New York City’s pension funds are supersizing their investment in affordable housing developments.
New York City Comptroller Mark Levine plans to use the city’s public pension funds to invest $4 billion over the next four years, the New York Times reported. The investment will more than double the real estate portfolio of the five funds, which provide retirement benefits to city employees.
The investments could go towards affordable development or rehabilitation across the city, potentially encompassing thousands of units. Eligible projects may include mixed-income developments, office-to-residential conversions, renovations and middle-income apartment developments constructed by unions.
The investments will need approval from each pension fund’s board of trustees. Investments are set to include $750 million in the first year and $500 million for the Public Private Apartment Rehabilitation Program. The rest will be pointed to the A.F.L.-C.I.O. Housing Investment Trust, which finances middle-income, union-built housing.
Altogether, there are five public pension funds for the city. They total a combined $320 billion in assets.
Levine’s been signaling his desire to get the pension funds more involved in affordable housing for a while.
Speaking at an event for the New York State Association for Affordable Housing last month, Levine said he was sure there were “projects that we should be learning about, where we can find that win-win and get a decent risk adjusted return for our pension fund and give you financing that you might otherwise not get access to.”
Affordable housing is often viewed as an undesirable investment because of low rents and minimal returns, which is why subsidies are vital to the sector.
But there will be scrutiny on the affordable housing investments, especially considering disappointing results in the rent-stabilized sector. A September analysis of city records by The Real Deal found that two city-managed pension funds invested in majority rent-stabilized housing — the subset most affected by the 2019 rent law’s revenue constraints — have cratered, losing more than two-thirds of their value since 2019.
Lilah Burke contributed reporting.
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