Minneapolis–The AFL-CIO Housing Investment Trust continues to aid the creation of construction jobs and support affordable housing with a recent $50 million investment in a Minneapolis multifamily rehabilitation project. The HIT’s contribution to the $123 million rejuvenation of Riverside Plaza, a 1,303-residence apartment community that first opened its doors in 1973, will help make 635 union construction jobs a reality.
Formerly known as Cedar Square West, Riverside Plaza is an historic landmark in Minneapolis and, although not commonly known, the property has a place in television history. When TV viewers watched the opening of the Mary Tyler Moore Show every week in the 1970s, most of them did not realize that the exterior of the single working girl’s apartment building was actually that of Riverside Plaza. Noted modernist architect Ralph Rapson designed the six-building complex, which encompasses structures ranging in height from four to 39 stories, as well as 30,000 square feet of commercial and community space. Ninety percent of Riverside Plaza’s residences are reserved as affordable housing units.
The HIT was eager to assist project developer Sherman Associates Inc. facilitate the renaissance of Riverside Plaza. “We’re providing construction funding through the investment in insured financing,” Ted Chandler, chief operating officer of HIT, tells MHN. The pension fund manager acquired a $49.9 million bond from Piper Jaffray & Co. that is collateralized by Ginnie Mae mortgage-backed securities issued by Oak Grove Commercial Mortgage L.L.C.
Contributing to the rehabilitation of Riverside Plaza, a project that will be spearheaded by general contractor Knutson Construction Services, is part of a greater endeavor that is presently on the HIT’s plate. “By early 2009, the construction industry was at a record low; 25 percent of job loss was in the construction industry,” he says. “About a year-and-a-half ago, we realized we needed to get the word out about our financing being available to put people to work and create affordable housing.” With that in mind, the company established the Construction Jobs Initiative with the goal of creating 10,000 union construction jobs by spring 2011. “Riverside is a very important component of achieving that goal; we’re on track.”
More and more developers and property owners are becoming aware of the HIT’s willingness to finance in a climate where debt providers are still less than enthusiastic about making construction loans. “In the last year-and-a-half, we’ve seen a very large increase in demand for our investment, as other lenders have withdrawn from financing, and in affordable housing in particular, there has been much larger demand.” In 2010, the HIT provided $613 million in financing, a record for the 45-year-old company. “We stuck to what we specialize in during the real estate boom of 2004-2007, so the good news is we’re here to invest at a time when we are most needed.”
This month, the HIT also announced it is supplying $42.4 million in construction and permanent financing for the development of The Moderne, a 30-story residential tower in downtown Milwaukee that will encompass 14 condominiums and 203 market-rate apartments. A crew of all-union construction workers will build the property. “We’re doing our part,” Chandler says. “We can’t be the only solution to the problem of unemployment in the construction industry, but we’re doing everything we can.”