Economically Targeted Investments
In an effort to generate risk-adjusted market rates-of-returns and to promote economic development within the five Boroughs of New York City, the New York City Retirement Systems (NYCRS) share an investment policy allocation of 2% of pension assets towards Economically Targeted Investments (ETI).
The ETI program seeks investment opportunities that are not only expected to deliver risk-adjusted market rates-of-returns for NYCRS, but also to generate collateral benefits to the City. ETIs are designed to address market inefficiencies by providing capital or liquidity to under-served communities and populations City-wide.
The ETI program’s investment portfolio has outperformed its custom benchmark, net of fees, for the last one, five and ten-year periods. As of June 30, 2014, the end of the last fiscal year, the one-year return for the ETI portfolio was 7.42%, the five-year return was 6.23% and the ten-year overall return was 6.34%. The custom benchmark had a one-year return of 4.58%, a five-year return of 4.42% and a ten-year return of 4.92%. (Each ETI investment has its own benchmark; the custom benchmark is a weighted average of returns.)
The ETI program’s historical investments have been targeted towards affordable or workforce housing in low- to moderate- to middle-income neighborhoods and populations in the five boroughs of NYC. The importance in addressing housing affordability is underscored by statistics from the U.S. Census Bureau that indicate an increasing percentage of New Yorkers that are confronted with affordable housing costs. In the past ten years alone, the percentage of renters in the City that pay unaffordable rents has reached to almost 50 percent.
These ETIs have revitalized neighborhoods by returning distressed properties to the City’s tax rolls and by developing new housing that is affordable to working people in NYC. For example, the NYCRS’ Public Private Apartment Rehabilitation Program has made 710 aggregate investments totaling $757 million representing the preservation or new construction of 29,694 affordable apartments as of June 30, 2014, the end of the last fiscal year. Many of these ETIs have also created jobs in the construction industry and helped grow small businesses in City neighborhoods. Since the ETI program began in the 80′s, close to $2 billion has been invested in New York City’s five boroughs.
NYCRS current active ETI investments include:
The Bureau of Economic Development intends to expand its ETI programs to achieve new ways of generating solid investment returns to NYCRS and to create new opportunities for the economic growth and development of the City. An open-ended Request for Proposals (RFP) for Economically Targeted Investments is currently available on RFP and Solicitations page. For more information, please contact Christopher Pak, Director of Economically Targeted Investments.