General Growth to Cut Benefits for Rouse Retirees
Friday, June 17, 2005
General Growth Properties Inc., the Chicago-based shopping mall developer that purchased Rouse Co. late last year, plans to cut retiree medical and life insurance benefits to hundreds of former Rouse employees starting Dec. 1.
A General Growth spokesman confirmed yesterday that the company sent 350 to 400 letters to retirees and their surviving spouses informing them of the decision.
The spokesman, Bob Rubenkonig, said he did not know how many of the affected retirees are from Maryland, where Rouse employed about 500 workers at its Columbia headquarters and surrounding buildings before the sale.
Nationwide, Rouse had more than 3,000 employees, most of them at the high-end malls it developed.
Rubenkonig said the decision was not about saving money for the company, a profitable real estate investment trust. It was about keeping the benefits of the Rouse retirees in line with those of General Growth retirees, he said.
"It was based on equity," Rubenkonig said. "General Growth does not offer retirement benefits to its employees, and it never intended to add retirement benefits for any of its employees."
The decision, first reported in the Baltimore Sun, answers one of the few remaining questions about General Growth's intentions in Columbia, the planned community that James Rouse built in 1967 with the sprawling Rouse Co. campus at its center.
In the months following the Rouse purchase, General Growth kept mum about its plans for the Columbia employees, the non-mall-related office and residential units Rouse ran, and the coveted parcels of undeveloped land that Rouse owned in the commercial heart of Columbia.
But in recent months, General Growth began tackling these issues head-on. Most recently, it unveiled its plans for a mixed-use, pedestrian-friendly commercial and residential development in downtown Columbia. It dropped a controversial plan to downsize, enclose and sell the open-air Merriweather Post Pavilion, also in Columbia.
John Bucksbaum, General Growth's chief executive, also put an end to rumors that his company would sell the division that built Columbia and other planned communities around the nation. In an interview, he said General Growth had "no intention of doing anything but keeping it." Bucksbaum also said there were no plans for a major layoff or buyout at the former Rouse headquarters.
The decision to cut retirement benefits was first floated in January, when General Growth moved all Rouse employees onto its benefits plan, Rubenkonig said.
Back then, "the Rouse employees were told that there would be no new enrollees accepted into the retirement benefits plan because General Growth does not offer retirement benefits," Rubenkonig said. "At the time, it hadn't been decided how to handle benefits for existing Rouse retirees and they were told that."
Rubenkonig said he had no estimates for how much the company would save by cutting off the benefits.
General Growth, he said, has enlisted a firm called Health Advocates to assist the former Rouse retirees with identifying alternate sources of coverage.