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The City of New York Office of the Comptroller

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

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The City of New York Office of the Comptroller

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  1. The City of New York Office of the Comptroller Economically Targeted Investments Kathy Martino June 10, 2008

  2. 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

  3. 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

  4. 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

  5. 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

  6. Current Investments PPAR – Expanded from 2 – 8 Lenders Bank and Not-for-Profit The AFL-CIO Housing Investment Trust Community Preservation Corporation Revolver Access Capital Strategies/Voyageur Erasmus Private Equity Fund

  7. Capital is deployed housing units created or preserved Systems Allocate $$$$$$ Lenders make construction loan as permanent take-out financing in place Systems commit to buy loan at lock-in interest rate 100% SONYMA Guarantee (P&I) Since 1978 total claims only $1.7 million no losses for Systems. 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. original Competitive Returns & a Revitalized New York (2007)

  8. Challenges Perception that below market rates are accepted Too few consultants Difficulty of creating customized benchmarks No reliable method of measuring collateral benefits

  9. 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

  10. Collateral Benefits Affordable Apartments Jobs Leverage of City/State/Federal Subsidies Revitalized Neighborhoods Safe, non-predatory mortgages for LMI Homeowners

  11. Looking Forward Continue Existing Programs Expand Program, Equity and Debt Focus on development of Workforce Housing

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