NEW YORK - Tired of seeing public school teachers flee because they can't afford to rent an apartment, the teachers union has taken a plunge into New York City's red-hot real estate market.
The New York City Teachers' Retirement System is investing $28 million in pension funds to buy bonds that are financing housing for educators. Experts say the job-specific housing project could become a model in other cities where soaring rents are forcing out essential workers like teachers, police and firefighters.
“For too many years now, New York City has lost many of its talented new educators; nearly half of them leave within five years on the job,” says Randi Weingarten, president of the United Federation of Teachers, the union representing more than 150,000 active and retired New York public school educators.
“What developer is willing to construct affordable housing?”
A New York teacher's salary starts at about $42,000, and at more than $2,000 a month, the average rent for even a studio apartment in the city eats up over half of it.
Rents in the two buildings slated to go up in the South Bronx will be much cheaper, from $806 a month for a studio to $1,412 for a three-bedroom apartment.
Construction on the 234 units is expected to begin later this fall.
The new apartments will be open to teachers in public, private, parochial and charter schools, as well as administrators.
To be eligible for a lottery for an apartment, applicants cannot earn more than 110 percent of the area median income, which is $70,900 for a family of four and $49,630 for an individual.
“I think I make a good salary, but it's so hard living here - I can't get a decent apartment with the money I make. You also need to eat! You need to feed your kids!” says Ramona Roman, 52, a Manhattan elementary school teacher with a master's degree.
Roman, who supports two children and her mother on her annual salary of $70,000, plans to apply for an apartment as soon as the city opens the lottery.
Richard Plunz, a Columbia University architecture professor and expert on housing in New York City, said the project could be influential.
“As a prototype of housing for people who are essential to the functioning of a city, it's quite important,” he said.
In New York, Mayor Michael Bloomberg has offered housing bonuses of up to $14,600 to incoming teachers.
In the tradition of unions taking care of their own, Weingarten approached the city's Housing Development Corp. about a year ago.
Under the deal they forged, the pension fund bought the bonds from the government-affiliated corporation, which also provided $20 million in below-market rate loans for the project being built by the Atlantic Development Group.
The New York-based construction company, which specializes in affordable housing, got a 1 percent mortgage for the project financed with the sale of the bonds to the pension fund.
The Bronx project “revisits how housing was provided in the city for the working population from the 1920s to the 1960s,” says Plunz, referring to such huge, union-backed housing complexes as Electchester in Queens, which was erected in 1949 for electrical workers by Local 3 of their union.
The Amalgamated apartments in the Bronx, one of the oldest housing cooperatives in the United States with more than 4,000 apartments, were built by several garments workers' unions starting in the 1920s.
Of course, investing pension fund money in real estate is not new.
The nation's largest pension funds, CalSTRS and CalPERS in California, have real-estate investments worth billions, and are helping teachers buy or build properties for individuals and families.
The city's teacher retirement system, with a $52 billion portfolio, also has tens of millions of dollars of real-estate investments.
But none of those investments is profession-specific rental housing like the Bronx apartments.
They will be only a drop in the bucket for the nation's largest school system, whose teacher force of 80,000 serves a student body of 1.1 million.
But it is a start.
“This establishes a blueprint for middle-income professionals that other cities could duplicate,” says city Comptroller William Thompson, who acts as the custodian of pension funds for city workers.
John Crotty, until recently the executive vice president of the housing corporation, helped engineer the deal. Now an executive of a public housing finance group at the J.P. Morgan Chase bank, he's looking to create other projects around the country using public pension funds for urban revitalization modeled on the Bronx experiment.
Crotty says the number of working people in America who are paying 50 percent or more for their housing is growing “to unsustainable numbers.” The ideal ratio is to spend no more than about 30 percent of a salary on housing.
“This affordability crisis exists nationally and we figured out a solution,” Crotty says. “It's important that people who work in cities get to live in them as well - that cities not become enclaves for the rich.”
AP-ES-10-13-07 1313EDT
“For too many years now, New York City has lost many of its talented new educators; nearly half of them leave within five years on the job,” says Randi Weingarten, president of the United Federation of Teachers, the union representing more than 150,000 active and retired New York public school educators.
“What developer is willing to construct affordable housing?”
A New York teacher's salary starts at about $42,000, and at more than $2,000 a month, the average rent for even a studio apartment in the city eats up over half of it.
Rents in the two buildings slated to go up in the South Bronx will be much cheaper, from $806 a month for a studio to $1,412 for a three-bedroom apartment.
Construction on the 234 units is expected to begin later this fall.
The new apartments will be open to teachers in public, private, parochial and charter schools, as well as administrators.
To be eligible for a lottery for an apartment, applicants cannot earn more than 110 percent of the area median income, which is $70,900 for a family of four and $49,630 for an individual.
“I think I make a good salary, but it's so hard living here - I can't get a decent apartment with the money I make. You also need to eat! You need to feed your kids!” says Ramona Roman, 52, a Manhattan elementary school teacher with a master's degree.
Roman, who supports two children and her mother on her annual salary of $70,000, plans to apply for an apartment as soon as the city opens the lottery.
Richard Plunz, a Columbia University architecture professor and expert on housing in New York City, said the project could be influential.
“As a prototype of housing for people who are essential to the functioning of a city, it's quite important,” he said.
In New York, Mayor Michael Bloomberg has offered housing bonuses of up to $14,600 to incoming teachers.
In the tradition of unions taking care of their own, Weingarten approached the city's Housing Development Corp. about a year ago.
Under the deal they forged, the pension fund bought the bonds from the government-affiliated corporation, which also provided $20 million in below-market rate loans for the project being built by the Atlantic Development Group.
The New York-based construction company, which specializes in affordable housing, got a 1 percent mortgage for the project financed with the sale of the bonds to the pension fund.
The Bronx project “revisits how housing was provided in the city for the working population from the 1920s to the 1960s,” says Plunz, referring to such huge, union-backed housing complexes as Electchester in Queens, which was erected in 1949 for electrical workers by Local 3 of their union.
The Amalgamated apartments in the Bronx, one of the oldest housing cooperatives in the United States with more than 4,000 apartments, were built by several garments workers' unions starting in the 1920s.
Of course, investing pension fund money in real estate is not new.
The nation's largest pension funds, CalSTRS and CalPERS in California, have real-estate investments worth billions, and are helping teachers buy or build properties for individuals and families.
The city's teacher retirement system, with a $52 billion portfolio, also has tens of millions of dollars of real-estate investments.
But none of those investments is profession-specific rental housing like the Bronx apartments.
They will be only a drop in the bucket for the nation's largest school system, whose teacher force of 80,000 serves a student body of 1.1 million.
But it is a start.
“This establishes a blueprint for middle-income professionals that other cities could duplicate,” says city Comptroller William Thompson, who acts as the custodian of pension funds for city workers.
John Crotty, until recently the executive vice president of the housing corporation, helped engineer the deal. Now an executive of a public housing finance group at the J.P. Morgan Chase bank, he's looking to create other projects around the country using public pension funds for urban revitalization modeled on the Bronx experiment.
Crotty says the number of working people in America who are paying 50 percent or more for their housing is growing “to unsustainable numbers.” The ideal ratio is to spend no more than about 30 percent of a salary on housing.
“This affordability crisis exists nationally and we figured out a solution,” Crotty says. “It's important that people who work in cities get to live in them as well - that cities not become enclaves for the rich.”
AP-ES-10-13-07 1313EDT
The Citizens' Say
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