NYC Pensions Makes Fiscal Move To Protect Affordable Housing

The New York City Pension Funds agreed Thursday to abandon investments deemed to negatively impact affordable housing, according to a press release from City Comptroller William C. Thompson, Jr.

The move comes after affordable housing and tenant advocates accused some of the real estate investment trusts (REITs) of buying “predatory equity,” or purchasing whole properties or stakes in properties occupied by low-income tenants in the hopes that they would be replaced by higher-paying tenants.

“We must all work together to maximize protection and affordability for tenants in both existing and future investments,” wrote Thompson, who first proposed the commitment, in the release. “With today’s announcement we are strengthening our commitment to invest in affordable housing by creating an opportunity to decline investments that could negatively affect affordability.”

All together, the NYC Pension Funds manages $110 billion worth of city employees’ retirement assets in its five funds. About a $1.8 billion slice of those assets is invested with REITs, companies that buy and sell properties for a profit and distribute the proceeds to their investors.

Thompson’s plan specifically aims to compel pension funds to avoid investing in “predatory equity.”

Opponents of the plan have argued that committing to such a principle goes against the pension funds’ legal duty to pursue investments that would deliver the highest returns to city employees’ retirement accounts.

“I’m all for affordable housing. For sure I wish my own rent was lower,” said Michael Washington, a teacher at P.S. 153 and a contributor to the Teachers’ Retirement System of the City of New York. “But I’ve been contributing to my pension with the expectation that they’ll be able to fund my retirement in the future.”

City officials are confident that the new investment mandate will not hinder the funds’ ability to maximize returns.

“Once again, the investment powers of the Funds are being put to good use in addition to maximizing returns,” wrote Betsy Gotbaum, public advocate and trustee of the New York City Employees’ Retirement System, in the release. “This new real estate investment principle not only helps bring landlords and developers to the table and holds them accountable, but it demonstrates the Funds’ firm commitment to protecting affordable housing for low-income New Yorkers.”

kevin.shin@columbiaspectator.com.