the city of new york office of the comptroller economically targeted investments kathy martino june...
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The City of New York Office of the Comptroller
Economically Targeted
Investments
Kathy Martino
June 10, 2008
Overview
All Five Systems, Comptroller is Advisor
Established in 1982
Characterized by:
Guiding Law – DOL
Achieving Risk Adjusted Market Rates of Return
Filling Capital Gaps
Targeting the Five Boroughs
Creating Partnerships
Strategy for Success
Trustees who champion program key to approval process
Programmatic Structure deflects political pressures
High quality investment vehicles
Transparent and rigorous RFP process
Low asset allocation risk
Utilizes available partners such as HPD, SONYMA etc.
Structure: Comptroller Staff plus consultants
ETI Program 1982 - 2002
Debt Based
Ginnie Mae Red Lined Neighborhood Aid
Public/Private Apartment Rehabilitation Program(PPAR)
SBA 7a Program
Project Home
All 100% guaranteed
2002 - Present
Program Expanded
Permits investments across asset classes
Targets 2% of Assets
Easier access for proposers – rolling non-competitive RFP
Portable track records, custom benchmarks
Current Investments
PPAR – Expanded from 2 – 8 LendersBank and Not-for-Profit
The AFL-CIO Housing Investment Trust
Community Preservation Corporation Revolver
Access Capital Strategies/Voyageur
Erasmus Private Equity Fund
Systems Allocate$$$$$$
Capital isdeployedhousing
units createdor preserved
100% SONYMAGuarantee (P&I)Since 1978 total
claims only $1.7 millionno losses for Systems.
Systems commit to buy loan at
lock-in interest rate
Lendersmake construction loan as permanent
take-outfinancing in place
Community partners have track record know neighbourhoods & developers.
Other partners may include the City with J-15 tax abatements.Gov’t agencies (Dept. of Housing Preservation & Development) may offer low rate second mortgages.
Source: Modified from Hagerman, L.A. originalCompetitive Returns & a Revitalized New York (2007)
Challenges
Perception that below market rates are accepted
Too few consultants
Difficulty of creating customized benchmarks
No reliable method of measuring collateral benefits
Returns (as of March 31, 2008)
3 yr 5yr 10yr Inception (1984)
PPAR – CPC 7.99 7.58 7.61 10.44
Overall Targeted 6.51 5.80 6.48 n/a
Lehman Aggregate 5.48 4.58 6.04 n/a
Collateral Benefits
Affordable Apartments
Jobs
Leverage of City/State/Federal Subsidies
Revitalized Neighborhoods
Safe, non-predatory mortgages for LMI Homeowners
Looking Forward
Continue Existing Programs
Expand Program, Equity and Debt
Focus on development of Workforce Housing