AFL-CIO Housing Investment Trust Investments Create Union Construction Jobs And Affordable Housing In San Francisco Neighborhoods
SAN FRANCISCO, May 20, 2015 /PRNewswire-USNewswire/ -- The AFL-CIO Housing Investment Trust (HIT) has been a catalyst for the remarkable recovery in San Francisco since the Great Recession and during its current boom, making investments of $163 million into four residential developments that created 2,193 union construction jobs and 778 housing units.
While the real estate market in San Francisco has been on the upswing in recent years, like other municipalities, housing and commercial construction in San Francisco ground to a halt during the height of the economic downturn. Development deals in San Francisco were slow to materialize, severely curtailing union construction jobs. Rental housing was hit especially hard, making the search for affordable housing even more challenging for working families.
As Michael Theriault, secretary-treasurer of San Francisco Building and Construction Trades Council, recalled, "Things were dead – things were moribund." But Theriault and others credit the HIT, and its workers' pension capital investments, with getting construction projects rolling again.
Since 2010, the fixed-income investment company with more than $5 billion in assets from union and public employee pension plans has helped finance four sizeable residential developments in the city: Rincon Green at 333 Harrison, the Potrero Launch Apartments, Arc Light Co. and 101 Polk.
"Those projects put people back to work and showed other investors and other developers that there were possibilities in San Francisco," Theriault said. "So what came back first in the city, really, was rental housing. And it came back because everybody saw those projects and saw that it was a possibility and said, 'Well, maybe it's worthwhile putting some money into this town again.'"
S. Osborn Erickson, chairman of The Emerald Fund, Inc., was, together with his partner, Alastair Mactaggart, the developer of Rincon Green at 333 Harrison. He said that San Francisco badly needed the projects to succeed. The HIT invested $70 million into the $105 million project located in San Francisco's South of Market (SOMA) neighborhood.
"In San Francisco for the period 2010 to 2011, it was impossible to get financing for projects, but the AFL-CIO provided two-thirds of the financing needed for Rincon Green," Erickson said, noting that the project "epitomizes smart growth" due to its proximity to a major transportation hub as well as to major centers of employment in downtown San Francisco. He says it took just six months for all of the units at the Rincon Green at 333 Harrison to be fully leased after it opened in 2013.
"This shows how critically needed this project was," Erickson said. "And it wouldn't have happened without the AFL-CIO HIT. Their participation was essential."
Erickson has worked with the HIT on projects for nearly 20 years. "Through thick and thin they've always extended themselves to make projects work," he said. "We are pleased they are our partners in our ongoing revitalization of the mid-Market neighborhood. With 100% union construction, we know we are getting the highest quality that will benefit our renters and be an asset to the City of San Francisco for decades to come."
The Potrero Launch Apartments in San Francisco's Central Waterfront neighborhood opened to the public in October 2012. The complex is LEED-certified, meaning the housing development was designed to conserve energy. It also has nearly 18,000 square feet of usable open space.
Forty of the 196 rental units at Potrero Launch are reserved for low-income residents who earn less than 30 percent of the area's median income. In addition, the residential project includes a restaurant, specialty grocery store, cafe, underground parking and a child-care center, among other amenities.
More than 570 union jobs were created by the $80.4 million Potrero Launch development. The project "created a tremendous amount of jobs at a time when the market was very depressed," said Joe Olla, vice president of business development and marketing for Nibbi Brothers, general contractor for the apartment complex. "This project was built in the trough of the market. Potrero Launch was certainly a huge cornerstone project."
Just six months before Potrero Launch opened its doors, the Arc Light Co. development in San Francisco's South Beach area, made its debut. The HIT invested $32.4 million into the $47.9 million project, which converted a 19th century electric company warehouse into a 94-unit multifamily development. Two stories of the brick warehouse's facade were redone and overlaid by a new four-story glass and metal structure.
Most recently, HIT's $58 million investment into the $82.8 million multifamily development known as 101 Polk has contributed further to the revitalization of the now-booming Central Market neighborhood. Its construction will introduce 162 new units, 19 of which are affordable housing, to the market and generate approximately 450 union jobs. 101 Polk was also designed with energy efficiency in mind, meeting California's GreenPoint program requirements.
"HIT's investments in San Francisco have been huge in influencing the future of the city's housing infrastructure," said Emily Johnstone, the HIT's Managing Director of Business Development. "In a City where gentrification is a key issue, it's a point of pride to be funding developments where residents across the income spectrum can find adequate housing."
Since inception in 1984, the HIT has invested $281 million in San Francisco representing over $505 million in total development. This capital has generated approximately 6,860 total jobs including 3,450 union construction jobs and 3,410 jobs in other industry sectors as well as created 1,660 housing units. These projects have generated nearly $1.1 billion in economic activity, including approximately $440 million of personal income.
"Despite the Great Recession, we've always been optimists about San Francisco and California," said Ted Chandler, the HIT's Chief Operating Officer. "We have worked with union leaders, developers and government agencies to maximize the investment of union pension dollars so that jobs can be created and we can expand the supply of affordable housing."
About the HIT
AFL-CIO Housing Investment Trust (HIT) is a fixed-income investment company registered with the Securities and Exchange Commission. It manages $5 billion in assets for more than 370 investors, which include union and public employee pension plans. The HIT invests primarily in government and agency insured and guaranteed multifamily mortgage-backed securities. The HIT is one of the earliest and most successful practitioners of socially responsible, economically targeted investing, with a track record of over 30 years that demonstrates the added value derived from union-friendly investments. The investment objective of the HIT is to provide competitive returns for its investors and to promote the collateral objectives of constructing affordable housing and generating employment for union members in the construction trades and related industries. Since its inception, the HIT has invested $8.5 billion (in 2014 dollars) to finance more than 99,000 units of housing nationwide, generating more than 74,000 union construction jobs. More information is available on the HIT's website, www.aflcio-hit.com.
Contact:
Michael K. Frisby
202-625-4528
SOURCE AFL-CIO Housing Investment Trust
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