Bureau of Asset Management
Advisor to New York City Pension Funds
Economically Targeted Investments
In an effort to generate affordable housing and promote economic development within the five boroughs of New York City, the Comptroller’s Office continues to expand the pension funds’ commitments to Economically Targeted Investments, or “ETIs”.
The funds’ ETIs seek to benefit the pensioners by providing solid, market-rate returns to the funds while at the same time making investments that benefit New York City. These investments provide capital in areas that are inadequately served by the market. ETIs aim to improve and create low-, moderate- and middle-income housing, to revitalize neighborhoods by returning distressed properties to the tax rolls, to produce new housing that is affordable to working people in NYC and to create jobs. Many of the ETI investments in housing create construction and small business employment. As of December 31, 2011 the five-year overall return on the pension funds’ targeted investments was 7.00% and the ten-year overall return was 6.61% (as compared to the Barclays US Aggregate Bond Index, with a five-year return of 6.50% and a ten-year return of 5.78%).
Current ETI investments include:
The Public Private Apartment Rehabilitation Program (PPAR).
This investment program finances multifamily buildings in the five boroughs. Working with 8 private and not-for-profit lenders, the funds issue forward commitments to provide permanent, long-term mortgages for the rehabilitation or new construction of multifamily buildings that will remain affordable for the long term. For calendar year 2011, $127 million has been invested and/or committed for 3,382 units of affordable rental housing.
The Community Preservation Corporation (CPC) Revolving Credit Agreement for New York
Investors since 2003, the pension funds collectively have commitments of $60 million to CPC’s Revolving Credit Agreement, participating alongside more than 65 additional investors. This credit facility was created to fund short-term construction loans for affordable housing, mixed-use development and commercial properties in low-, moderate- and middle-income areas. As of December 31, 2011, the facility was financing 139 construction projects in New York City for a total of $337 million, representing 3,809 units of housing and over 101 commercial units.
The AFL-CIO Housing Investment Trust (HIT)
The funds began investing in the HIT in 2002 and as of December 31, 2011 had a total of $580 million invested. The funds invest in this national fund because the HIT has made a deep commitment to invest in New York City. Since 2002, HIT has invested over $2.5 billion in multifamily and single family housing in New York City.
The Access Capital Strategies (ACS) Separate Account
The Systems collectively have $100 million invested in this affordable housing/anti-predatory lending strategy that was established in 2007. The account primarily invests in single-family MBS (mortgage backed securities) that provide a source of safe, non-predatory capital to home purchasers and to minority purchasers who might otherwise be vulnerable to predatory lending practices. The income of the borrowers may be up to 200% of area median income (currently $80,200), with more than half the portfolio at 95% or below AMI thereby strengthening the secondary market for loans targeted to these segments of the population. The account may also invest in multifamily housing or investments that are designed to support underlying community development activities targeted to low-and moderate-income neighborhoods.
An open-ended Request for Proposals (RFP) for Economically Targeted Investments is currently available on the RFP page of the Comptroller's web site.
In addition to fixed income investments, ETI staff may consider investments in other asset classes where practical. For more information, contact the Director of ETIs, Kathy Martino Kathy.Martino@comptroller.nyc.gov.