Pension dollars fund urgent repairs, reduce operating costs at labor-sponsored cooperative
NEW YORK, March 27, 2013 /PRNewswire-USNewswire/ -- The AFL-CIO Housing Investment Trust (HIT) today announced that it is providing $89 million of pension capital to repair damage from Hurricane Sandy at Amalgamated Warbasse Houses, one of New York's largest union-sponsored housing cooperatives located in Brooklyn's Brighton-Coney Island community.
The loan allows the co-op to replace the electrical distribution system that was destroyed by flooding as well as refinance existing debt at significant cost savings that will help keep the cooperative affordable for its residents.
"This investment provides vital funds for Brooklynites to rebuild after Sandy's wrath," Comptroller John Liu said. "New York's hardworking and retired municipal employees are committed to putting their retirement savings into investments that not only offer positive returns, but also benefit the communities they call home."
The most serious hurricane damage inflicted on Amalgamated Warbasse in October 2012 was the loss of the co-op's electrical transformers due to saltwater flooding. Residents of the co-op's five 24-story buildings experienced devastating hardships in the storm's aftermath, without lights, heat, refrigeration, elevator service, and other necessities until temporary generators could be installed.
Moreover, flooding damaged the co-op's income-producing retail space, and there was considerable wind damage. The HIT bridge loan enables the co-op to move ahead with repairs while waiting for the anticipated insurance proceeds. To guard against future power losses, the loan will pay for relocating the transformers above the flood plain. The HIT-financed work is expected to create about 225 union construction jobs.
"Amalgamated Warbasse contacted us in January seeking our help," said Stephanie Wiggins, HIT Executive Vice President and Chief Investment Officer. "After all that the residents had been through, we felt a deep obligation to come to their aid quickly." By the end of February, the loan was closed. "The HIT had the funds and the flexibility to provide a timely solution," Wiggins said. "Few financial institutions could have acted that fast." The New York City Housing Development Corporation and New York State Division of Housing and Community Renewal worked with the HIT to help expedite the loan.
"We are grateful for the HIT's quick response to our enormous needs resulting from Superstorm Sandy," said Michael Silverman, President of the Co-op Board at Amalgamated Warbasse. "We worked closely with HIT staff to come up with a sound financing option that allows us to refinance our current debt and go forward with the repairs. Our residents are especially excited about replacing the damaged transformers and protecting them from any future flooding."
Amalgamated Warbasse was built in the 1960s as affordable housing for union families, with the backing of the Amalgamated Clothing Workers, a forerunner of today's UNITE HERE. Located on 26 acres, the Mitchell-Lama cooperative consists of 2,585 residential units and 17 ground-floor professional units, as well as a small retail center. The HIT previously assisted Amalgamated Warbasse in 1996 and 2003 with financing to upgrade the property and maintain its affordability.
HIT Chairman John Sweeney, President Emeritus of the AFL-CIO, was a young union organizer in New York in the early 1960s when the clothing workers were building Amalgamated Warbasse. He helped organize the co-op's staff as members of what is now Local 32BJ, part of the Service Employees International Union. "This investment means a lot to all of us who care about the way working people live their lives," Sweeney said. "We are helping sustain a historic union community and keeping alive their dream of decent, affordable housing."
Besides financing repairs, the HIT's short-term loan will replenish capital reserves that were depleted by Sandy expenses. The debt restructuring allows the cooperative to save more than $3 million in debt service over the two-year loan period, making the housing more affordable for its residents.
Chang Suh, HIT Senior Executive Vice President and Chief Portfolio Manager, called the financing "a sound investment for our portfolio, one that meets strict underwriting criteria and each of the HIT's direct loan underwriting standards." He noted that the cooperative has taken steps to secure long-term financing through other funding programs. The HIT has invested more than $790 million of its capital in New York City since 2002, financing nearly 30,000 units of housing, as part of its partnership with the city to address critical housing needs.
About the HIT
The AFL-CIO Housing Investment Trust (HIT) is a fixed-income investment company registered with the Securities and Exchange Commission. It manages $4.6 billion in assets for more than 360 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 nearly 50-year track record 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 over $6.6 billion to finance over 108,000 units of housing nationwide, generating over 71,000 union jobs. More information is available on the HIT's website, www.aflcio-hit.com.
Michael K. Frisby
SOURCE AFL-CIO Housing Investment Trust