NYC plans to invest $4B from pension funds for affordable housing
New rental building The Ellery at 312 West 43rd Street was financed by the A.F.L-C.I.O Housing Investment Trust, which finances middle-income housing built by union employees. Rendering courtesy of the NYC Department of Housing Preservation and Development.
New York City Comptroller Mark Levine plans to invest $4 billion from the city’s public pension funds for affordable housing development. Levine on Thursday unveiled the “NYC Housing Investment Initiative,” which will more than double the funds’ current real estate portfolio and help finance thousands of new homes through mixed-income projects, office-to-residential conversions, and renovations, as first reported by the New York Times. The plan calls for roughly $1 billion in annual pension investments over the next four years.
The initiative seeks to address NYC’s current housing crisis. As of February 2024, the rental vacancy rate had fallen to 1.4 percent, the lowest level in more than 50 years. Data from Pew also shows that the city’s housing stock grew by only 4 percent between 2010 and 2018.
As part of the initiative’s first round of investments, Levine has directed the Bureau of Asset Management to bring $750 million in investments to the boards for approval to create new mixed-income affordable housing, preserve existing affordable homes, and support office-to-residential conversions.
He has called for a $500 million expansion of the Public Private Apartment Rehabilitation (PPAR) program to support the construction, preservation, and rehabilitation of housing across NYC and surrounding counties. Levine also announced a new 36-month rate lock and 40-year amortization schedule for both preservation and new construction.
Additionally, Levine recommended further investment for approval in the AFL-CIO Housing Investment Trust to finance large-scale multifamily and affordable housing projects in NYC using union labor. The AFL-CIO trust specifically finances middle-income housing built and operated by union workers, according to the Times.
Investments will require approval from each pension fund’s board of trustees.
“Too many New Yorkers are struggling just to keep a roof over their heads. Solving this crisis takes action on all fronts. We’ve advanced critical zoning changes, but without financing, housing doesn’t get built,” Levine said.
“The NYC Housing Investment Initiative is about closing that gap, delivering the homes New Yorkers need, and making sound investments for the NYC retirement systems,” he added.
NYC currently has five pension funds, which provide retirement benefits to police officers, teachers, firefighters, and other city workers. Totaling roughly $320 billion in assets, the funds invest in real estate across the city and around the world, as well as in stocks, bonds, and private equity.
Since the early 1990s, these investments have helped create or preserve 199,000 housing units, according to a press release. The new capital infusion is expected to support the creation or rehabilitation of thousands more units.
Previous projects funded through the program include Lily House, a Bronx building for domestic violence survivors, and The Rise, a Brooklyn building that houses formerly incarcerated women, according to the Times.
Pension funds are required to make investments that maximize returns, which has historically made affordable housing a less attractive option. Investors have often favored market-rate projects, where higher rents typically generate stronger returns.
However, a 2024 survey from the Federal Reserve Bank of New York found that pension funds have increased their investments in affordable housing in recent years, viewing it as more stable long-term than market-rate housing, according to the Times.
RELATED:
