CalPERS adopts tenant-oriented rental policy

SACRAMENTO
April 20, 2010 5:13am

The nation’s largest pension fund – the California Public Employees Retirement System – has adopted a new policy for its real estate investments that forbids “excessive” increases in rents and the involuntary displacement of low-income households.

“This policy will help us ensure that external managers who deploy CalPERS capital won’t inappropriately displace households in rent-regulated units as a result of their investment strategies,” says Rob Feckner, president of the CalPERS board. “Such strategies have exposed CalPERS to risks and have caused adverse impacts to renters that must not happen again.”

In recent months, the CalPERS Board has heard concerns from tenant groups about managers who have eliminated rent-regulated housing units by converting them to market units or have raised rents above regulated levels.

The policy, effective immediately, applies to all future investments and to previous investments insofar as existing contracts permit it, says CalPERS.

The pension fund says it will pursue remedies against managers that violate the new policy, with the option of not committing new capital to them.

“We believe that we can implement the policy without undermining the CalPERS mandate to maximize risk-adjusted investment returns on behalf of our members and employers,” says Investment Committee Chairman George Diehr. “At the same time, this protection of tenants is consistent with the United Nations Principles for Responsible Investment that are part of our own governance principles, which incorporate environmental, social and governance best practices into our investment decision-making process.”

CalPERS is the nation’s largest public pension fund with assets totaling approximately $209 billion. It provides retirement benefits to 1.6 million state, school and local public agency employees and their families.