Both Democratic gubernatorial hopefuls last week said they would use a larger chunk of the state pension funds to create affordable housing if elected.
As state comptroller, H. Carl McCall oversaw the investment of only a fraction–less than one percent, according to his opponent–of the state’s $600 billion in pension funds in affordable housing construction. Investment in real estate is risky, said McCall, and New York can’t take that chance with its retirement money without a guarantee. But a guarantee is possible, if federal legislators are willing to grant it. So he and U.S. Senator Hillary Clinton have begun drafting legislation calling for a federally-backed guarantee on these kinds of investments, he told a roomful of housing advocates at a candidate forum sponsored by Tenants and Neighbors, a lobbying group, last Wednesday.
At least some state finance experts don’t think it’s such a bad idea. “Housing investments are less risky than venture capital investments,” said James Parrott of the Fiscal Policy Institute, a statewide budget watchdog. “There is some risk of default, but the federal guarantees would erase that problem.” And, he added, “The jobs of public sector employees will be more secure because of investments in affordable housing.”
On this point, McCall and his Democratic opponent seem to agree. While Cuomo skipped the forum for a week-long visit to Israel, he did suggest in a written statement that New York at least match California’s commitment: The Golden State’s Public Employees’ Retirement System currently invests over $2 billion, or almost 1.4 percent of its assets, in affordable housing, he noted. New York State’s Common Retirement Fund, he said, only puts about $200 million, or less than .2 percent of its total resources, into affordable housing.
“I was quite intrigued by McCall’s suggestion of using pension funds,” said Michael McKee of Tenants and Neighbors. “We can build a lot of housing with just a bit of that money.”
There is certainly a need. According to Housing First!, a housing advocacy group, New York City is short about 225,000 affordable apartments for its residents. And housing production has slowed down. In the 1990s, the number of housing units increased by 83,000 units, compared to the 1960s when five-times more apartments were built.
Green Party candidate Stanley Aronowitz had another idea: raise taxes. According to his math, a 2 percent tax hike for people earning more than $80,600 a year could bring in about $4 million to $6 million annually.
In the article above, we incorrectly stated that Tenants and Neighbors has endorsed H. Carl McCall in his race for governor. In fact, Tenants and Neighbors is a nonprofit organization and does not make endorsements in political races. We apologize for the error.