Don’t strain your arm …
… patting yourself on the back.
Better self-esteem, through engineering
Because I have an interest in such things, when I saw the recent headline in New York Business, “City develops affordable housing for teachers,” I thought it might constitute the seed for an interesting story about workforce housing, and perhaps how local initiatives are driving innovation in housing policy. So I read on:
New York City Comptroller William Thompson said on Thursday that the city’s pension fund planned to invest more than $28 million to create affordable housing for the city’s teachers, teaching aides and educational administrators.
‘Invest’ says equity, doesn’t it? For most people, but not here:
Financed by the Teachers’ Retirement System of the City of New York, the comptroller’s office purchased $28.3 million worth of bonds issued by the city’s Housing Development Corp.
Buying bonds – I’m sorry [No, you're not. – Ed.; That was irony – Auth.], that doesn’t constitute investing.
That constitutes lending hard debt, with the expectation of repayment and a return. Debt implies the existence of equity – nobody lends 100% — and it implies a sponsor, and the entire accoutrements of development. So I started watching the city’s role diminish and diminish.
“Vance, the more I learn of your role in this transaction, the less I think of you.”
The money will pay for the construction and for permanent mortgage loans for 234 residential units at two buildings on
Will it? In fact, this is only part of the financing quilt. In fact, this sounds like the long-term permanent financing – which, as Sherlock Holmes noted in The Musgrave Ritual, is the absolutely easiest form of debt to get.
$28,500,000 may sound like a lot of money, but allocated across 234 apartments it’s about $120,000 apiece. Undoubtedly they cost quite a bit more than that to build. Almost certainly they have Low Income Housing Tax Credits, a J-51 tax exemption, and probably some soft debt from other parties. Everyone else’s contribution is, in economic risk or subsidy terms, more significant than lending hard debt. None of those parties is mentioned, leaving the idle reader to conclude that the pension fund, and only the pension fund, was causing this housing to come into being.
Nor is there any indication of rate, and the pension trustees, as fiduciaries, have an obligation to secure a market risk-adjusted return.
In other words, so far the pension fund has lent money at commercial rates with the full expectation of repayment. Stand up and cheer!
Thanks for all you’ve lent to us!
By now I suspected this was simply a press release, recycled into an industry news story.
My suspicions were confirmed by these two paragraphs of pabulum:
“Teachers have the tremendous responsibility of educating our young minds, yet often struggle to make ends meet on their modest salaries,” Mr. Thompson said. “We need to be able to attract and retain skilled educators in our city.”
Such revelations are blinding us
At a press conference Thursday, Mr. Thompson told reporters that more than 5,000 preschool, kindergarten, elementary and secondary school teachers moved out of the city in 2005, citing the high cost of living and low salaries.
The grammarian in me observes the participial phrase, which cleverly implies that all 5,000, as one, mentioned high cost of living and low salaries; rather, of course, that’s Mr. Thompson’s explanation (a plausible one) for their move.
United Federation of Teachers President Randi Weingarten said nearly half of the city’s teachers leave within five years of being hired.
The move is the latest in the city’s attempts to attract new talent and stop educators from leaving the area. In September, the city’s Department of Education said it had hired 6,000 new teachers and last year, Mayor Michael Bloomberg announced bonuses for math, science and special education teachers who would commit to teaching in the city’s tougher schools. The bonuses would provide up to $14,600 to cover moving expenses, security deposits or down payments on a home.
Paying teachers more – a novel strategy for attracting and retaining them.
Note to self: pay better, get more
Mr. Thompson, who controls the pension fund, has been in talks with other city pension funds about developing additional workforce housing.
No doubt building on this latest triumph.
They say success has a hundred fathers. As it should; in affordable housing, success involves many actors. Thus I don’t mind credit-taking, lots of it. Indeed, the more sources of funds, the more credit there is to distribute – we have found the philosopher’s stone of political capital.
If it looks like the back of a dollar bill, thank our Masonic Founding Fathers
In this case, however, the last to arrive provides the first press release and looks like the leader, even though all the real work was done elsewhere.
This little story – and everything about it, including this post, is little – has a moral that is also little: There are those who create the value and those who take the credit, and it sure would be nice if they had some correlation.
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