House Speaker Casper R. Taylor Jr. and the governor's economic development chief urged the state's $33 billion pension system yesterday to consider investing $150 million in technology parks near college campuses and federal laboratories.
Taylor and David Iannucci, secretary of business and economic development, told the Maryland Pension Board's investment committee that such developments are in high demand and probably would make money.
Iannucci said high-technology businesses in Maryland are scrambling to find office and laboratory space, especially in sites near research institutions. He said some companies' expansion plans have fallen apart because they could not find suitable space quickly enough in a fast-paced market.
"These high-technology companies don't want to see a plat, they don't want to see blueprints, they want to see a building," he said.
Pension board members have a legal duty to make investment judgments on the basis of the beneficiaries' interests, so they are generally wary of calls to use the fund's vast resources to accomplish social or economic-development goals. Taylor and Iannucci urged members to have their own consultants study whether technology parks would be a good investment.
"I think it gives you all the opportunity in a very good fiduciary way to invest in that economic activity and reap responsible returns," Taylor said.
The speaker noted that he is a member of the plan.
"I hope to be a pensioner one of these days, so I'm not intentionally crazy enough to jeopardize my retirement," he said.
Taylor emphasized that he was only making a suggestion, but the speaker's wishes carry considerable weight with some leading members of the pension board.
Treasurer Richard N. Dixon, the board chairman, is elected by the General Assembly and frequently reminds listeners that the legislature is his constituency. The House casts three-quarters of the votes for that office, so Taylor could have considerable influence on Dixon's re-election prospects.
Comptroller William Donald Schaefer, the vice chairman, is a close friend of Taylor.
The state pension system invests in real estate projects, but they make up only about 5 percent of the fund's assets, which are heavily weighted toward stocks.
The risk involved in such a technology park investment is that the commercial real estate market could go into a tailspin similar to that of the late 1980s and early 1990s.
But Dixon noted that the $150 million Taylor suggested is less than 1 percent of the fund's portfolio. He said the idea could be a "golden opportunity" to "see if we can be a help to our institutions around the state."
The pension system provides retirement benefits for about 300,000 government employees and retirees in Maryland, including public school teachers.
Mary Jo Neville, government relations specialist for the Maryland State Teachers Association, said the group has no objections to legislators making suggestions to the board as long as they aren't trying to dictate investment policy in legislation.
"As long as decisions are made on an investment basis and not a political basis, we're content with that," she said.
Iannucci said college presidents around the state had reported missed business opportunities because of a lack of nearby commercial space. The secretary said department officials had approached private banks about investing in technology parks, but were told they had come to the wrong place. Iannucci said banks prefer to make short-term loans and leave development decisions to institutions - such as pension funds - that make long-term investments.