The recent announcement by Comptroller Brad Lander regarding the New York City Employees’ Retirement System’s investment of up to $60 million in affordable housing units marks a significant milestone in the city’s efforts to address the housing crisis. With nearly 35,000 units at stake, the partnership aims to not only preserve these units, 80% of which are rent-stabilized but also deliver a healthy return for pension funds and retirees.
Following the collapse of Signature Bank last year, concerns were raised about the fate of the loans on the housing stock left behind by the bank. City, state, and federal officials initially viewed the situation as a potential disaster, with fears of a run on the banks looming large. The focus shifted to ensuring that the loans did not end up in the hands of slumlords seeking to exploit them for personal gain.
The involvement of the Community Preservation Corp. in taking over parts of Signature’s loan portfolio played a crucial role in preventing the housing units from falling into disrepair. By quickly parcelling the loans into billion-dollar pools and forming partnerships with banks, the CPC helped to safeguard the affordable housing stock in record time. This proactive approach underscored the importance of collaboration between various stakeholders in addressing the crisis.
The partnership between the CPC, investment manager Related Fund Management, and nonprofit Neighborhood Restore Housing Development Fund Corp. to form Community Stabilization Partners exemplifies a sustainable investment model with a focus on long-term impact. By retaining equity in the venture and managing a significant portion of the loans, the partners are committed to ensuring the stability and affordability of the housing units.
The decision by NYCERS to invest $60 million in the affordable housing venture represents a strategic move to increase the fund’s exposure to private markets and diversify its portfolio. With a growing emphasis on responsible investing, NYCERS has demonstrated its commitment to generating positive returns while contributing to social good. This approach has not only bolstered the fund’s financial performance but also solidified its position as a leading public pension fund in the U.S.
The collaborative efforts of city officials, housing advocates, and financial institutions have resulted in a significant victory for tenant protection and community stability. By preventing the affordable housing units from falling into the wrong hands, the investment has set a positive precedent for future initiatives aimed at addressing the housing crisis. The acknowledgment of past challenges, such as redlining and foreclosures, underscores the importance of learning from history and working together to build a more inclusive and equitable future.
The New York City Employees’ Retirement System’s investment in affordable housing units represents a testament to the power of proactive collaboration and responsible investing. By preserving and expanding the city’s affordable housing stock, the partnership has not only delivered a positive return for pension funds and retirees but also safeguarded the rights of tenants and fostered community stability. Moving forward, continued efforts to address the housing crisis will require sustained commitment from all stakeholders to build a more resilient and equitable city for all.