MINNEAPOLIS, MN - The AFL-CIO Housing Investment Trust (HIT) announced a $50 million commitment of union pension capital to finance the substantial rehabilitation of the historic Riverside Plaza apartment complex. The investment will modernize the 1,303 housing units at the aging Minneapolis landmark, with work on the $123 million project expected to generate an estimated 635 union construction jobs.
Source: AFL-CIO Housing Investment Trust
Riverside Plaza needs major rehabilitation work on deteriorating mechanical, plumbing and electrical systems as well as substantial exterior and interior work. The six-building complex consists of a cluster of towers ranging from four to 39 floors with over 30,000 square feet of commercial and community space. Ninety percent of the units are designated as affordable, with 669 of those units receiving Section 8 rental assistance. First opened in 1973, the project is located in the Cedar-Riverside neighborhood on the edge of downtown Minneapolis.
"We are very happy that HIT financing can help Minneapolis preserve this significant housing development that has been a major source of affordable housing for city residents for over 35 years," said HIT Chief Investment Officer Stephanie H. Wiggins. She noted that the union jobs created by the project "help put the HIT on track to achieve its goal of generating 10,000 union construction jobs by the spring of this year through the investment of union pension capital." By year-end 2010, the HIT's Construction Jobs Initiative was 90% of the way to its 10,000-job goal.
The HIT worked closely with the project sponsor, Sherman Associates, to complete a creative financing package for the Riverside Plaza project. The HIT purchased a $49.9 million bond from Piper Jaffray & Co. collateralized by Ginnie Mae mortgage-backed securities (MBS) issued by Oak Grove Commercial Mortgage, LLC. The general contractor is Knutson Construction Services.
"Riverside Plaza is an excellent investment for our portfolio, and we are pleased to be participating in this project," said HIT Executive Vice President and Portfolio Manager Chang Suh.
All on-site construction work at the $123 million project will be performed under collective bargaining agreements with local building and construction trades unions.
Scott Gale, business manager of the Minneapolis Building and Construction Trades Council, thanked the HIT for its part in helping generate family-supporting jobs for local union members. "Riverside Plaza is going to be a major project that will help keep our members working in this difficult economy," he said. "I'm proud that union pension dollars invested by the HIT are making this possible." Mr. Gale adds that the local building trades have been working closely with the City of Minneapolis, the community, and the general contractor to make sure that all "special hire" requirements for the project will be met.
Designed by the Modernist architect Ralph Rapson, Riverside Plaza was one of the first urban renewal projects to be completed as part of a federal campaign to integrate diverse socioeconomic groups into densely populated, self-sustaining communities. To Minneapolis residents, the development has been highly visible with one of the tallest structures outside the central business district, and national television audiences knew its exterior as the fictional residence of Mary Richards on the Mary Tyler Moore show.
"The HIT has been a long-time partner in Minnesota's efforts to meet its housing and urban development needs," said HIT Investment Officer Chris Shaw. Over the last 45 years, Shaw noted that, "the HIT has committed over $700 million for projects representing almost 8,180 housing units, more than $965 million of development, and approximately 6,150 jobs for members of the local building and construction trades unions."
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 approximately 350 investors, which include union and public employee pension plans. Seventeen of these investors are in Minnesota. 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 $6 billion to finance 97,000 units of housing nationwide, generating approximately 66,000 union jobs.