sbfund.com',-'dulcie.brandGpiJ.lsburyÌaw.com, ; Schlenker, Eric; plasencj-a,
Javier; Eliopoulos,'Iheodore, poEE,Ìe, Randy
Subject: Fw: Loday's Fair RenÈ, Coalition national press reLease re CalPERS and lnlells Fargo
involvement in Page MiJ.I properE,ies II
Eric. Please forward on co paL macht and her team.
----- Original Message -----
From: Christopher Lund <cplund@9rmaiJ..com>
To: rubenxl@aol.com <rubenxrGaol.com>,'cromero-ezlnGyahoo.com <cromero_ezJ.n@yahoo-com>;
Lauramartj-nezforepa@gmail.com <lauramartinezfoiepaGgmail.com>; valerie
<varmenE,oGci tyofepa - or9> ; ralvarado@ci tyofepa - orq .ialvarado@cicyãiãp-. Àrmento
sfordGcityofepa.org_<sford@cicyofepa_orçr>i court..skinnerGgrnail.cãm o.gr,
<court'skinner@grmaí1-com>; christine'gasparacBdoj.ca.gov <chrisEine-gasparac@doj.ca.gov>;
Marsh, Ryan D- <rdmarshGbhlaw.com>; Re'Ànita Burns <reanitaGyouchuniÉeil-net>; charisse
domingo <cÌ¡arisse@youthunited.neE.>; marl4)iaGsbcgloba1 .nee <mårypiaesbcgroral
Alderson <woL framGcollectiveroots. org> i acohen@menlopark. org .lãohen@menlopark. ,net>,- !,rolfram
hgrobinson@menlopark-org <hgrobinson@menlopark.orgr;-c¡narrii""G;iay;;;pa.orç, org>;
<cmart.inez@cit,yofepa.orçt>; Clmthia-D'agosCã <c¡rntñia@greenfoothill-s-orgr;
rharrís@co-sanmateo.ca-us <rharris@co.sarlmat,eo--"".rrrt; kelly.morariu@cityofpaloalto-org
<kel1y-morariuGciryofpaJ-oarto.org>i Ray Lunny <rlunnyGco.sanmateo.ca.us>;
::abbi-mardergbecham.org <rabbi-marder@Èetham.org>; rabbi_altenberggbethãm-org
<rabbi-al lenbergGbeEham.org>; rachel-arnowGmaillhouse.gow <rachel .arnor,y@mail.house.gov>.,.
annagram@hr.house_ gov <arnagramGhr.house-gov>i Burns, Dennis
<dennis.burnsGcityofpal.oalÈo'org>,'dean@tenantstogeEher.org <deaneE.ena¡tstogether.org>;
.Andy Blue <andv@tenalr.scogecher.org>t Juliet arodie <JMBrodieglaw.stanford.edu>,-
j ksceinb@law. stanf o¡d . edu < j ksteinbBLaw. stanf ord. edu> Jeame
;
<JMerino@l-ah,.stanford.edu>,'ndaro@sÈanford.edu <ndaro@stanford.edu>; Merino
<candiceGclsepa.org>,- victor Ramirez-<victorGcJ.sepa-org>; ilon Frohnmayer candice Greenberg
:shuayt. oGs tanf ord . edu <rshuayLoes tanf ord . edu> ; j f powersGstan f ord . edu
<jongcrsepa-org>;
<jfpowersGscanford-edu>,'wtp@stanford.edu <wtp@ãE.anford.edu>; lbuen61aw.sEanford.edu
<lbuenGlaw-st.anford-edu>; Vrreir, Laurie; pacheão, Brad; McKiniey, ClaiÈ;
info@midpen-housÍng.org <infoGmidpen-housing-org>; info@bridgehousing-comKane, Sue,.
<infoGbridgehousing.com>; Daniel pinna <dpiãna@ãopydox.com>; Lesia presEon
<lesiaGehpcares - org>i Mindy Gatoob <mindy@craigsri-stfoundacion org>
- ;
elmer.melgar@bankofameri.ca.com <elmer.melgarGbãnkofamerica.com>; ãaeden.koenigGgrmail.com
<caeden'koenigGgmail'com>; Yana Ernrny Hoy <ehoy@sEanford.edu>; Marnie
<marni ellmn . man aba E@f edex . com> ; nidef avega @ravãn swood . k1 2 . ca . us iyn' uo"o' ManabaE
<mdelavegaeravênswood.kL2.ca-us>i olgaGravenswood-k12-ca.us <oJ.ga@ravenswood-k12.ca.us>;
renae-owensGesa.sccgov.org <renae.owens@esa.sccg,ov.org>; dbaitey@samcera.org
<dbaileyGsarncera.org>; dorntaxGpacbeLl.neE, <dorntðxgpacbell.neci; bnaudnaud@ao1com
<bnaudnaudeaot.com>; vesB597@hormail.com <vesB597@holmail-com>; w¡rosi"liJ;à:;å;-""'
<wbltGsÈ,anford.edu>; bob allen <roberEallen3@gmail.com>; lrlallOmanoaolcom
<hlalloman@aol'com>; wleeGcityofepa.org <w1ee@cityofepa.org>; peter.hartnect.@asm.ca.gov
<peter.hartnetLGasm_ca,gov>,. blowell@smchousing.orq.¡fowã11B^smchousirt.orgr;
dbay@smchousing.org <dbay@smchousing-org>; rmarcherBco.sanmaE.eo.ca_us
<rmarcherGco'sanmateo,ca.us>,'aarmsby@co.sanmateo.ca.us <aarmsby@co.sanmaE.eo-ca.us>;
al'bert'sheldenGdoj'ca-gov <albert'shelden@doj.ca.gov>; ylahn@yaËoo.com <yj-ahn6yahoo.com>;
Lewyêuhab-org <LevyGuhab.org>; susan.saylor@àfeh.ãa.gov <susan.saylorqdfeh.ca-gov>,.
çrrichaneGhì,csmc-org <grichaneGhr.csmc.org>,-sgibsonGlãgar"i¿sÃc.;;á---'
<sgibsonGlegalaidsmc.org>; Laura-cacho@edar-ãorn <Laura.cacho@eda"l.o¡¡r,
I{ilary-Pearson€boxer.senaEe-gov <Hilary-Pearson@boxer.senate.gov>; venLure¡ape6li.,,e.com
<venturetape@live-com>; goroGcdi-usa.org <goroGcdi-usa.orgr>; amy@tandn.org
<amyGtandn.a¡.g>: twatersGcssny.org <twatersGcssny.org>; .minnehän@wclp.org
<cminnehanGwcJ-p-or9>; rrothschirdGwclp.org <rrotñschitder¿cLp.org>;
rr,ãr.anevrclp.org
<rnev¡mancwclp-org>; qfgarcialGyahoo.com <gfgarciaLGyahoo.com>; burns.edwardgsbcglobal.net
<burns'edwardGsbcglobal-neE>; brian.perkj.nsGmail.house.gov <brian.perkinsgmair.house.gov>,.
Americanvoices@mail-house.gov <ÀmericanVoicesGmail.house.gov>,. johngsco.ca.gov
<j ohn@sco . ca . gov> i governor@governor . ca . gov <governor.gorrãr'or .
ãu. gorr, ;
?nator. sl.mit.ianGsen.ca. gov <senauor. simitian@sen. ca. gov> ;
:heduling-feinstein@mail.house-gov <scheduling.ÍeinsLein@mail.house.gov>,.
senat or@boxer. senat e - gov <senator@boxer . senate. gov> ; s f . nancyGmail . hoise. gov
<sf -nancy0mail .house.gov>,. scheduler.pelosi@maii -house.gov
< scheduler - pelosi@mai 1 . house . gov>
; Michael . beardGmai 1 . hãuse. gov

PM-1020
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Plvl-1021
 From: Marzion, Ken
Sent: Tuesday, June 09, 2O09 2:ZZ pM
To: Weir, Laurie; Slausboll, Anne; Dear, Joe
Cc: Elíopoulos, Theodore; Pottle, Randy
Subject: RE: Page Mill - evictions

Considering the sensitivity around this subject, I think we need something tomorrow for
the Board. Can one of the
attorneys drafl something that you can edit?

From: Weir, Laurie

Sent¡ Tuesday, June 09, 2009 2:15 pM
To: Mazion, Ken; Stausboll, Anne; Dear, Joe
Cc; Eliopoulos, Theodore; pottle, Randy
SubJect: RE: Page Mill - evictions

Hi AII,

we have scheduled an urgent Page Mill today at 4:00. That said, we are focusing our efforts on preparalion
the RCP meetings tomorrow mor.ning and1e-eüng
aftern-oon año psc presentation next week. lt riould be very helpful
for
deliver to this group the Page Mill mémo updatíng the lnvestment Committee later thís -- if we could
,""L .
Please advise if that is ok with the group.

Thanks very much. Laurie

:rom3 Marzion, Ken

Sent: Tuesday, June 09,2009 Z:05 pM
To; Stausboll, Ànne; We¡r, Laurte; Dear, Joe
Cc: Eliopoulog Theodore; Pottle, Randy
Subject: RE: Page Mill - evictions

LaurieiRandy when wìll you have the. memo together?

From: Stausboll, Anne

Sent Tuesday, June 09,2009 12:59 pM
To: Weir, Laurie; Dear, Joe; Mazion, Ken
Cc: Eliopoulos, Theodore; Pottlg Randy
Subject: RE: Page Mill - evictions

Hi All - Will you please pul together a memo to the Board on this, for distribution
tomorrow. Thanks. Anne
ANNE STAUSBOLL
Chief Executive Officer
CaIPERS Executive Office
Lincoln Plaza North
400 Q Street, Room 3340
Sacramento, CA 9581 1
Phone: 91 6-795-3825
Fax: 91 6-795-341 0

rom: Weir, Laurie

Sent: Tuesdat June 09, 2Q09 12:,46 pM
To: Dear, Joe; Marzion, Ken

Plvl-1024
 Erika Wilhehn, a 3l -year-old Hewlett-Packard employee who lives in a three-becl¡oom rental
home at I 909
Cooley Ave-, said she also ¡eceived the notice WeAnáAuy.

V/ilhelm said she and her boyfriencl, a Stanford Ph.D. studenl, and two other roommates were
still in shock and
contemplating what to do. :

"Vy'e're looking on Craigslist right now some of the Palo Alto three-bedrooms rre like $6,000,,, Wilhelm said.
-
The Sroup pays $2,550 for its house and enjoys biking to work and school fronl the convenient
location.
Wilhelm questioned whether Page Mill singled out the household after she made several complaints
about
repairs and her boyfriend was named in coun documents involving a class-action lawsuit against
the landlord.
"We have never been late," she said. "We always pay.n

Eric Coffinan, who lives in a one-bedroom cottage at l9l I Cooley rvith his partner, said he feels
certain he was
targeted because of his involvement in tenant protests and the lawsuit. "They're taryeting
a lot of people,,, said
Coffrnan, 35. 'lThey've purchased way too many properties. They honestly don't knãw what they'ie
dåíng.,,
Coffman said ìe never paid the rent late in the nearly nine years he has lived in the home.

Lunddeclinedtocommentextensivelyonhisplansbutsaid''thenoticestheysentoutspeakforthemselves.

"Givelt that there are individuals in some of these units who have been involved in tenants,rights advocacy,
- think the selectiorl of these units is interesting," he said.
I

Page Mill and the city of East Palo AIto are currently involved in about l0 lawsuits over rent hikes and other
ssues.

Much of the dispute centers on whether Page Mill correctly raised rents to match the legal maximum
that
appeared on certificates kept by the city. In many instances, those amounts were
hundreds of dollars more than
what tenants were aclually payrng rvhe:r the company bought more than 1,700 units in
the city of 32,000.

Randy M. Pottle
Senior Portfolio Manager - Real Estate - CalpERS
LPE, 400 e Str, #E4800, Sacramento, Ca 9SB,l4
Direct Ph: 916 795-2941, Ceil: 916 T69-9715
Email: randyjottle@calpers.ca.gov

Assn't: Jackie Sumner

Ph:916 79ç3212
Email:jackie_sum ner@calpers.ca.gov
Fax; 916 795-3965

PM-1025
 Page I of2

Langhi, Taryn

From: WarrenOtto[Olto@sbfund-com]
Sent: WednesdaY, March 04, 2009 5:33 AM
To: Weir, Laurie
Subject: RE: UPdate

The proposal I'm referring to is the mediation concept we discussed last Friday, where Page Mill would agree to
suspend all rent increases and engage in mediatíon with EPA and the tenant's groups. I believe this concept ís
embedded in one of the strategic allernatives our task group reviewed at our last meeting and w¡ll be reflected as
an option in the proposal being wr¡tten up by Dulcie for our group's review this Thursday- I discussed th¡s concept
wilh Dulcie late yesterday afternoon and she does believe it is one of the alternatives conlemplated in the
document she is preparing.

I mentíoned it in my Update email, as lwant everyone to know thatwe regard Page Mill as a top.priority, and this
alternative could be implemented immediately (subject to working out the delails with Page Mill) and would
alleviate lhe pressure staff and the Board are under from EPA and the lenant's groups, and doesn't compromise
any of our other alternatives. I certainly didn't rnean lo 'put you on the spot," ¡f that-ís what my email did, but at
the time I wrote the email I hadn't discussed thís alternative with anyone other than you, so thal is why I said that I

had "a proposal in to" you. I look fonvard to fully vetting this idea with our task force tomorrow, and welcome any
other thoughts or queslions you may have on Page Mill in the meantime.

From: Weir, Laurie [mailto: Laurie-Weir@Ca lPERS.ca. gov]

SenÍ Tuesday, March 03,2009 7:49 PM
To: Warren Otto
Subject: RE: Update

Hí Warren,

I am a little concerned that you indicate that you have a proposal to me on Page Mill. I assume that you are
refering to the proposal forthcoming from Stqckbridge and Pillsbury this Thursday. Let me know if I have missed
' something along lhe way-

Thanks L

From: Warren Otto [mailto:Otto@sbfund.com]

Sent: Tuesday, March 03, 2009 6:48 AM
To: Eliopoulos, Theodore; Pottle, Randy; Weir, Laurie; Stocking, Earbara
Cc: Terry Fancher; Steve Steppe; Dwight Merríman; Jay Jehle; Jeannie Murphy; Doug Sturiale
Subject: Update

ffiffiffiÆffirffiffi

PM-1034
 Page2 oî2

ffiffiffi&ffigffiffi

PM-1035
 Page 1 ofl

Langhi, Taryn

From: WanenOtto[Otto@sbfund.com]
Sent: Frìday, March 20, 2009 6:37 AM
To: Doug Sturiale; Josh Callahan
Gc: 'Leiva, Bill';'Shore, Jim'
Subject: Page Míll

Doug, I spoke with Bill Leiva and Jlm Shore of Page Mill yesterday, and they are prepared to work with us to
develop a new budget for 2009 which would include two months of actual results (Jan. & Feb.), estimate March,
and then forecast the remaÍnder of the year using new assumptions about leasing and occupancy levels.. They
will also provide us with an updated rent roll.

I have also asked them for their most recent estimale of market rent for all units. Given lhe large number of
vacant units (390+ a couple of weeks ago), it's critical that they meel currenl market rent levels to fill their
vacancies. Wth a new leasing director on board as of March 1sr, whose success depends on leasing, loday's
estimale of market rents may be somewhat different from lhose we first received. We need lo understand how
concessions are being used in lhe market, and how long we expecl these concessions to last. Are they only
needed for new leases, or are'they also being offered on renewals?

This budget should include capital expenditures for the year. l'm sure there are several projects which Page Mill
would like to undertake bul wíll not have the cash to fund, so we need to identify those projecls which are critical
to leasing or safety and break those out from projects which can be delayed.

Bill Leiva is expectÍng a call from you to schedule a working session when he can provide you with a new budget,
rent roll, and market rent levels. Russ, who runs the property management operation, will probably join you to
explain the operatíng costs of the budget. You should also get some time with lhe new marketing director, as
lease-up assumptions should be driven by what she thinks she can do leasing up the vacancies and minímizing
turnover.

l'll be in the Bay Area for several days next week, and may join you if I have the time, but don't wait on me to
schedule a meeting with Page Mill. We need to have this meeting and develop this new budget as soon as we
possibly can. lwould like to present CaIPERS with our underwriting and financial analysis no later than Aprìl 15th,
so we need a good 2009 budget by lhe end of March. Bill Leiva's direcl phone number is 650 833-3818. Thanks-

PM-1036
 ï._: :.1 . :i...j :: : ;i':j.+.r1.::iiri,.:-.:::i.r.l
..rir-r:jT.:j..-_ji
iti::+'j¡l:iili : ì .:.r.

CONFIDENTIAL
lñvestmeiìt Offlce
P.O. Box 2749
Sacramenlo, CA 95812-27 49
(e'!6) 795;3647
FAX (9'r6) 7s5-3965
Telocommunications Device for the Deaf - (916) 795-3240
Date: December 2,2008

To: Members of the lnvestment Committee

From: Ted Eliopouios, Senior lnvestment Officer

Laurie Weir, Portfotio Manager

Subject: Page Mill Properties Update

Attorney Client Privileged Communication

ln January of th¡s year, slaff provided the lnvestment Committee wilh a memo that
outlined GaIPERS investment partnership with Page Mill Properties Fund ll (please see
memo atlached). The memo bummarized rent increases, litigation between Page Mill
and the City of East Palo Alto, and crílical press resulting from the inveslment strategy.
The purpose of this memo is to update the lnvestment Committee on recent events
relating to Page Mill.

BACKGROUND

ln 2006 CaIPERS Real Eslate entered into an investment partnership committing $100
million to Page Mill Properties ll, L.P. Page Míll has amassed almosl 100 existing
apartment buíldings in East Palo Alto aggregating over 1,800 units housing over 6,000
residents. Page Mill embarked on a building rehabilitatíon program, íncluding new roofs,
seismic upgrades, and improvement to comrnon areas and landscape.

Page Millhas come under criticism for raising rents on tenants who are primarily low
income and working families. Community leaders have expressed concern that Page
Mill's strategy may include replacing sorne of the lasl avaílable affordable housing wilh
more expensive housing stock.

California Publlc Employees' Retiremenl System 90

PM-1041
 Attachment

BECENT EVENTS 4't.

à,'; i
Page Mill and the City of East Palo Alto have sued and countersuad one another five
times thus far. The Stanford Community Law Glinic represenled the tenants in one of
the court cases against both Page Mill and East Palo Alto. Page Mill has prevailed in
each case. ln response, East Palo Alto has partnered with the City of Borkeley for
advice and assistance on how to improve the administration of East Palo Allo's renl
slabilization ordinance.. The Stanford Community Law Clinic intends to press lheir case
further in new litigation efforts. The tenants are also represented by Tenanls Together, a
lenanl rights gtoup headquartered in San Francisco.

Staff has maintained open communication with Page Mill and all interesled parties. ln
August of this year staff met with Tenanls Together and tenants from the apartments to
hear their comments and concerns. The tenants related issues including hÍgh rent
increases, lack of timely responses to requesls for maintenance and repairs, and injuries
that have occurred resulling from lack of appropriate maintenance. They provided staff a
booklet titled Homeless Now that oullines renl increases and habitability issues.

Over the past three months, staff has had severalconversations with a tenant who
appears to be a Stanford law student that is involved with the Stanford Community Law
Clinic. He informed staff that there are CaIPERS system members living in some of lhe
Page Mill apartment unils. Ho also stated thât thê Law Clinic ís dratting a letter to
CaIPEBS waming against predatory investment practices. The letter is based on a New
York City Comptroller letler to investors regarding lhe Peter Cooper Vílláge projecl in
New York C¡ty (as you are aware, CaIPERS is an investor in the Peter Cooper project
through our parlnership with Blackrock). The Law Cliníc expects lhe letter will be signed
by Congresswornan Anna G. Eshoo, of California's 14th Congressional Dislrict, They
hope Ìhe letter will also be signed by Senators Boxer and Feinstein, and other local
elected olficials such as the Mayor of East Palo Alto. The letter will most likely be
addressed to Board Presídent Rob Feckner and lnveslment Committee Chair George
Diehr.

On August 18, 2008 Real Estate staff presented the Strategic Plan lmplementat¡on
Update to the lnvestment Committee in closed session. The Update included staff's
identification of Page Mill as a non-strategic Urban Program partnership that is identilíed
for evaluation. The agenda item noted inveslment parlners to act as consultanl advísors
to assist statf with this process. Subsequently, staff has retained the services of
Stockbridge as consullant, and Pillsbury Winlhrop as outside legalcounselfor Page Mill.
The consultant and counselwill advise staff on CaIPERS' rights under the parlnership
agreement.

Starting in November 2008, staff has spoken several times with representatives from
SEIU that state that their members are tenants in Page Millowned properties. SEIU
íntends to parlícipate in efforts to raise awareness of tenant ríghts and demands. SEIU
noles that this effort wíll be coordinated around the holiday season.

91

Plvl-1042
 Attachment

The other Page Mill ínvestors consist of a parallelfund that is a group of high net worth
individuals. Staff has spoken with severalof these inveslors, each of which has
expressed support for Page Mill's strategy.

On several occasions, mindfulof CaIPERS rofe as limited partner, staff has spoken with
and conveyed concern and disappointmenl lo Page Millfor their recent actions. Notably,
stafl has told Page Mill that the investment of CaIPEBS funds are not intended to resutt
in the involuntary displacement of low Íncome or workforce households. Page Mill
conlends that they have done nothing inappropriate, all of their aclions are legal, and
their investment strategy is performing as anticipated.

ln conclusion, staff has met with and heard the concerns from interested parties. Staff
has hired consullants for evaluation and recommendation of the Page Mill investment
partnership. Staff continues to work closely w¡th the Legal and Communicalions offices
on the Page Mill matter. Staff will keep the lnvestment Committee informed as aclions
are taken relating to the Page Mill investment partnership.

Questions regarding these issues should be directed to Ted Eliopoulos atl9tO¡ ZSS-
3647. )

Anne Stausboll
Pat Macht
-@ Peter Mixon

92

PM-1043
 ,Attachmenf

CONFIDENTIAL
lnvestrnent Otllce
P.O.Box2749
Sacramento, CA 9581 2-27 49
(9:16) 79S3647 :

FAX (916) 7s5-3965

Telecommunications Device for the Deal - (916) 795-3240
Date: February 12,2009
' To: Members of the lnvestment Committee
From: Têd Eliopoulos, Senior lnvestment Officer
Laurie Weir, Portfolio Manager

Subject: Page Mill Ëund ll Update

Attorney Client Privileged Communication

ln January and December 2008, slaff províded the lnvestment Committee wilh
memoranda (attached) that outlined CaIPEBS investment partnership with Page Mill
Properties Fund ll, surnmarízed rent increases, outlined litigation between eagb Mi¡ and
the Cíty of East Palo Alto, and criticalpress resulting from the investment strategy. Staff
has reported on Page Mill issues to the lnveslment Gommittee in closed session, and the
Committee has heard public cornment from East Palo Alto Mayor Rubin Abrica, Tenant's
Together, and Page Mill tenant Chris Lund. The purpose of this memo is to update the
lnvestmenl Committee on lhe process that slaff has established to address th'e issues
relating lo Page Mill.

Staff has formed a leam lead by Real Estate Unit (BEU) Portfolio Manager Laurie Weír.
The team includes FìEU consultant Warren Otto of Stockbridge, Javier Plasencia from
the Legal Unit, DulcÍe Brand as external legal counsel from Pillsbury Winlhrop, and Clark
McKinley from Public Affairs. The team will be meel¡ng regularly to discuss progress and
strategy relaling to Page Mill. Thus far, the process has accomplished the following:

. ln August 2008, stafl met with Tenant's Togelher to discuss their concerns.

. REU retained lhe consultanl seryices of Stockbridge to assist with seeking

information, analyzíng and reviewing the projected economics of the ínvestment
as well as assessing the capabilitíes of Page Mill.

Calif orniu- g.Er?l lygg" rernenr System

^. |1t9.1¡ _T gti 8B

PM-1044
 Attachment
Page Mill Fund ll
February 1'1, 2009
Page 2

ln December 2008, staff with consultant Stockbridge met with executives of Page
Mill to relay sígnificant concerns regarding the investrnent strategy. Page Mill
agreed to respond in writing to the allegations made against them by lsnants and
local governme nt off icials.

REU has retained the legalcounselof Pillsbury Winthrop. Allorney Dulcie Brand
is currently reviewing legalallernatives available to CaIPERS under the contracl
documents.

CaIPERS lnternalAudit Unit is pedorming a compliance audít on Page Mill. After

initialfindings were revlewed by staff, the audit períod was exlended through
December 2008, and auditors were tasked with additionalrevlew.

On February 10, 2009 staff received the wrilten responsê from Page Millto the
allegations made by the tenanls and local government officials. That document
has been fonn¡arded out to the team for review and comment.

Stockbridge and Pillsbury are currently working to craft strategic alternalives for
the CaIPERS in connection with its investmerit in Page Mill. Such alternatives
must take into account the complicaling faclor that there are other limiled partners
in the fund that ímpact GaIPERS options.

. Slalf and the team willwork closely with corisultants to review the information
provided, the alternatives available to CaIPERS and the risks associated with
those alternatives to develop the best course of action for CaIPERS wíth respect
lo the Page Mill invastment.

Staff will keep the lnvestment Committee informed as events relating to Page Mill move
forward. Questions regarding these issues should be directed to Ted Eliopoulos at (916)
795-3647_

cc: Anne Stausboll

Ken Marzion
Peter Mixon
Pat Macht
Larry Jensen
Allan Emkin, PCA

B9

PM-1045
iir,_ +:i, -ii':-t:.::;,.Í.:ìrii-i itii::.-'- :.
ï:ri:üil-
.1:il

CONFIDENTIAL
lnvestment Ofllce
P.O. Box2749
Säcram ento, C A 95812-27 49
(916) 795-3647
FAX (916) 7ss-3s65
Telecomrnunicalions Device for lhe Deaf - (9J6) 795-3240
Date: February 24,2OAg

To: Members of the lnvestment Committee

From: Ted Eliopoulos, Senior lnveslment Officer

Lauríe Weir, PortfolÍo Manager

Subject: Page Mill Fund ll Update

Altomey Client Privileged Communication

The pu¡pose of lh¡s memo is to provide a further update lo our príor merno dated'
February 12,2009 on staff activílies regarding the Page Mill investment fund. Staff and
consultanls are working diligently to develop a resolution of the íssues surrounding Page
Mill. We view this as a hígh priority, and we are moving forward wilh all possíble speed.
CaIPERS'ínveslment in Page Mill is via a límited partnership. Our altematives are
limited by our limited partner status with other limíted partners in the fund. Consequently
CaIPEBS does not control the fund. Unless we can reach a negotiated resull, Page Mill
is likely to litigate, and other limited partners may litigate, regardless of the slrategy stafl
chooses to pursue. Staff intends to update the lnvestment Committee on our proposed
actions in closed sessíon on April 20,2ÐO9.
There are nurnerous interest groups pressíng lheir concerns regarding Page Míll. Staff
understands thal lnvestment Committee members have been and are likely lo be
contacted with questions on Page Míll. Public Atfairs staff has drafted a communication
plan for Page Mill. Stafl will present that plan to the lnvestmenl Committee as a part of
the update in Aprí|. ln the inlerim, please conlact Ted Eliopoulos with any questions that
you have regarding lhis investment at (916) 795-3647.

California Public Employees' Retirement System 87

¡:..^-r- ñr^-^ t-^¡ à^^ õt---¡ ô..:r- ?.^^^
^--..---. - ..
^

PM-1046
 PRESENTATION: UPDATE ON PAGE MILL PROPERTIES II

The purpose of this agenda item is to brjefly update the Investment

Committee on steps taken to date to address issues surrounding the
Page Mill investment in East Palo Alto

CaIPERS investment in Page Mill is via a limited partnership. our

alternatives are restricted by our limited partner stahrs with other
LPs in the fund. consequently, calPERs does not control the
fund.

staff has formed a dedicated team of staff and consultants to

evaluate Page Mill, establish goals for the outcome of the
investment strategy, and identifo the steps required to make well-
infonned decisions on this investment. Team members include
staff from the Real Estate, Public Affairs, and Legal units, Internal
staff are assisted by two external consultants: Stockbridge is the
independent financial consultant, and Pillsbury winthrop serves as

external legal counsel on the team. Staff also works ciosely with
PCA on decisions related to the Page Mill investment.

PM.1OB7
 Staff anticipates that discussions with Page Milt will commence
coming months. The purpose of the discussions will be to
determine Page Mill's willingness to revise their investment
strategy to address CaIPERS financial concerns and issues raised
by the community. If these discussions are not fruitful, it is likely
that the decision will be made to remove the general partner. If
amicable separation is not possible, staff will initiate the process to

rernove the general partner as allowed in the partnership

agreement.

REÐACTEÐ

Staff will continue to inforrn the Investment Cornmittee as

progress is made on Page Mill. Team members are available to

ans'wer questions

-,ffiffiffiffiffffi

PM-1088
 L"nghi, Turyn . _, .
.
,_
From: Stausboll, Anne
Sent: Tuesday, March 02, 2Q't012:3T pM
To: Weir, Laurie
Cc: Dear, Joe; Brown, Dann¡4 Macht, Pat
Subfect: RE: Page Mill

Thanks for the update. lf this is public, Danny should let the author of the new divestrnent bill (the one on predatory
lending) knowasap. Thanks, Anne

Anne Sbusboll I Chíef Executlve Otlicer ICaIPERS Executive Ollice

Office - 916.795.3825 |Fax - 916.795.34i0

From: .Weir, taurie

sent: Tuesda% March 02, 2010 l2:l2 pM
To: 'Bran$ Dulde D.'; [anen Otto'; Mêcht, Pati Pachecq Bradi Pechtel, Patric¡a; Sdrtenker, Eríc
Cc: Eliopoulos, Theodore,. Allan Emkln'; Dear, Joe; Stausboll, Anne
Subject: Page Hill
Importance: High

Hi Everyone,

All Page Mill units were sold at auctlon today. Wachovia was only bidder at approx S0% purchase price. We no longer
own Page Mill assets.

So, we have work to do.

Eric, please schedule meeting for the Page Mill dedicated team- One hour, with call ín info. (Vickie is out today and
tomorrow, but Crystal can help).

On the call we need to discuss winding down partnership activities, final audit (?), accounting, public comment, memo to
Board, and any other action items.

Lets try to move quickly on this.

Thanks everyone.

Lanrie Wei¡, Portfolio Manager

Global Real Estate Investme,nts
Califomia Public Emptoyees Retirement System
400 Q Sreet, Suite 84800
Sacramen(o, CA 95814

Vickie Clemens, Assistant

916-195-9428 pltone
916-795-3965 fax
Vîsit our \ryebsite: htto//wvw.calperscovemance-oro/
Follcw us on Twiiter: htto://twitter.com/Ca|PERS ffiffiffi&ffirffiffi
.B_ecoT9 a
Fan on Facebook: htto//facebook-com/mvcalpERS
Mew r/ideos on YouTuba: http://voutube.com/CatpERgñetwolk

Submit an lnvestment Proposal: www.ca¡pers.ca.oov/¡nvestmentorooosels

^$Þ"
}IPLRS

Pl\A-1212
 From: McKinley, Clark
Sent: Thursda¡ December 20,2007 8:40 AM
To: Weir, Laurie
Subject: SJ Bus Journal & our partner

Laurie,

Eileen Goodwin iust confirmed that she will call the reporter on behalf of our partner. She will give her the messages for
"the other side of the story' that we discussed. However, Eileen says this reporter may very well dísregard the fadts and
slant the story as she has done in the past. She also said the reporter may come back to CaIPERS for comment.

I've already told the Business Journal our preference lo have partners discuss their activities directly. l've thoughl about
adding the followÍng, lf pressed:

"CaIPERS has spoken with our partner. We are satísfÍed that our partner is complying with the law and following sound
business practices.'

Please advise with any comment about this stalement. lf there's any problem with it, you can suggest other language or we
can simply decline comment, deferríng to our partner - as we typically do in such case.

Thanks for your help with this.

Clark McKinley
lnformation Officer
CaIPERS Office of Public.Affairs
91 6/795-41 96; fax: 91 61195-3507

Pf\A-1225
 From: McKinley, Clark
Sent: Friday, December 28,2007 1:26 PM
To: Macht, Pat
Gc: Eliopoulos, Theodore; Weir, Laurie; Pacheco, Brad
Subject: CaIPERS, Page Mill & East Palo Alto: Biz Joumal

Attachments: CaIPERS backs Page Mill plan.doc

Pat,
Attached is the Silicon Valley/San Jose Business Journal story of Dec. 28th on activities of Page Mill real estate in East
Palo Alto. lt was sent to us by Lance lgnon (Lance_lgnon@sitrick-com; 415-388-8525), who's handling the rnedia on thls
issue for Page Mill's David Taran. From Page Mill's standpoint, lgnon says the story is factually accuráe and reasonably
balanced - although its not something we would have inítíated in the media. lt's a follow-up loprevious stories in the Sãn
Jose Merctrry News and other media that didn't mention the CaIPERS connection. CaIPEFiS is the new angle here, but
there's also a fairly thorough account of the issue of improving low-rent property.

lgnon believes Business Jog'nal competitors may try to follow up this story, which may work well for us. He sa1æ crime
statistics are down for East Palo Alto, and one can,make a strong case thât Page Mill actions were a fáctor in íhat. The
críme reduction impact of property improvements míght be a good lead angle for following stories to the Journal's piece.

Meanwhile, the City Council could act on the rent issue as early as January 3rd.

It appears there is nothing furlher for CaIPERS to do with this issue. I don't think we would get any traction by vriting a
letter to the Journal editor - unless there is some serious error in its story. Othérwise, calling atteirtion to the issue úouldn't
serye us, I believe.
ffiiEt
r==l
CaIPERS backs
Page Mill plan.d...

Clark McKinley
tnformation Officer
CaIPERS Offlce of Fublic Affairs
91 6/79S41 96; fax: 91 6/795-3507

Dec.28,2OO7

Prvl-1226
 "rom: Macht, Pat
,êlìtl Tuesday, Februaryl7, 2oO92:17 PM
To: Weir, Laurie
Subject: RE; EPA housing crisis - Page Mill Properties

please CeIl hi¡n to remove our 1ogo. IE is copyright.ed a¡d r¡te are concerned Ehat viewers
will think Ehis is a communication from us- Thanks,---Original Message-----
From: V'Jeir, Laurie
SenE: Tuesday, February tT, 2009 2:15 PM
To: ftarren otto,' Brand, Dulcie D.
èc: nliopoulos, Theodore; Pottle, Randy; Plasencia, 'Javier; Schlenker, Eric; Macht, Pat
Subjects: F1¡1: EPÀ housing crisis - Page Mi]l ProperÈies
I am forwardíng FyI. I noEe the long addressee fist, and others from CaIPERS including
Sue Kane, and Brad and Ctark from Pat's staff
Where- are \^¡e with the confidenciality agreemenE?

Thanks r.

- ----Original Messagre-- ---

'From: Christopher Lund [mailto:cpLund@g'maiJ- -com]
SenE: Tuesday, February 17' 2009 L2:53 PM
To: rubenxl@áof . com; cio*"ro-ezln@yahoo. com,' 1 auramartinez forepa@gmai I . com; Valerie
Àrmentoi ralvaradogciÈyofepa.org; sfordGcÍuyofepa.org; court.skinner@grmail.com;
christine.gasparacedoj.ca.gov; Marsh, Ryarr D., Re'Anita Burns; charisse domingo;
*ãivpi.e"¡ãgfã¡af -netl wolÈram å.Iderson,' acohenGmenlopark.org; hgrobinson@menLopark'org,'
cmarlinez@ci Cyofepa. org; C¡mthia D'Àgosta; rharri s@co . sanmaÈeo. ca. us;
kelly.morariuGcityofpaloalE,o.org; Ray Lunny,- rabbi-mardercbetham.org;
ral¡bi_allenberg@bècham.orgr rachel.arnowGmail.house.gov,'annagra:nGhr.house-gov;
=:a14iãa.pu¡GmaiI.house.gov; michaef.gaffin@mail.house.gov; Burns, Dennis;
lean@tenãntstogether.org; Andy BIue; Juli.et Brodie,' jksteinbGlaw.stanford.edu; ,Jeanne
Merino; ndaroGstanford.ãdu; Cãndice Greenberg; Vict.or Ramirez; Jon Frohnmayer;
rshuayÈocstanford.edu; jfpowers@stanford-edu,'wtp@stanford-ed¡r; lbuenGlaw'stanford.edu;
wàir,-Laurie; pacheco, ãtã¿; u.xinley, Clark; Kane, Sue; info0midpen-housÍng.org;
infoGbridgehousing.com; Da¡ie1 Pìnna; Lesia Preston; Mindy Galoob;
elmer.mellar@bankóÉamerica-comi caeden.koenig@çrmail.com; Yana Emr¡z Hoy; Marnie L)¡nn BoEon
Manabat ; mdelavegaorar¡enswood. k12 . ca. us ; oLgaGravenswood. kl2 . ca. us,'
renae.owens@esa.sccgov.org; dbaileyGsamcera.orgr; dornraxGpacbell.net; bnaudnaud@aol--com;
yåraSSZOfr"Èmail . com; wbwGiuanford. edu,- bob allen,' hralloman@aol . com; wlee@cityof epa. orgt
3ubject: EPA housing crisis - Page Mill ProperEies
Friends,
The current East palo ÀLLo affordable housing crisis continues to impact over 5000
residents.
In what is commonly described as a predatory equicy scheme, Page Mill ProperLies, a PaLo
since late 2006 in
Alto based reaL eslate investment firm has purchased 1?89 renEal uniEscity's
t.he lrloodLand park neighborhood of East PaIo Alto, roughly 50t of the rentaL housing
stock.
The East palo Àtto housing crisis weÌ¡siLe was updat.ed significantly over the weekend.
www. epa- tenants . org
please take a minuE.q to view our new photo gaffery (PhoEos & Flyers) and read the new
informaLion on CalpERS involvement including !,he possibilicy Ehatr CaIPERS has acted as
ã1rár..rtot on an additional $400 million worth of Loans used beto leverage che initial eguiey
ãffering for this fund. Federal Lax dollars may ulrÍmaEe1y used to cover the potential
losses- This is yet another example of che the privac.izaLion of profiEs and socialization
>f downside risk that re have seen play ouc on Ehe naE.ional stage over thä past several

Pl\tl-1237
From: Kane, Sue
Sent: Friday, February20,2009 12:37 PM
To: Macht, Pat McKinley, Clark
Cc: Weir, Laurie
Subject: RE: Chris Lund: E. Falo Alto activist inquíry

Hi Pa¿lC1ark/Laurie -- I will respond to Chris Lund's e-mail (he already has mÍne anyway)
and will forward my response so you know what I have said.
-----Original Message-- ---
From: Macht, Pat
SenL: Friday, Februaty 20' 2009 l-2:34 PM
lo: McKinleY, Clark
Cc: Ialeir, Laurie; Kane, Sue
Subject: RE: Chris Lr¡nd: E' Palo Alto activist ]-nqurry
I an concerned that Chris is calling loLs of different people here. I don't thínk C1ark
you should rgply unless Laurie or Sue wishes us Eo get involved- Lau¡ie and Sue will work
ãut how to handle. ff he emails again, who should we refer him to?
>Patricia K. Macht
>ÀssístanE Executive Officer
>Of fice of .zub1ic Àf faÍrs
>par.-machLGcalPers . ca. gov
>916/795-3850; fax: 9L6/795-j507
-----originaÌ Message-- -- -
'rom: McKinleY, Clark
Sent: Friday, February 20, 2OO9 12:24 PYI
To: Macht. Pat
Cc: üleir, Laurie; Kane, Sue
SubjecE: Chris I,und: E. Palo À1to activist inquiry
PaÈ,

Here's the latest from Chris Lund, who hrants Eo know if Rob Feckner goE his last e-mail-.
reca11 from the Last IC meeting thaE Board members wanE. Eo be spared lobbyingr by various
parEies
Any suggest.ions for whaE I should tell him?
Clark McKinleY
Information Officer
CaIPERS Office of Public Affairs
916 /195-4t96; fax: 9L6/795-35O'7

--- --Original Message-- -- -

From: ChrisLopher Lund [mailto: cplund@gmail . coml
Sent: Friday, February 20, 2OO9 r.1:54 AM
To: McKinIeY, Clark
Subject: follow uP

rii Clark,
Sue Kane has yet to confirm forwarding my email (sent Eo Sue earlier chis week per your
instructions) to the CaIPERS board. can you follow up on Lhis for me?
Thanks,
lhris

PM-1238
 )
Page I of5

..!
Langhi, Taryn

From: Elíopoulos,Theodore
Sent: Sunday, September 20,2OOg 2:53 PM
To: Potlle, Randy
Cc: Weir, Laurie
Subject: Fw: Page Mill

Please sort out wlth Dulcie as we discussed

From: Ennþht, Dan

To: Eliopoulos, Theodore
Cc: Flynn, Matthew; Henderson, Phil
Sentr Fr¡Sep 18 L2:24:46ZOO9
, Subject: FW: Page Mill

Hi Ted,

You seemed very concemed about why the Page Mill properties were included to be appraised on the
6/30 update scheduie, so I wanted to follow up with you to let you know I was not info¡med to omit
them. Quite honcstly, I worked closeJy with Eric on the assignment and kept Laurie, and legal apprised
. as the appraisals went final.

I am attaching a chain of correspondence for your review. Rest assurred they will not be appraised this
coming cycle.

Let ¡¡e knorv if you have any questions and I rvill be happy to respond.

Thanks,
Dan

From: Schlenker, Eric

Sent: Tuesdaç September 08, 2009 10:42 AM
To: Enright, Dan
Subject: FW: Page Mill properties II June 2009 Quarterly Report

Go ahead and have them input lhe new values. Thanks.

From: Weir, Laurie

Sent: Fríday, August 28,2009 4:I7 PM
To: Schlenker, Eric
Subject: Fw: Page Mill properties II lune 2009 Quarterly Report

lnclude this in your conversalion with dulcie

From: EnrighÇ Dan

6Dt2n1n

PM-1239
 Page 2 of5

' i To: Weir, Laurie

Sent: Fri Aug 28 15:44:55 2009
Subject: FW: Page Mill properties II June 2009 Quarterly Report
Hi Laurie,

Thanks for getting back to me!

Nadine Gallegos, Accounting manager with Page Mill properties would like to receive the lìnel Page Mill appraisal
so she can input the values into REPIMS. The Reconcilíation team would like to have those values entered into
the system to meet theír fìnancial reporting requirement. Although Page Mill may be filing bankruptcy, the values
may serve beneficial in the long run.

I will let the recon team know what you and legal decide. I am Ímpartial to the outcome and I will send you a
separate spreadsheel with all the Urban values as of 6-30 as soon as possible.

Have a great weekend.

Dan

From: Schlenker, Eric

Sent: Mondayf June 01, 2009 2:05 PM
To: Enright, Dan
Subject: RE: Page Mill Properties II, L.P.

Dan,

That is good news. Hold off for now on forwarding a copy to them I'm not sure they want one. I'll ask our counsel
for their input. Thank you very much.

Eric

From: Enright, Dan

Sent: Monday, Juhe 01, 2009 10:05 AM
To: Schlenker, Eric
Subject: RE: Page Mill Properties II, L,P,

Hi Eric,

The Page Míll fìnal appraisals will be ín this week. Do we need to send a copy lo Page Mill?
Thanks,
Dan

From: Schlenker, Eric

Sent: Monday, June 01, 2009 9:01 Alvl
To: Enright, Dan
Subject: FW: Page Mill Properties II, L.P.

Dan,

Do you know when we will have the "fìnal" appraisal? See guestion below from our outside counsel. Thanks.

Eric

É,n rrrl.t ñ

PM-1240
 Page 3 of5

RHffi&ffiTE.ffi

From : Weir, La urie [ma ilto : La urie_Weir@Ca IPERS-ca.gov]

Sent: Friday, May 29,2009 5:22 PM
To: Brand. Dulcle D.; Plasencia, Jav¡e[; Schlenker, Eric; Pottle, Randy; Otto@sbfund.com
Subject: Fw: Page Mill Properties II, L.P.

From: Ceballos, Elizabeth

To: Weir, Laurie
Cc: Eliopoulos, Theodore; Shore, Jim
Sent: Fri May 29 17:13:31 2009
Subject: Page Mill Properties II, L'P.
Attached is a copy of James Shore's letler to you dated May 29,2009. The original has been sent out this
afternoon via Federal Express for delivery to you Monday alternoon.

Regards,

Elizabeth Ceballos
Page l\fill Properties, LLC
+80 Couper Si. zn¿ iÌoor
Paìo Alto, Ca9430l
650-833-3857 Direct
650-833-3957 Fax
eccba llos@pagemil l.conr

Ã,1111n1n

PM-1241
 Page 4 of5

From: Schlenker, Eric

Sent: FridaY, MaY 08,2009 3:25 PM
To: Enright, Dan
Cc: 'Brand, Dulcie D.'
Subject: FW: Page MillPDF

Dan,
with the.managlfi.gtifv.lng-i1?T.3^f the appraisal
our attorney on Page Mill ll is looking for any conespondence senr rhem notifying rhem of such? I don't see
Drocess. Do you t or óuri,mãñ right nave
"u" "nv*inõih;i-ñ foider under Page Mill ll. rhanks.
äîffiî ¡íir,ä"rîäidJ ãi¡í"ãpîr"ir"i
"orr""ponãànce
Eric

ffiËHþ&ffirKffi

From : Weír, Lau rie [mailto: Laurie-Welr@CaIPERS'ca'gov]

Sent: FridaY, MaY 08, 2009 3:02 PM
To: Wanen öBoj Brand, Dulcíe D'; Schlenker, Eric
Macht, Pat; Plasencia, Javier
Cc: Allan Emkin; e[opoulos, inuoáot"; Pottle, Randy;
Subject: FW: Page Mill PDF

Forgive me if I already lorwarded this one to

you. They come in via email, overnight' fax' etc' L

From: Mateo, Michele

Sent: FridaY, MaY 08,2009 10:22 AM
To: Weir, Laurie
Subject: Page Mill PDF

lauríe,

Pl{t-1242
 Page 5 of5

Attached is the Page Mill Properties II, L.P. (the "Fund) pclf.

l'4tc)¡elpl"lateo
CaIPERS Investments
Global Real Estate
4O0 QStreet, Suite E4800
Sacramento, CÀ 95814
Michele-Mateo@calpers.ca. gov
Tel:916.795.9428
Fax:976.795.3965

Ñb"
CâIPERS

* Intemal Revenue Service regulations generally provide that, for the purpose of avoiding federal tax
penalties, a taxpayer may rely only on formal written advice meeting specific requirements. Any tax
advice in this message does not meet those requirements. Accordingly, ffiy such tax advice was not
intended or wrjtten to be used, and it cannot be used, for the purpose of avoiding federal tax penalties
that may be imposed on you or for the purpose of promoting, marketing or reconunending to another
parry any tax-related matters.
: ========--==================================================

PM-1243
 Page I of5

Langhi, Taryn

From: Poltle, Randy

Sent: Sunday, September 20,2OOS 6:58 PM
To: Eliopoulos, Theodore; Pottle, Randy
Gc: Weir, Laurie
. Subject: Re: Page Mill

T, got it. R

Randy M- Pottle
SPM - REAI ESTAIC - CAIPERS
LPE, 400 Q Str, #E4800
Sacramento, GA 95814
P: 916 795-2941, M: 916 769-9715
E: randyjottle@ca lpers.ca.gov

Assistant: Jackie Sumner

P: 91 6 795-3212, F: 916 795-39ô5
E: jackie_sumner@calpers.c¿r.gov

From: Ellopoulos, Theodore

' To: Pottle, Randy
Cc: WeÍr, Laurie
Sent: Sun Sep 20 14:52:35 2009
Subiect: Fw: Page Mill

Please sort oui with Dulcie as we discussed

From: Enright, Dan

To: Eliopoulos, Theodore
Cc: Flynn, Matthew; Henderson, Phil
Sent: Fri Sep 18 72:24:462009
Subject: FW: Page Mill

Hi Ted,

You sesmed very concerned about why the Page Mill properties were included to be appraised on the
6/30 update schedule, so I wanted to follow up wìth you to let you know I was not informed to omit
them. Quite honestly,I worked closely with Eric on the assignment and kept Laurie, and legal apprised
as thc appraisals went final.

I aln attaching a chain of correspondence for your review. Rest assurred they will not be appraised this
coming cycle. ¡

Let me know if you have any questions and I will be happy to respond.

Thanks,
Dan

Ptvt-1244
 Page2 of 5

From: Schlenker, Eric

Sent: Tuesday, September 08, 2009 10:42 AM
To: Enrþht, Dan
Subject: FWI Page Mill properties II June 2009 Quarterly Report

Go ahead and have them input the new values. Thanks.

From: Weir, Laurie

Sent: Fridaç August 28,2:009 4:L7 PM
To: Schlenker, Eric
Subject: Fw: Page Mill properties II June 2009 Quarterly Report

lnclude this in your conversation with dulcie

From: Enright, Dan

To: Weir, Laurie
Senil Fri Aug 28 15:44:55 2009
Subject: FW: trage Mill properties II lune 2009 Quarterly Report
Hi Laurie,

Thanks for getting back to me!

Nadine Gallegos, Accounling manager with Page Mill properties would like to receive the fìnal Page Milt appraisal
so she can ¡nput the values into REPIMS. The Reconcillation team would like to have those values enlered lnto
the system to meet their linancial reporting requirement. Although Page Mill may be filing bankruptcy, the values
may serve beneficial in the long run.

I will let the recon team know what you and legal decide. I am impartial to the outcome and I will send you a
separate spreadsheet with all the Urban values as of 6-30 as soon as possible.

Have a great weekend.

Dan

From: Schlenker, Eric

Sent: Monday, June 0L,2009 2:05 PM
To: Enright, Dan .

Subject: RE: Page Mill Properties II, L.P.

Dan,

That is good news. Hold oft for now on forwarding a copy to them l'm not sure they want one. I'll ask our counsel
for their input. Thank you very much.

Eric

From: Enright Dan

Sent: Monday, June 01, 2009 10:05 AM
To: Schlenker, Eric
Subiect: RE: Page Mill Properties II, L.P.

Plvl-1245
 Page 3 of5

HiEric,

The Page Mill fìnal appraisals will be ín this week. Do we need lo send a copy to page Mill?
Thanks,
'
Dan

From: Schlenker, Eríc

Sent: Monday, June 01, 2009 9:01 AM
To: Enright, Dan
Subjech FW: Page Mill Properties II, L.P.

Dan,

Do you know when we will have the'final" appraisal? See question below from our outsfde counsel. Thanks.

Eric

RHffi&&rË[3

PM-1246
 Page 4 of5

Subject: Fw: Page M¡ll Propert¡es II, L.P.

From: Ceballos, Elizabeth

To: Weir, Laurie
Cc; Eliopoulos, Theodore; Shore, Jim
snt: Fr¡ May 29U:13r31 2009
Subject: Page Mill Properties II, L.P.
Attached is a copy of James Shore's letter to you daled May 29,2009. The origínal has been sent out this
afternoon via Federal Express for delivery to you Monday aflernoon.

Regards,

Elizabeth Ceballos
Page Mill Properties, LLC
480 Cowpcr St. Znd Floor
PaIo Alto, Ca9430l
650-833-3857 Direct
650-833-3957 Fax
eceballos@pa gemill.com

From: Schlenker, Eric

' Sent: Friday, May 08, 2009 3:25 PM
To: Enright, Dan
. ì Cc: 'Brand, Dulcie D.'
Subject FW: Page Mill PDF

Dan,

. Our attorney on Page Mill ll is looking for any correspondence with the manager notifying them of the appraisal
process. Do you have anything that you or Cushman might have sent theri notifying them of such? I don't see
anything in the shared drive appraisal correspondence folder under Page Mill ll. Thanks.

Eric

From: Brand, Dulcie D. [maílto:dulcie.brand@pillsburylaw.com]

Sent: Friday, May 08, 2009 3:14 PM
To: Weir, Laurie; Schlenker, Eric; Warren Otto
Cc: Slanton, David L.; Plasencia, Javier
Subject: RE: Page Mill PDF I

Laurie and Eric

Just a reminder that you need to send us the correspondence related to the appraisal.
Wanen
You were lo let us know the date of the kick off meeting on the appraisal.

Dulcie D. Brand I Partner

Pillsbury Winthrop Shaw Pittman LLP

Tel: 213.488.7244 | Fax: 213.226.4364

725 South Figueroa Street, Suite 2800 | Los Angeles, CA 90017-4506

PM-1247
 Page 5 of5

Email : dulcie.brand@pillsburylaw.com

From : Weir, Lau rie fma ilto: Lau rie-Weir@Ca lPERS.ca' gov]
ænt: Friday, MaY 08, 2009 3:02 PM
To: Warren Otto; Brand, Dulcie D.; Schlenker, Eric
Cc: Allan Emkin; Eliopoulos, Theoãore; Pottlg, Randy; Macht, Pat; Plasencia, Javier
SubJect: FW: Page MlllPDF

Forgive me if I already forwarded this one to you' They come in via email, overnight, fax' etc' L

From: Mateo, Michele

Sent: Friday, May 0$ 2009 10:22 AM
To: Weir, LaurÍe
Subject: Page MillPDF

lltutie,
Attached is the Page tuIill Properties II, L.P- (the "Fund) pdf'

ì4írlwl.etl4øtea
CaIPERS fnvestments
Global Real Estate
400 QStreet, Suite E4800
Sacramento, CÀ 95814
Michele-Mateo@calpers.ca.gov
Tel:916.795,9428
Fax: 916.795.3965

Ãþ"
C¿IPF.RS

* Intemal Revenue Service regulations generally provide that, for the purpose of avoiding federal tax
penalties, a taxpayer may rely only on formal written advice meeting specific requirements. Any tax
ädui"" in this meisage dôes not meet those requirements. AccordinglY, anY such tax advice was not
intended or written tó be used, and it cannot be used, for the purpose of avoiding federal tax penalties
that may be imposed on you or for the purpose of promoting, marketing or recornmending to another
p^rly any tax-related matteß'
=========================================

Ptvt-1248
 Page I of2

Langhi, Taryn

From: McKinley, Clark

Sent: Thursday,January29,2OOgg:254M
To: Weír, Laurie
Subject: Page Mill & CIM (Sacrarqento Towers)
(_./
Laurie,
V/ould you advise Public Affairs on a reE)onse to questions by joumalist Ed Mendel, has a blog about
CaIPERS and CaISTRS? One set of questions is about Page Mill & the other about the status of our CIM
partner and the Sacramento Towers (Saca) project. Please suggest other real estate staff if I'm
misdirecting these questions.

Clark McKinley
Information Officer
CaIPERS Oflicc of Public Affairs
91 6t 7 9 5- 419 6; Iax: 9 I 617 9 5-3507

From: Ed Mendel fmailto:calpensions@9maíl.com]

Sent: Fríday, January 23,2009 11:13 AM
To: Press Room
i Subject: Pachecho: East Palo Alto

Hi Brad,
I'm doinga post on the dispute between East Palo Alto and Page Mill Properties and would like to
check some things.

Page Mill:

--The tenant activists say Page Mill has only received S70 million from CaIPERS. They are calling on
CaIPERS to withhold the rest of the $100 million originally planned. Are they correct that $30
million has not yet been delivered to Page IVIill?

--When Mayor Abrica and the EPA delegation spoke to the CaIPERS board last month, Ted Eliopoulos
said a consultant has been hircd to evaluate the situation. Has the consultant issued a report?

--The board members said CaIPERS has limited options because of contractual obligations. IIas
CaIPERS taken any action in response to the complaints and the EPA cify council's request that
CaIPERS withdraw the $100 million from Page Mill?

The Towers

-ln addition, ryhat's the status of The Towers project in Sacramento tl¡at CaIPERS purchased
from Saca? A news release in June 2007 said CIM would focus on developing a new plan for the site
over the next l8 months.

Ed Mendel
927-85s9

6t112010

Pf\A-1267
 Page2 ofZ

6/1t?.010

PM-1268
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Prú-1277
 Page I ofl

Langhi, Taryn

Frorn: Brown, Danny

Sent: Friday, September 04,2009 4:24 PM
To: Eliopoulos, Theodore; Weh Laurie
Cc: Dear, Joe; Macht, Pat; Marzion, Ken; Moreno, Melanie
Subject: Assemblymember lra RuskÍn - PageMill lssue
lmportance: High

Hello all-
ljust received a phone call from Pele Hartnetl in lra Ruskin's oflice regarding the current situation at the East
Palo Alto PageMill property. According to Peter the tenants have informed him that the rental offìce has closed
and there is no management or security on the property. The tenants don't know what to do if there is a
maintenance issue or an emergency. They are complelely in the dark as to who owns the property. There is an
assumption that Wells Fargo has foreclosed on lhe property and PageMill just walked away without any type of
transition plan in place. Pete also has a phone call into the Wells Fargo lobbyist.

I told Pete that lwould lry to get tn"t"rs for him bul coutdn't make any promises.
"otu
I'm not sure what our current role is in this properÇ, but is there any information that we can share with Pete as to
the,status of the property? Who is responsible for the day-to-day management of the property? ls there
someone that Pete can contaci to try and get this situation resolved-

Thanks, Danny

Ê ta la^1
^

PM-1280
.
"1 La{¡g,hi, Tpryn , -
From: Kane, Sue
Sent: Wednesday, May 21,2008 ',l0:05 AM
To: Weir, Lauríe
Subject: RE: Response Needed

Hi Laurie -- can a generaL & neutrâl response -- nothing t,oo deÈai1ed -- be taking from
what you have aLready done? Thank you.
-----OriginaI Message-----
From: hleir, Laurie
SenL: Tuesday, May 20, 2008 4:50 PM
To: Kane, Sue
SubjecÈ: RE: Response Needed
ImporÈance: High
Hi Sue,

recenEly received a cotßnent and reguest for response on our talk Back websiE.e from
f/ve
ovíer Mariscal. r don't know who he ís, buE I have crafted a respbnse t.o ¿he request, and
forwarded to Ted and Javier for Eheir approval before iE goes out- lE. tvould be helpful to
know if thís, rnuch longer çfilery is comíng from the same source.
lrle hawe received several medÍa requests Eo which we have responded wiÈh assistance from
PaE. MachÈ and her staff.

we have aLso received subpoenas rel-ating co a second

rhas Page MiIl liEigat.Íon Ehat I belíeve
subsequenE.ly been setÈIed-
hlith all Ehe activity around Page Mil1, iE is important, for me Eo know where questions are
coming from so trhaE r cå¡l Erack and craft appropriate .responses (with assistance fro¡n our
Legal and Publíc Affairs when appropriaÈe)
Àny insight Rob can provj.de is greatly appreciated. AlEernately, if Rob is noL free to
discLose t.his informatio.n I wilL understand and do my best. c.o provide him wÍbh a:n updaÈe
on the Page MiII fund.
Thanks so much for your help wich this matÈer.
Laurie
-----Original Message-----
From: Kane, Sue
Sent: Tuesday, May 20, 2OO8 4:31 PM
To:9rleir, Laurie
Subject: RE: Response Needed

Hi -- r do noE know as Rob. chose not c.o share thaÈ information but if you give me a reason
that iE matters relaLive to response (r can see how that might, happen) , r will go back jto
Rob and ask on Ehat basis.

-----Original Message-- - --
From; lteir, Laurie
SenE: Tuesðayi May 20, 2008 4:27 PM
To: Ka¡e, Sue
Subject: .RE: Response Needed
ImporE.ance: High
Hí Sue,

PM-1285
lan you telL me who drafced che issues ouElined beLow? Is iL Ovier Mariscal, or other?
Thanks.
-----Original Message--- --
From: SEausboll, Ànne
Sent,: Tuesday, MaY 20, 2OOB 11:42 All
To:9üeir, Laurie
cc: Kane, Sue; Eliopoulos, Theodore
Subject: Fw: ResPonse Needed

V,IiIl you s prepare some bulleÈ (Ealking) points for Sue and cc me. Thanks. Ànne

----- Original Message -----

From: Karte,Sue
To: Stausboll, Ànne
Sent: Tue MaY 2O 10:00:43 2OOB
Subject: Response Needed
Hi Ànne -- Rob rta¡Es Eo respond Eo this concern and wou]-d like information on thÍs
invesÈmenE ÀsAP. Tha-nk 'You-

So here is an overview, as briefly as we can describe a ratrher complicat.ed

scenario. ..

page Mill properties is a private equity investment fund, and Calpers appears Eo be
one of ics biggest investors. Until very recently, Eheir websiÈe described Page Mil]
properties as specializíng in co¡nrnercial real estate. So it was with great misgiving Ehae
p"opl" in EasE pato Alto hratched them, starting abouE LB months ago, stârt buying up large
ãr.lhe" of rental housing in East Palo Àlto. From the very beginníng, observers were
suspicious thaE PMP \ras intent. on some other goal chan providing renEal manage¡nent
services for the workíngr pèople living in tshese unies.

The area in which PMP is acquiring land is Ehe "vtesE side' -- Ehe narrow strip of E.
palo Àlto Ehat extends wésL of }lighway 101. This is the area E.hat used to be known for
"whiskey gulch, " a¡rd which now features the 4 Seasons Hocel and a big law complex. The
resE of Ehe "wesE side' remains modesE: Ít houses a very large nr.uriber of apartment
complexes along with some single family uniÈs- A fairly large portion of the affordable
renEal housing in the greacer Palo AIEo area is to be found in this narrow space.

. pMp's acquisitions started around Ehe Four Seasons complex and spread from trhere. At
present, they have purchased over 1500 units in EasE Palo Ãlto, \,thich makes chem by far
th. 1.tg"=t landlord in t.he city. They have sunk almost half a billion dollars of inwestor
money ineo their purchases, and che prices trhey have paid to acguire Ehese properties
greaily oucscrip E.he kinds of rencal incomes they can earn from them- On the face of it,
thir quite strange, because Ehe ciuy has a fairly scrongf RenL Scabilization
"ã"*"
Ordinance--passed by the voLers, irrevocabte by Ehe citsy counciÌ, Ehat stands in the way
of <lrastic rent increases or redevelopment. of propertíes for purposes other than rentaL
housing -

' IniÈially, pMp sEated EhaE. Lhey would be a law abiding ciÈizen inEenE on improving
the housing stock in the neighborhood. This has curned ouE Eo be quiEe unErue. Last
December they began to show everyone Eheir actual moEives, issuing renL. increases Eo some
1300 units, in open defiance of Uhe city's Rent Stabilizac.ion Ordinance. The increases
ranged from 93 tro 43t , and repTesent a serious hardship for many of Che people facing
them--noE Eo say an eviccion by other means. Many people are on fixed income and quite
vulnerable, but Page ¡¡i]l has evicted them anyuray, while cynically preE.ending E.hat Ehe law
2

PM.1286
 doesn'E appLy Èo chem. This is clearly contrary Eo the LocaL ordinance.

The affair wit.h the renE íncreases has followed a complicaÈed and unfortunaE.e
course. It is Èoo complicated t.o expì.ain at lengeh here, buE effect,ively PMP made use of a
situation of demoraLizauion and understaffing in the renE office E,o seize upon a set of
outdat.ed and inapplicabLe "certificates of maximum lega1 rent.' in order Eo make a series
oE contradictory and bizarre claims about the nature of the certificaÈ.es. IE, has
exacerbated t.his by coordinatinq ics increases E.o occur al1 at once, which has had the
effect of overwhelming Ehe CiEy's resources and of Íntimídating cenants wich a sense of
inevit.abiliey. ltany people have just moved away in the face of pay-now-or-be-evicted
threats from t.heir landlord

The cicy has responded poorly to t.his chalì.enge. The cicy council and Ehe renL board
are uniEed in opposition Eo the rent increases, but E.he citsy atEorney quic in NoveTnber,
and they have lacked the organizaÈion, the courage, and (most importantly) t.he legal
counsel t.o respond effectiveLy. Unable to free themselwes of this 1aw, Page Mi1l has
decided Eo seart a Lhousand fires againsÈ iE, daring the city t.o bankrupE itself on legal
defense of a law protectring Ícs poor people. On Page Mill's side: a fancy pubLic relaLions
firm, and a team of lawyers headed up by a specialisE. in overturning municipal ordinances
and busting unions -- On East. Palo ÀlEo's side: a few part-time volrrnteers straggling in
from SEanford 1aw, a¡¡d some corununity acEivists-

The sEoties told by the many peopLe facing rent increases are heartbreaking, and we
are very concerned by clear paEterns of tenar¡t harassment--ranging from false notices of
.eviction for unpaid rent, Èo illegal unit searches- (In our comple>< alone, four ouE of E,he
eighc units have received false noEices of ewicr,ion in Èhe lasL few months- I hardly need
to add that it is a teriifying ching for most. E.enants to receive such a notice.)

Buc oulí concerr¡ is not simpJ.y with the plight of individual t.enants. we are
convinced that PMP does noc wanÈ E,o be a landlord at all, buE is trying to circumvenL or
overEurn the renE scabilizãEion ordinance in order to kick peoþle ouE of their homes and
redevelop È.he .1and for co¡runercial purposes. D¡oÈ.hing less Ehan a vast. redevelopment projecc
would justify t.he scale of PMP's investment. Moreover, becãuse of PMP's highly ì-everaged
and financially vulnerable position, we believe ÈhaE tshey wili acc quickly and ruthlessly
in the next months to overturn Èhe ordinance and remake the l-andscape of Èhe cicy
according Lo their plans. Some of this Ehey could do 1egally if they followed che sç.aridard
prôcedure for redevelopment, which involves buying ouL the tenants,- buE page Mill prefers
Eo intimidace people or force Ehem out by oLher means--it is cheaper.

Our personal experience with Page Mill has given us a úindow inco how uhey plan to
do Lhis. Last summer we discovered t,hat our landlord (which was noE page Mill at the E,ime)
was evadi-ng Ehe Renc StabilÍzation Ordinance, and we enibarked on a campaign Lo compel
registracion of his units. Because of the disorganizaEion and demoralization in the Rent
Board Office, Ehis v¡as noL an easy thing E.o do. EvenLually, we caught him, however--
ironically, E.he facÈ that he was crying to sell the unit.s to Page Míll allowed us Eo
corner him. hjich che help of ¿he Rent Board, the CiEy Council, the City Attorney, and a
pro-bono voLunteer from SE.anford law. we forced him E.o register in order to compleE.e his
sale. He paid 5100,000 in fees and penalties to c.he ciEy, rolled back our iJ-IegaI renE
increases, and signed a lega1 agreemenL wirh us Ehae he woul.d regisE.er the unics. (This
was a slap on E.he rvrist., compared wich whac he should have paid for over ttrenty years of
willful evasion of Ehe law and handsome profics from doing so. )

Curiously, while our ol.d landlord paid up to t.he city, he did nor regist.er rhe
unics. fnsÈead, he delayed signing che agreement with us unLil after the sa1e. Thereafter,
Page Mill has refused to regiscer Èhe uniL.s. They separately incorporated each unit as an
3

Plvt-1287
.LLC (in DeLaware!) and are claiming a "srnalL owner' exempEion from Lhe RenÈ SLabiLizaEibn
Ordinance- They've creaÈed a large number of these ''mom and pop' LLCs.

I¡,le now beLieve EhaÈ Page MiIl's sE,rategy is Eo use Ehe separaEe incorporaE.ions Eo
circumvents che Ordina¡ce by selling Che separate uniÈs to E,hemselves for condo-izaEion.
Once condo-ízed,, Ehe 'separaÈe ohrners" will get E.ogeEher and voEe for demolition- This is
obviously an inappropriaEe business practsice: moreover, is aLmost certainly illegal.
CorporaE.ion sÈructures may legitimaEely be used to avoid some taxes, but Lhey may not be
useã Eo evâde civic dueies. üre are looking inEo ì.egal resources for conEestíng E,he LLCs in
courE.

lrle befieve Lhat CalPers should invesÈigate Page MilI's pracEices very seriously, for
both huma¡riÈarian and financial reasons:

. Hurnanitsarian: obwiously, it doesnJt fit in with CaIPers' social responsibility ethic

to be backing a company Ehat hires slimy lawyers Lo try to evade clvic responsibilities,
círcumwent municipal ordinances, inE,imídaÈe people, and tshrou, senioÎ ciEizens and working
families out of their homes- We persqnally know a few CalPers me¡nbers who are in the weird
sicuation of having Eheir own reeireÍents sysE,ejn invescing money in a cornpany working to
itlegally and unethically drive them from Eheir homes

'invesEment
FinanciaL: obviously, any highly leveraged real estaÈe company is a risþr
in rhe currenu market. !ùe believe that PMP might be an especially poor invesEmeng. PMP...
. represents itself as a large comparty, buE when you look at Ehem closely, you realize Ehat
'thãy are nothing buL a couple of fraÈ boys sieeing on a vast pile of debt, just Erying to
see whaE they can gec away with. Page rvfiÌÌ has waged a huge bets that the city is too
disorganized a¡¡d incompeEenc to protect itself and iLs citizens. But if we are righc and
Ehe cigy can prevail against these ilLegal tactics, Page I4ill will be sEuck wich a stock
of modesEly performing rental- properties they bouqh! at a premium based on Ehe idea that
Chey could-or-rt*-n.rr'rr"r th" }aw. Holding investrnents in Page Mill woul-d lrot, under this
scáario, be a good thing for invesEors such as Cal-Pers

trte woufd be happy Eo wríte a longer account of this situation, or to ta.Ik to anyone
aE Calpers who has further guesfions. The situaf.ion is developing week by week, so we will
probably hawe more news soon.

As we wrap up Chis email, we should warn you about one E.hing: because PMP has a
public relagions firm working aÈ high heat, mosL of the media coverage has been heavily
corg¡ed Eoward their perspective (they like to insinuaLe thaL eweryone else is
incompeEenE)- Most media accounts are simply verbat.im reprintings of PMP's press reÌeases.
So cake what you find on google r,vith a grain of sdlt!

wondering whaE's for Dinner TonighL? Gec new tu/ists on farnily favoriEes at ÀOL Food
<hutp://food.aol com/ d inner- ton igh L ?NC ID=aol f od0 0 0 3 0 00 0 0 0 0 0 0 1>

PM-1288
. Message Page l,of2'

Langhi, Taryn

From: MaqhlPat '. :,.-,:'

öenti - Wednesilav; February z4,2o1o'2i49;PM ' .. ,.
To: ,poitle;Ran{y;.W9ir, Laurie ,: ,:,,:.,., ....,,'
Subjéct: FW: PRESS:REIERSE : Ammiano lntioduces Socially,Responsible lnvestmenl Açt t; ':i

lmportance: l,l1Sh

with page Mill ouu and.Peters Gociper.Vilìage out, wgutd it be a fair staternent to say we do nto have'anv,;o-[:tlæt:
in,oür porlofl io loday?tricìa,K.Meeh!
Dîrector of Ertëinal Àffíii¡,s .
p a't'' m a ç L!@ c .-.'.'---....
aliLe rs. c iW
.

w 91 6n95-3850; i: 91 6:26ç5Ut t'

-u-
laxi 9161795-:3507 : '

:From i Mecke, QuinFin lmajlto:Qu intin; Mecke@asm' ca'govl

Sênt: Wednesday, February 24, ZOT} 2:46 PM

I;iliäitåi:T*rr, *.,*sE: Amniiano rntroduces sociauy Responsible Investment Act

Importançe: High

---'Original Message---:-
From: Mêcke, Quintin
Sent: Wednesday, February 24,2AI0 9:574M
To: Mecke, Quintin
Subiect: PRESS RELEASE: Ammiano Introduces Socially Responsible Investment Act
Importance: High

PreBs
T#nT Am:ffitüirr,Ít
FOR IMMEDIATE RELEASE: February 24,2O10
Contact: Quintin Mecke
Office: 41 5-557 -3O1 3; Cell: 4'l 5.505.2417

AMMIANO INTRODUCES SOCIALLY RESPONSIBLE INVESTMENT ACT

AB 2337 Would Prohibit Use of State Pension Funds ln Predatory lnvestment Schemes

Sacramento - Assemblymember Tom Ammiano (D-San Francisco) has introduced the

PM.1350
 Message Page? ofZ

Socially Responsible lnvestment Act, AB 2337, to prohibit the use of public pension funds in
predatory investment schemes. The legislation would require CaIPERS and CaISTRS to
disclose and d¡vest from any investments in companies engaged in predatory business
practices that rely, or result in, the displacement of residents in affordable housing in order to
generate profits for investors.

"lt is unconscionable that hundreds of millions of dollars in public funds have been used in
efforts to evict tenants from New York to Californía," said Ammiano. "Actions speak louder
than words and CaIPERS needs to make its claim of socially responsible investing a reality."

Tenants Together, California's statewide organization for renters' rights, has been urging
CaIPERS for over a year to voluntaríly adopt "predator free" investment criteria, pointing to the
large scale displacement of tenants in East Palo Alto and New York City fueled by CaIPERS
money. To date, the pension fund board has not taken action to screen out real estate
investments that are premised on evicting tenants.

"The retirement funds of working people should not be used to evict working people. We
applaud Assemblymember Ammiano for introducing this important bill that will ensure that
public employee pension funds are not invested in predatory schemes that displace renters,"
said Dean Preston, Executive Director of Tenants Together.

Fublic pension funds have been a primary source of equíty for what affordable housing
advocates have termed ''predatory equity", a form of real estate speculation predicated on the
displacement of low and middle-income renters from affordable housing. ln recent months,
"predatory equity" investments have come under greater gcrutiny in both California and New
York as a result of tenant harassment and foreclosures.

"At its heart, this bill introduces greater transparency and accountability into California's
pension fund investment decisions, something that will benefit communities across the
country," added Christopher Lund, Communications Director of the Easl Palo Alto Fair Rent
Coalition.

###

Quintin Mecke
Communications Director
Office of Assemblymember Tom Ammiano
455 Golden Gate Avenue, #14300
San Francisco, CA 941O2
Email : qujnti n. m ecke @asm..ç-a-ggv
Phone: 415-557.3013
Fax: 415.557.3015
Website:h.t!BJ'lcl-erne-cl-a!s-ass-enblv.ca.gplrlç-nnþ-çfs]al.=31

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 Page I of I

Langhi, Taryn

From: Weir, Laurie

Sent Friday' January 16, 2009 2:45PM
To: Eliopoulos, Theodore; Pottle' Randy
Subject: FW: Tenant Book

Hi Ted and RandY,

De'Antay is one of the Page Mill tenants we met
in Ensrish and spanish üË;'äïñË;ï;:
I oroDose the following response to De'Antay,
inat we have hired a consultant' etc'/)
"'¿¿
Hi De'AntaY,
to is a pamphlet
with lasl year' The tenant book he is referring
The Rent lncreases'
ã;i Ë;,o Aíto Tenants strugsle to Pav
(Question: is it too specific' or is this level of detail
ok? I could also

lhooevouhadagreatholidayseasonagwetl.WehavereadtheHomelessNowtenantbook.Thankyouvery concern regarding the

much íor providing tnis look ío-ii. W,
n"r, .",iüii nie M¡tt an-¿ expressed oÚCaIPERS' reputation'
sTîlåin"dï"'' to Page...Mítt's and
financiat security of the irnà;'ãi| tn" uppureot that thev-wí, consider're rssues rarsed in our
resuttins ftom the ¡n
u¡:äíïáiàá!"¿
conversation'
""iäîÅt-"iluîågi.-þrs"

wewelcomeyourcontinuedinputonfhesel?tt:rsandhopelhatyo.uwillkeepusinformedofeventsrelatingto
lhe new year'
page Milt in the East palt-o-Ãio'"àl^rurity. wshing you allfhe besf in

Laurie

From: De'AntaY Williams Imailto :deanbay@youthun ited'net]

Sent: ThursdaY, January 15, 2009 4:33 PM
To: Weir, Laurie
Subject: Tenant Book

Hi Laurie,

HappyNewYears!Ihopeyo,,"ry9y^"qtheholidays.Iwsryedto'99*ifyouhavereadthetenantbook
we sent. we would like to know if calp"o rrur
*i"t with Page Mill to discuss the rent increases' Please
keep us uPdated about this iszue'

PM-1354