Politico New York
November 28, 2016
By Sally Goldenberg
New York State's retirement fund and a company that finances below-market-rate housing projects have struck a deal to increase the pension fund investment in residential developments throughout the state (except in New York City) to $710 million, the largest of its kind.
The agreement between the $179 billion Common Retirement Fund and the Community Preservation Corporation is nearly four times their 2014 agreement of $200 million and in excess of the $440 million in such loans currently being serviced by the retirement fund.
The deal calls for the financing to be provided on a rolling basis, so any time a loan is paid off, the same amount could be invested in a new housing project.
The loans would cover nearly 1,500 apartments in 24 projects, including a 48-unit building for low-income tenants in Buffalo and an 81-unit development for seniors with limited incomes in Pawling, Community Preservation Corporation officials said.
"Over the last 25 years, the [state pension] fund has placed their trust in our ability to lend at scale and put their investment to work in neighborhoods where it will do the most good," Rafael Cestero, president of the Community Preservation Corporation, said in a prepared statement. "The longstanding partnership between CPC and the (common retirement fund) has helped provide capital for housing projects that have transformed and stabilized communities and given tens of thousands of New Yorkers access to new housing opportunities."
Loans for the low- and moderate-income projects would range from $250,000 for smaller apartment buildings to more than $10 million under this deal.
"This is definitely the largest that we've done with the New York State Common Retirement Fund and what's significant about this particular deal that we made with them is that it's a revolving agreement. It's evergreen, so that as loans pay off we can reuse the capacity," chief operating officer Sadie McKeown said in an interview last week.
The investment in rent-controlled housing is not as lucrative for the pension fund as putting money into stocks and bonds, but it is more secure, McKeown said. The mortgages are 30-year, fixed-rate loans, which many banks do not want to take on anymore.
The loans are also insured by the state's mortgage agency, SONYMA.
"The state is guaranteed to not lose money in this program," she said. "They don't get the returns they would get if they were making equity investments, but it's such a safe investment. And they need a diverse portfolio."
The agreement does not provide financing to housing in the five boroughs, but the Community Preservation Corporation has similar deals with the New York City Employee Retirement System.