Bay Area 5-Year $ 1 Billion HIT Initiative Tackles Critical Bay Area Economic Problems

SAN FRANCISCO – (COMMERCIAL THREAD) – AFL-CIO Housing Investment Trust’s $ 1 billion Bay Area investment initiative launched in fall 2020 is bearing fruit. At the time, HIT pledged to make $ 500 million of its capital available over five years to leverage an additional $ 500 million from other sources to create much-needed union construction jobs and new affordable housing. and labor in the Bay Area. HIT’s investments have already produced 588 new union construction jobs and 289 rental apartments, of which 144 are affordable or workforce housing.

Through this initiative, HIT, a premium fixed income mutual fund with $ 7 billion in net assets, has been able to provide the capital needed to finance multi-family housing and union construction work in the bay area.

“This was especially important when an economic downturn hit the Bay Area following the onset of the COVID-19 pandemic,” said senior managing director of strategic initiatives at HIT Ted Chandler. “Some banks have pulled out of affordable housing finance and HIT has acted as a first responder by injecting capital to create jobs and housing. HIT has continuously advanced the social impact of ESG (environment, social and corporate governance) investments. ”

“This ‘S’ in ESG investing has meaning for workers that is often overlooked,” Chandler added. construction, education, health care, catering and other areas are essential to the economy of the Bay Area. Supporting them with investments like those of HIT is essential. ”

HIT-funded Bay Area affordable housing projects create jobs, needed housing for unions

The first project under HIT’s $ 1 billion initiative was launched in late 2020 with $ 19.1 million to help finance the new construction of 96 permanent support homes for very low-income residents homeless in the South of Market district of San Francisco. The development, 53 Colton, is part of a larger two-acre mixed-use redevelopment of the Local 38 Plumbers & Pipefitters union hall at 1629 Market Street. These apartments, built by Strada Investment Group and managed by nonprofit affordable housing development company HomeRise, are particularly noteworthy as San Francisco is sorely lacking in units to house residents most at risk of homelessness.

In early 2021, HIT funded the construction of a second project, Ventana Residences in the District of Excelsior, a 193-unit multi-family community, with 48 affordable homes for moderate-income San Franciscans, including members of the union which make up the bulk of the city. labor. TDA Investment Group also helped finance the construction of the development, which is a joint venture between Presidio Bay Ventures and American Realty Advisors.

While the AFL-CIO Housing Investment Trust and its development partners have had a positive impact on what has been a mixed economic recovery in the Bay Area, the region continues to face a shortage of construction workers and a crisis. affordable housing.

These two issues are interrelated: The shortage of construction workers in California has been attributed to low wages, unstable work opportunities, and lack of benefits faced by non-union workers. At the same time, the shortage of construction workers has contributed to the estimated deficit of more than 200,000 housing units in San Francisco, according to a recent study by the National Low Income Housing Coalition.

The union construction industry is leading the way for the middle class by promoting pay equity, great benefits and worker safety. In addition, unionized workers benefit from a rigorous and extensive apprenticeship program that equates to a higher education system and generates jobs with wages equivalent to those enjoyed by workers with a bachelor’s degree. The workers it trains contribute much more to the economies of their communities, ranging from the consumption of goods and services to the payment of higher income taxes.

In fact, unorganized and unionized construction jobs have a hidden cost, a recent study from the University of California at Berkeley noted. He revealed that nearly half of the families of California construction workers – the vast majority of whom are likely non-union workers – are enrolled in a state safety net program, the annual cost of which to the state is greater than $ 3 billion. By comparison, a third of all California workers are enrolled in state safety net programs.

Last spring, California Governor Gavin Newsom’s Future of Work Commission reported that the real wages of high-income workers have risen over the past 40 years, in stark contrast to the overall median wages of low-income workers, which are remained unchanged at slightly lower. This spurred Governor Newsom’s goal of increasing union representation of workers in order to reduce this disparity. According to the commission, while a university degree reduces the chances of having a low-paying job by 33%, union membership further reduces these chances to 39%.

HIT projects generate significant ESG impacts

Notable in the current period of increasing institutional interest in ESG investments, HIT’s current and past projects in the Bay Area demonstrate its long-term commitment to ESG principles. “Our mission to invest in communities by funding construction projects that create housing and union jobs has always been at the heart of HIT’s work. Today, we are recognized as advancing the ‘S’ in ESG, ”noted Chandler.

The HIT was established in 1984 to obtain competitive returns on pension fund investments and also to create unionized jobs in the building and construction trades. The HIT requires the use of 100% union labor in its construction-related investments, and its investments increase the national supply of affordable housing and labor. Its portfolio focuses on high credit quality multi-family securities that provide a means of diversifying fixed income investments from treasury bills and corporate bonds.

Prior to launching its Bay Area initiative in 2020, HIT had already invested more than $ 396 million in 19 projects across the Bay Area, creating 4,500 union construction jobs and more than 3,200 housing units. But given the current housing crisis in San Francisco, it’s clear that more is needed. HIT’s two new projects in San Francisco, 53 Colton and the Ventana Residences, represent an investment of $ 71.1 million and are actively seeking additional construction-related investment in the Bay Area.

“To increase the social impact of our Bay Area initiative, we hope to also fund affordable housing options specifically for unionized workers. This way, essential workers can live and work close to their place of work instead of traveling miles around the Bay Area, ”Chandler added.

In addition to its Bay Area developments, HIT now has 36 projects under construction across the country including Hawaii, Illinois, Massachusetts, Michigan, Minnesota, New York, Ohio, Pennsylvania and in Wisconsin.

About HIT: HIT is a premium fixed income mutual fund with $ 7 billion in net assets. For more than 35 years, HIT has been a leader in using the capital of unions and public pension plans to generate competitive returns and achieve collateral mission goals. Investors should carefully consider the investment objectives, risks and expenses of HIT before investing. Investors can view HIT’s current prospectus, which contains more complete information, on its website at www.aflcio-hit.com and can obtain a copy from HIT by calling collect the Marketing Department and Investor Relations at 202-331-8055. Investors should read the current prospectus carefully before investing. The employment and economic impact figures are estimates calculated using IMPAN, an input-output model, based on data from the HIT Project and HIT Subsidiary Building America CDE, Inc. are current as of November 30, 2021. Economic impact data is in 2020 dollars and all other figures are nominal.


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