New York, NY – July 14, 2008 – (RealEstateRama) — New York City Comptroller William C. Thompson, Jr., on behalf of the New York City Pension Funds, is urging some of the country’s largest pension funds to follow the New York City Pension Funds’ lead by taking steps to create and retain affordable housing.
In a letter to more than three dozen pension funds, Thompson wrote: “As a fiduciary, my office’s first responsibility is to pursue prudent investments that deliver appropriate risk-adjusted returns for our retirees. However, it is my firm conviction that it is possible to pursue long-term growth of pension assets while at the same time taking an active role in maintaining affordable housing and protecting tenants that live in affordable housing buildings.”
Thompson noted that last Fall housing advocates brought to his attention the trend of rapidly rising sales prices and quick sales among subsidized, formerly subsidized and rent-stabilized residential properties, including buildings in which New York City had investment interests.
Affordable housing and tenant advocates have called this trend “predatory equity,” based on concerns that the projected debt service for these transactions could not be supported without pressuring low-rent tenants to move out in favor of new market-rent tenants.
In February 2008, after working with housing advocates, the Pension Funds expanded their commitment to the preservation and creation of affordable housing in the City by enacting a residential real estate investment principle that includes:
- Reaffirming the Pension Funds’ commitment to affordable housing to the Funds’ new and existing real estate managers, including the long-term preservation of affordability in underlying real estate fund investments and the selection of reputable operating partners to manage affordable housing investment;
- Adopting an “investment opt-out,” under which the Pension Funds can decline investments in individual properties that might adversely affect tenants and affordability;
- Engaging building management to ensure fair treatment of tenants, especially in instances when ownership changes; and,
- Encouraging the submission of responses to the Pension Funds’ open Request for Proposals (RFP) for Economically Targeted Investment (ETI) Programs seeking new affordable housing opportunities. ETI investments are expected to provide the Funds a market rate of return for specific quantitative or qualitative benefits to New York City and, in particular, its low- and moderate-income communities and populations.
“I ask that you join me in instituting practices such as the ones listed above that support the housing needs of low- and moderate-income families,” Thompson wrote.
“It is imperative that our fellow public pension systems join with New York City in implementing these investment housing policies,” said Public Advocate and New York City Employees’ Retirement System (NYCERS) Trustee Betsy Gotbaum. “Affordable housing must be protected, and additional building encouraged and incentivized. Public plans can play a significant part to ensure that this kind of housing is maintained. Comptroller Thompson has led the way in raising these issues and implementing practices to address them, and we should encourage all plans to immediately sign on to these principles. Together, I am confident we can positively impact the housing market.”
“The measures taken by the New York City Pension Funds are important first steps towards the recognition and elimination of municipal support to a destructive business strategy that results in the elimination of affordable housing units and in some cases the harassment of the most vulnerable tenant populations,” said Manhattan Borough President and NYCERS Trustee Scott M. Stringer. “Cities and towns need to send a message that ethical investment strategies do not include practices that displace tenants or reduce the availability of affordable housing.”
The Pension Funds have assets totaling more than $108 billion, with $1.8 billion invested in commercial and residential real estate.
The New York City Pension Funds are New York City Employees’ Retirement System (NYCERS), Teachers’ Retirement System of the City of New York (TRS), New York City Police Pension Fund, New York City Fire Department Pension Fund and the New York City Board of Education Retirement System (BERS).
In addition to Thompson, the New York City Pension Funds trustees are:
New York City Employees’ Retirement System: New York City Finance Commissioner Martha E. Stark (Chair); New York City Public Advocate Betsy Gotbaum; Borough Presidents Scott Stringer (Manhattan), Helen Marshall (Queens), Marty Markowitz (Brooklyn), Adolfo Carrion (Bronx), and James Molinaro (Staten Island); Lillian Roberts, Executive Director, District Council 37, AFSCME; Roger Toussaint, President Transport Workers Union Local 100; and, Gregory Floyd, President, International Brotherhood of Teamsters, Local 237.
Teachers’ Retirement System: New York City Finance Commissioner Martha E. Stark (Chair); Deputy Chancellor Kathleen Grimm, New York City Department of Education; and, Sandra March, Melvyn Aaronson and Mona Romain, all of the United Federation of Teachers.
New York City Fire Department Pension Fund: Mayor Michael Bloomberg; New York City Fire Commissioner Nicholas Scoppetta (Chair); New York City Finance Commissioner Martha E. Stark; Stephen Cassidy, President, James Slevin, Vice President, Robert Straub, Treasurer, and John Kelly, Brooklyn Representative and Chair, Uniformed Firefighters Association of Greater New York; Michael Currid, Captains’ Rep.; John J. McDonnell, Chiefs’ Rep., and Stephen J. Carbone, Lieutenants’ Rep., Uniformed Fire Officers Association; and, Joseph Gagliardi, Marine Engineers Association.
New York City Police Pension Fund: Mayor Michael Bloomberg; New York City Finance Commissioner Martha E. Stark; New York City Police Commissioner Raymond Kelly (Chair); Patrick Lynch, Patrolmen’s Benevolent Association; Michael Palladino, Detectives Endowment Association; Edward D. Mullins, Sergeants Benevolent Association; Thomas Drogan, Lieutenants Benevolent Association; and, Roy T. Richter, Captains Endowment Association
Board of Education Retirement System: mayoral appointees Schools Chancellor Joel Klein, Alan Aviles, Philip Berry, David Chang, Tino Hernandez, Edison O. Jackson, Richard Menschel and Marita Regan; Luis Peguero (Bronx), Patrick Sullivan (Manhattan), Wendy Gilgeous (Brooklyn), and Joan Correale (Staten Island); and employee members Joseph D’Amico of the IUOE Local 891 member and Milagros Rodriguez of District Council 37, Local 372.
