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 Debt Based Ginnie Mae Red Lined Neighborhood Aid Public/Private Apartment Rehabilitation Program (PPAR) SBA 7a Program Project Home All 100% guaranteed

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 Lenders Bank 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 is deployed housing units created or preserved 100% SONYMA Guarantee (P&I) Since 1978 total claims only $1.7 million no losses for Systems. Systems commit to buy loan at lock-in interest rate Lenders make construction loan as permanent take-out financing 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. original Competitive 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 yr5yr10yrInception (1984) PPAR – CPC Overall Targeted n/a Lehman Aggregate 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