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Last month, WW reported that the R.B. Pamplin Corp., a Portland conglomerate that owns newspapers, textile mills and Ross Island Sand & Gravel, had engaged in highly unusual transactions with its pension fund (“Trader Bob,” Feb. 23).
Experts told WW some of those transactions were imprudent and may favor R.B. Pamplin Corp. at the expense of its nearly 2,400 pension beneficiaries.
The day after that story was published, Ross Island Sand & Gravel recorded five property deeds with the Multnomah County assessor’s office memorializing a curious series of previously unreported real estate transactions valued at $10.8 million.
The transactions shift ownership of land in the heart of Portland from Ross Island Sand & Gravel to the R.B. Pamplin Corporation and Subsidiaries Pension Plan and Trust.
The property: a crescent-shaped, flood-prone archipelago known as Ross Island, located in the middle of the Willamette River downtown.
Until 2019, when it ceased Portland operations, Ross Island Sand & Gravel used the eastern side of Ross Island, known as Hardtack Island (it’s joined to Ross Island by an earthen berm), to process rock mined in Washington.
Today, rusting machinery and a settling pond are the legacy of the company’s productive years on the property. And the fallow ground is now the property of the Pamplin companies’ employee pension fund.
Bob Sallinger, conservation director of the Audubon Society of Portland, points out that Hardtack Island is strewn with detritus left over from decades of industrial use. He says 75 years of mining and rock processing took a heavy toll on the land and will be costly to remediate.
“This property is going to require significant investment,” Sallinger says. “It doesn’t seem like an investment, it seems like a liability.”
The newly recorded transactions are the latest examples of puzzling decisions made by the R.B. Pamplin subsidiaries, which are controlled by Robert Pamplin Jr., the 80-year-old scion of what was once one of Oregon’s largest fortunes.
As WW reported last month, the R.B. Pamplin Corp. is legally obligated to make a contribution to its employees’ pension fund each year.
In recent years, that annual obligation has been $3 million to $4 million. (At the end of 2020, the fund held $98.4 million for beneficiaries.)
Prior to 2018, the pension plan’s written policies called for parent company R.B. Pamplin Corp. to contribute cash every year to fund its pension obligations.
In 2018, however, records show that policy changed to allow “cash contributions or property contributions.”
Robert Pamplin Jr., in addition to being president of R. B. Pamplin Corp., is also the sole trustee or fiduciary of the pension fund.Experts say that dual role creates the potential for conflict of interest when a Pamplin company contributes or sells real estate to the fund.
That has happened more than 20 times since the policy shift allowed R.B. Pamplin Corp. and its subsidiaries to put real estate into the fund. Most of those transactions were sales, which allowed Pamplin operating companies to exchange real estate for cash.
The Ross Island transaction, the largest so far, brings the amount of real estate to 37% of the entire pension fund’s value.
The U.S. Department of Labor, which regulates pension funds, says to minimize risk, pension funds should hold no more than 10% of their assets in real estate.
There is also the matter of the value the R.B. Pamplin company placed on the 122-acre Ross Island property when it transferred the land to the company’s pension fund.
The newly filed deeds show it was valued at $10.8 million, or $88,524 an acre. (The property also includes submerged lands, to which the county assessor assigns zero value.)
WW spoke to analysts familiar with the market for real estate zoned as open land—i.e., not usable for commercial purposes. They all found the price on Ross Island high. An appraisal released in January for recent sales of such land cited two parcels that, like Ross Island, are accessible only by boat.
Their average price per acre: $5,000.
Travis Williams, executive director of Willamette Riverkeeper, keeps a close eye on land zoned “open space” along the river.
He is also very familiar with the Ross Island property, having helped negotiate Pamplin’s 2007 donation of 45 acres of the island to the city of Portland and the legal agreement that began the reclamation of the Ross Island lagoon. That reclamation, which started in 2002, won’t be finished until 2035 because of the expense and difficulty of returning Ross Island and its lagoon to their pre-industrial state.
Williams says the value placed on Ross Island is “egregious.”
Terry Deneen, a fellow at the Pension Rights Center in Washington, D.C., says he’s also troubled by the Ross Island transactions.
“There is a fundamental problem with [Robert] Pamplin being on both sides of the transaction,” Deneen says. “There’s nobody standing up independently looking out for the pension fund’s interest.”
Mark Garber, president of Pamplin Media Group, says the price on the newly recorded transactions is fair.
“The value of Ross Island was required to be determined by independent appraisal, and the transfer had to be at that value,” Garber says. He adds that Ross Island Sand & Gravel will fulfill its reclamation obligations and did not transfer them to the pension fund. And, he says, Ross Island Sand & Gravel will rent the island from the pension fund at a market rate.
Garber declined to share the appraisal of Ross Island, but he insists Pamplin has carried out his fiduciary duty to pensioners. “The pension plan is well funded and has always paid retirees on time and in full,” he says.
Deneen, who for more than 20 years worked for the Pension Benefit Guaranty Corporation, the federal agency that bails out financially troubled pension funds, isn’t so sure.
After reviewing the Ross Island transactions and the prior ones reported earlier by WW, Deneen called them “one of the most egregious and sustained breaches of fiduciary duty I’ve ever run across. It’s mystifying.”
WW also asked James Ambrose, a Portland lawyer with 35 years of pension experience, to review the Ross Island transaction.
“A determination that an investment is ‘prudent’ is based on a combination of many factors. Identified in this article is a factual situation which, assuming it is an accurate portrayal, would almost invariably lead one to the conclusion that the acquisition and holding of this particular real estate investment is a breach of fiduciary duty on multiple levels, as well as a violation of the prudence requirement,” Ambrose says.
“Valuation questions abound, the methodology behind the acquisition violates federally authorized procedures, zoning considerations are present in spades. Where is the environmental analysis any reasonable third party would require? And what about the lack of suitability of the property for multiple purposes? All raise issues that warrant having the Department of Labor investigate this situation.”