NYC real estate sways CALPER policy
The Stuyvesant Town and Peter Cooper Village apartment complexes in New York City.
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Stacey Vanek-Smith: Stuyvesant Town is a housing complex in New York City. Its owners took some heat for kicking out tenants so they could jack up the rents. Turns out one of the major investors was the largest public pension fund in the country. Now the California Public Employees Retirement System is changing how it invests in real estate. Jill Barshay reports.
Jill Barshay: CALPERS is expected to adopt a new policy Monday: to stop investing in real estate deals that convert apartments with controlled rents to much higher market rates.
CALPERS decided to make the change after the bad press it got when tenants lost their homes in New York and elsewhere. Even worse, the deals went bust and Calpers lost $700 million of tax payer money.
David Wood is the director of the Initiative for Responsible Investment at Harvard University. He says Calpers carries a lot of weight with the banks that partner with them.
David Wood: They can require the projects in which they're the equity investors to, you know, use these principles. And so the lenders are likely to follow on.
Calpers new policy could also be meant to pre-empt tougher regulation. The California legislature holds hearings Wednesday on a bill that would make it illegal for public pensions to engage in predatory investment practices.
In New York, I'm Jill Barshay for Marketplace.