AFL-CIO HOUSING INVESTMENT TRUST TO PROVIDE $33 MILLION IN FINANCING FOR ARC LIGHT CO. IN SAN FRANCISCO
South Beach Apartment Project will be Union Built and Financed
San Francisco – The AFL-CIO Housing Investment Trust (HIT) has announced a $33 million commitment of union pension capital to finance the Arc Light Co. project, a development that will create much needed in-town rental apartments. The project will convert an historic commercial building in the South Beach neighborhood into an innovative multifamily development.
The development project will transform the former Arc Light Company Station into a five-story structure with 94 housing units, 20% of which will be reserved for low-income households. It will include an underground parking facility, more than 4,400 square feet of retail space and a children’s day care center. With its many green features, Arc Light is expected to become San Francisco’s first LEED Gold-Certified residential project.
“The HIT’s investment in the Arc Light project will bring much needed housing, while creating family-supporting jobs as San Francisco recovers from its worst recession in generations,” said Stephanie H. Wiggins, who is HIT’s Chief Investment Officer- Multifamily Finance. “It shows that prudent investment of union pension funds is a force for positive change in the lives of union workers, their families, and their communities.”
The project is expected to create an estimated 270 union construction jobs in a city where the construction industry has been especially hard hit by the economic downturn. All on-site construction work at the $48 million development will be performed under collective bargaining agreements with local building and construction trades unions. The jobs created by the Arc Light project move the HIT closer to its goal of creating 10,000 union construction jobs to help combat high unemployment and support economic recovery in communities around the country. The HIT is more than two-thirds of the way to its goal and expects to surpass 10,000 jobs nationwide by the spring of 2011.
“We’re very pleased to be part of San Francisco’s drive to create new housing opportunities in neighborhoods like South Beach,” said Liz Diamond, the HIT Investment Officer who heads its Western Regional office. “This project exemplifies South Beach’s continuing transition from a largely industrial area to a more residential-oriented community.”
The HIT was an early investor in the revitalization of the South Beach neighborhood with its 1997 commitment of $42 million for One Embarcadero South, located a few blocks from the Arc Light Co. site.
The HIT worked closely with CB Richard Ellis (CBRE), the world’s largest real estate services firm, to put together a creative financing package for the Arc Light project. CBRE utilized HUD’s Section 221(d)(4) mortgage insurance to help fund the construction and permanent loans. The loan provided the credit enhancement for a tax-exempt bond that allowed the project to be eligible for low-income housing tax credits. The HIT purchased tax-exempt bonds collateralized by Ginnie Mae mortgage-backed securities (MBS) issued by CBRE. Merchant Capital served as the bond underwriter.
Arc Light Co. is being developed by Martin Building Company of San Francisco, a multi-disciplinary design and development firm with special expertise in historic preservation and neighborhood-oriented urban infill development. Architectural design services were provided by HKS, Inc., and the general contractor is James E. Roberts-Obayashi.
The Arc Light building was originally constructed in 1888 and has been used for various industrial and commercial purposes.
About the HIT
The AFL-CIO Housing Investment Trust is a fixed-income investment company registered with the Securities and Exchange Commission. It manages nearly $3.9 billion in assets for 350 investors, which include union and public employee pension plans. Forty-four of these investors are in California. The HIT invests primarily in government and agency insured and guaranteed multifamily and single family mortgage-backed securities. The HIT is one of the earliest and most successful practitioners of socially responsible, economically targeted investing, with a 45-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 $5.8 billion to finance 95,000 units of housing nationwide, generating approximately 64,000 union jobs.