Won't Aid Profiteering
Funds Wary of Housing Ruses

By ARI PAUL

Joined by housing advocates and City Council Members, City Comptroller William C. Thompson Jr. announced Feb. 28 that the city's five pension funds would be able to "opt out" of real-estate investments that would adversely affect the affordable housing market.

WILLIAM C. THOMPSON: Pension funds on guard.

During an announcement at City Hall, the mayoral hopeful said that housing activists alerted his office and the pension Fund Trustees last fall that the city was investing in former Mitchell-Lama developments at inflated prices, which caused landlords to dramatically raise rents and put pressure on existing tenants to leave.

'Surprised and Outraged'

"We don't actively manage our pension-fund investments in real estate; rather we select and hire real-estate fund managers and set parameters for how we'd like the funds to be invested," Mr. Thompson said. "We were surprised and outraged to learn that certain monies we invested were not in fact being used as they were intended."

The new protocol would allow the funds to divest from properties if the management was trying to force out low- and middle-income tenants to convert the housing into high-end residences. Mitchell-Lama housing encompasses rent-regulated apartments originally built for the middle class, which for the most part can jump to market rates after 30 years.

LETITIA JAMES: Won't invest in block-busting.

In addition to the "opt-out," Mr. Thompson said the pension funds and the city would have more oversight of their real-estate investments.

"For the properties in which we invest, we are now actively engaging new management in discussions about our concerns about protecting tenants and following up to ensure that they are responsive to tenant needs," he said.

'Threaten Social Fabric'

Several elected officials were on hand for Mr. Thompson's announcement. Queens Council Member Leroy Comrie likened the "opt-out" to the pension funds' move two decades ago to divest from companies doing business with South Africa due to its since-toppled racial apartheid system.

"Investors unfortunately are completely unaware or disregard the social consequences of investment practices that displace long-term residents, low- and moderate-income families," said Brooklyn Council Member Letitia James. "I have witnessed egregious patterns of abuse threatening the social fabric of the affordable housing market and a diversity that we all celebrate."

One of Mr. Thompson's anticipated rivals in the mayoral race, Council Speaker Christine Quinn, announced last month that the Council would partner with the AFL-CIO New York City Central Labor Council to create a non-profit under the labor group's auspices that would use union pension funds to help protect affordable housing that is in danger of becoming deregulated and to build new units.

"It would not work contrary to that plan," Mr. Thompson said. "If anything, it would work in conjunction with."

Retired Housing Authority worker Horace Horton, whose Bronx apartment building was once Mitchell-Lama housing that has since been converted, praised the work of the advocates and Mr. Thompson.

"Because of the work on the part of community organizations that follow up on these kinds of statistics, it wouldn't have come to the surface," he said. "So right away the Comptroller of the City of New York spotted something was wrong and decided to do something to help us."