Are New York City’s public-pension managers running an investment fund — or an affordable-housing program?

diego-beekman-6111461Last week, City Comptroller John Liu announced the latest venture of the police fund and the civilian workers’ fund, which control $68 billion between them to pay out current and future benefits to retirees.

The two funds will invest $19 million in a fixed-rate, 30-year mortgage for the Diego Beekman Houses, a 38-building apartment complex on Beekman Avenue in the Mott Haven neighborhood of the Bronx.

The apartment complex has suffered deterioration over the years. The federal Department of Housing and Urban Development (HUD) owned it until 2003, when HUD transferred it to residents and “housing professionals.” The buildings got a $13.6 million loan from New York City in 2006 for repairs.

The complex is also a pet project of Bronx Borough President Ruben Diaz, Jr., a trustee of the civilian pension fund, who previously had earmarked $600,000 in separate city money in this year for an (apparently rather fancy!) security-camera system.

Where do the pension funds come in?

Residents — and Diaz — wanted the buildings to remain rent- and income-restricted, and the marketplace wouldn’t provide a mortgage under such conditions. Private lenders are often leery of such investments, as the risk is that rent won’t cover operating and maintenance costs.

So now the taxpayer-guaranteed city pension funds have done so, providing a mortgage that further features insurance from a state agency, the State of New York Mortgage Association (Sonyma).

This isn’t the first such investment. In two years, through their “economically targeted investments” program, city pension funds have invested more than $440 million in similar affordable-housing ventures.

Pension officials’ interest in this area isn’t in service of achieving a great return.

As Diaz said upon announcing the investment, “A 30-year, fixed-rate mortgage means welcome relief for struggling families who are trying to keep afloat in this economy. This great investment will improve their lives and give them much needed peace of mind.”

And as Liu put it, “This investment will not only help ensure that more than a thousand Bronx families can afford to live in the City but also underscores what can be achieved when the private and public sectors work together for the greater good.”

The Bloomberg administration is involved, too, as the mayor has trustees on both pension funds, who didn’t raise objections.

There’s a good reason that the trustees concentrated on political objectives rather than financial objectives in their press release.

This investment doesn’t offer stellar financial results — only 3.44 percent to the pension funds annually for 30 years, or just 43 percent of the funds’ objective to return an 8 percent overall return.

(The borrower will pay a 4.19 percent rate, with the difference between the two going to the insurance and other fees.)

Though the pension funds (and indirectly taxpayers) are insured against the risk of default, they face another risk: that interest rates will go up sometime over the next 30 years, leaving the funds locked into a long-term mortgage that carries an even lower relative return.

New Yorkers should wonder: who do pension trustees work for — the taxpayers who guarantee the funds’ payouts to public retirees, or vote-rich special interest groups with their eye on

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