INVESTMENTS IN SAN FRANCISCO 20 YEARS OF IMPACT INVESTING

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1 INVESTMENTS IN SAN FRANCISCO 20 YEARS OF IMPACT INVESTING AFL-CIO HOUSING INVESTMENT TRUST FALL 2015

2 HIT IMPACTS IN SAN FRANCISCO ( ) 9 projects $ 280 million HIT investment $ 504 million total development investment 6,860 total jobs 3,450 union construction jobs 1,660 housing units 386 affordable units $ 1.1 billion in total economic impact $ 438 million in wages and benefits for workers including $ 235 million for union construction workers $ 130 million in revenue for local, state, and federal governments Source: Pinnacle Economics, Inc. and HIT. Figures provided by Pinnacle are estimates calculated using an IMPLAN input-output model based on HIT project data and secondary source material dollars.

3 The AFL-CIO Housing Investment Trust ( HIT ) is committed to helping San Francisco address its affordable housing shortage while creating broader economic impacts throughout the city. The HIT has invested in San Francisco during market downcycles when others have stood on the sidelines. The HIT continues to identify projects where its financing spurs an increase in the supply of affordable housing and fosters redevelopment efforts. Over the past 20 years, the HIT has invested over $280 million in San Francisco to leverage more than $500 million of development that financed the construction of 1,660 units, including 386 affordable units. These projects have created an estimated 6,860 jobs in the city and generated nearly $1.1 billion in total economic activity, including $440 million of personal income. AFL-CIO HOUSING INVESTMENT TRUST SAN FRANCISCO INVESTMENT REPORT 1

4 Those projects put people back to work and showed other investors and other developers that there were possibilities in San Francisco. So what came back first in the city, really, was rental housing. And it came back because everybody saw those projects and saw that it was a possibility and said, Well, maybe it s worthwhile putting some money into this town again. Michael Theriault Secretary-Treasurer, San Francisco Building and Construction Trades Council 2 AFL-CIO HOUSING INVESTMENT TRUST SAN FRANCISCO INVESTMENT REPORT

5 HIT INVESTMENTS IN SAN FRANCISCO 20 YEARS OF POSITIVE IMPACT HIT s Commitment to San Francisco The HIT s relationship with San Francisco spans more than two decades, investing $280 million to finance nine construction projects with a total development investment of $504 million. These projects have created 1,660 housing units, of which 386 are affordable to low- and moderate-income families. The projects have created an estimated 3,450 union construction jobs and a total of some 6,860 jobs across industry sectors. San Francisco continued to rank first as the most expensive city in the country by a wide margin in 2015, with median rents on one-bedroom apartments increasing by 13.9 percent in the past year alone. 1 With rents rapidly increasing, almost no city employees can afford to live in the city. For example the average teacher s salary of $69,400 a year could not afford a one-bedroom rental in any of the city s neighborhoods. 2 The HIT has been a partner of the City of San Francisco and its development community in addressing this crisis and working to make the city affordable for its residents once again. San Francisco Projects Financed by the HIT (since 1994) Period Number of Projects Total Units Affordable Units HIT Investment Total Development Investment Union Construction Jobs Other Jobs $117,146,536 $187,873,219 1,255 1,280 Construction Jobs Initiative ( ) $163,133,700 $316,196,130 2,193 2,135 Total 9 1, $280,280,236 $504,069,349 3,448 3,415 1 Businessinsider.com, September San Francisco s deepening rent crisis pushes out vulnerable teachers, by Peter Moskowitz, theguardian.com (9/10/15). AFL-CIO HOUSING INVESTMENT TRUST SAN FRANCISCO INVESTMENT REPORT 3

6 Economic and Fiscal Impacts of HIT s Construction-Related Activity on San Francisco s Economy Significant economic and fiscal impacts on San Francisco s economy have resulted from construction of nine HITfinanced projects between 1994 and September Total economic activity generated across industries is estimated and services from other businesses, which in turn generate additional sales, jobs, and income for others. In addition, increased purchasing power for families directly and indirectly impacted by the construction lead to still more The Housing Investment Trust has provided significant benefits to our City: competitive pension fund returns, jobs and affordable housing. Malia Cohen San Francisco Board of Supervisors, District 10 at $1.1 billion. As a result of these projects, some 3,450 union construction jobs (6.9 million hours) and 3,415 other jobs (6.5 million hours), totaling 6,860 jobs (13.4 million hours), are estimated to have been created across industry sectors. In addition, these projects have served as economic catalysts for additional development in the city. The creation of construction jobs through financing of union-built projects is an important collateral benefit of the HIT s investments. The economic benefits do not end with the on-site employment, but continue to ripple through the local economy as the project moves through permitting and construction. The HIT s investments leverage additional spending for construction, which provides wages and benefits for union construction workers and others such as architects and engineers. Businesses directly impacted by the spending buy goods spending on goods and services, impacting other sectors of the economy. The total economic and fiscal impacts on San Francisco s economy include: 3 $1.1 billion of total economic benefit $438 million of personal income, including wages and benefits, with $235 million of that amount earned by union construction workers. 6,900 total jobs across industries, 13.4 million hours of work 3,450 union construction jobs, 6.9 million hours of work $46 million in state and local tax revenue generated to purchase goods and services to benefit residents. 1,660 new housing units constructed, including 386 affordable to low- and moderate-income families. 3 Source: Pinnacle Economics, Inc. and HIT. Figures provided by Pinnacle are estimates calculated using an IMPLAN input-output model based on HIT project data and secondary source material dollars. 4 AFL-CIO HOUSING INVESTMENT TRUST SAN FRANCISCO INVESTMENT REPORT

7 This project was built in the trough of the market. Potrero Launch was certainly a huge cornerstone project. Joe Olla Vice President of Business Development & Marketing, Nibbi Brothers General Contractor, Potrero Launch AFL-CIO HOUSING INVESTMENT TRUST SAN FRANCISCO INVESTMENT REPORT 5

8 Recent HIT-Financed Projects in San Francisco The HIT is committed to helping San Francisco provide affordable housing and revitalize neighborhoods. Since it launched the Construction Jobs Initiative in 2009 in response to high unemployment in the building trades, the HIT has financed 77 projects in 34 cities, representing over $4 billion in total development investment. Four of those projects have been in San Francisco: 101 Polk; Rincon 333 Harrison; Arc Light; and Potrero Launch. The HIT stepped up and put members of the construction trades back to work when other investors did not. Conclusion The HIT has invested over $280 million in the City of San Francisco financing 1,660 units of housing and generating over $500 million of development over the past 20 years, with well over half of these investments being made since The HIT remains committed to San Francisco and continues to seek additional investment opportunities throughout the City in order to help increase the supply of affordable housing and foster redevelopment while creating union construction jobs. The total economic and fiscal impacts of these four Construction Jobs Initiative projects on San Francisco s economy are listed below. 4 $638 million in total economic benefit $276 million in personal income, including wages and benefits 4,330 total jobs across industries, 8.4 million hours of work 2,190 union construction jobs, 4.4 million hours of work $29 million in state and local tax revenue generated to purchase goods and services for state residents 778 housing units constructed or rehabilitated, including 163 affordable to low-and moderate income families When investing in ourselves through AFL-CIO Housing Investment Trust everyone wins! Hector Cortez Business Manager-Secretary Treasurer, District Council of Plasterers, Cement Masons & Shop hands of Northern California 4 Source: Pinnacle Economics, Inc. and HIT. Figures provided by Pinnacle are estimates calculated using an IMPLAN input-output model based on HIT project data and secondary source material dollars. 6 AFL-CIO HOUSING INVESTMENT TRUST SAN FRANCISCO INVESTMENT REPORT

9 PROJECT PROFILES A number of the projects that the HIT has helped finance around San Francisco in recent years are shown on the following pages. AFL-CIO HOUSING INVESTMENT TRUST SAN FRANCISCO INVESTMENT REPORT 7

10 101 POLK Central Market Overview $83 million mixed-income rental project in Central Market adjacent to the Civic Center. HIT financing of $58.1 million. Area slated by City of San Francisco for significant revitalization. 162 apartments with 19 units reserved for residents earning up to 55% AMI. Project Description This project is construction of a 13-story residential building with 162 mixed-income rental units and an underground parking garage in San Francisco s Central Market neighborhood. Project amenities include a residential lobby, open-air ground floor atrium, roof deck and garden, fitness center, and concierge desk. HIT Role The HIT is providing $58 million in financing for 101 Polk through the purchase of taxable Ginnie Mae construction loan certificates and a permanent loan certifi cate. The HIT 8 AFL-CIO HOUSING INVESTMENT TRUST SAN FRANCISCO INVESTMENT REPORT

11 worked closely with the mortgage lender, Red Mortgage Capital, LLC, and the developer, Emerald Fund, to structure financing for the $82.8 million project. Social Impact The project site is adjacent to the city s Civic Center in the Central Market neighborhood. The area has been slated by the City of San Francisco for significant revitalization to create a vibrant urban environment that takes advantage of the neighborhood s transit-rich location and many cultural amenities. 101 Polk is also helping San Francisco address its shortage of affordable housing, with 19 units reserved for residents earning up to 55% of the area median income. With its sustainable and green features, 101 Polk is designed to meet California s GreenPoint Program requirements and is expected to exceed the California Energy Commission s Title 24 requirements, which promote greater energy efficiency. The project is expected to generate approximately 450 union construction jobs. I have been a union electrician for over 27 years. I have worked in all aspects of our trade and appreciate what the HIT does for the building trades. This job, 101 Polk, has the AFL-CIO Housing Investment Trust funding and that allows us as tradesmen s to enjoy more work and provide for our families. Our dollars working for us. Jeff Hawthorne Vice President and Sprig Foreman, IBEW Local 6 AFL-CIO HOUSING INVESTMENT TRUST SAN FRANCISCO INVESTMENT REPORT 9

12 ARC LIGHT CO. South Beach Overview $48 million conversion of historic commercial building in South Beach to multifamily rental housing. $32.5 million in HIT financing. 94 apartments, including 19 units designated for lower-income individuals. City s first LEED Gold-certified midrise residential project. Project Description The Arc Light Co. project is a $48 million conversion of a historic commercial building in San Francisco s South Beach neighborhood into a multifamily development. The new development offers 94 housing units, 20% of which are reserved for lower income households. Other features include underground parking, over 4,400 square feet of retail space, and a day-care facility. The project s innovative design combined an older brick structure with a new fivestory concrete building on the site of the Arc Light Company Station building, which had previously been used for various industrial and commercial purposes. 10 AFL-CIO HOUSING INVESTMENT TRUST SAN FRANCISCO INVESTMENT REPORT

13 HIT Role The HIT financed the construction through the purchase of a $32.5 million FHA insured, tax-exempt bond issued by the Association of Bay Area Governments. The project qualified for historic tax credits as well as Low Income Housing Tax Credits. 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 site. Social Impact Arc Light Co. is helping San Francisco meet the ongoing demand for in-town rental apartments and much-needed affordable housing. The project reflects South Beach s continuing transition from a largely industrial area to a more residential and retail oriented community. With its many green features, Arc Light became San Francisco s first LEED Gold-Certified midrise residential project. Work on the project generated approximately 440 familysupporting union construction jobs. The HIT provides great jobs and a positive impact on the neighborhoods and economy where they invest. Jeff McEuen Ironworkers, Local 378 AFL-CIO HOUSING INVESTMENT TRUST SAN FRANCISCO INVESTMENT REPORT 11

14 RINCON 333 HARRISON Rincon Hill Overview $105 million mixed-income rental unit complex in Rincon Hill at the eastern end of the South of Market (SOMA) district. $70 million HIT investment. Transit-oriented development near Transbay Transit Center. 326 apartments, including 49 affordable to residents earning no more than 30% AMI. Includes energy efficient features, such as a green roof and solar hot water system. Project Description The project involved construction of a new 326-unit rental complex at 333 Harrison Street in San Francisco s Rincon Hill neighborhood in the South of Market (SOMA) district. The seven-story residential building has 277 market rate units and 49 affordable units set aside for residents earning no more than 30% of the area median income. The unit mix includes studios and one- and two-bedroom apartments. There are also two levels of underground parking. 12 AFL-CIO HOUSING INVESTMENT TRUST SAN FRANCISCO INVESTMENT REPORT

15 HIT Role The HIT provided $70 million in construction and permanent financing for the $105 million project. The HIT purchased taxable Ginnie Mae construction loan certificates and a permanent loan certificate totaling $70 million from Red Mortgage Capital. The loan is insured under FHA Section 221 (d)(4). Social Impact Known as Rincon Green at 333 Harrison, the project is contributing to San Francisco s effort to develop downtown neighborhoods by providing much-needed rental housing for people at a variety of income levels. It is bringing mixedincome housing to the Rincon Hill area at the eastern end of the city s large SOMA district, an area that has been undergoing considerable redevelopment. The project also exemplifies transit-oriented development with its location near San Francisco s Transbay Transit Center, which is being developed as a mass-transit hub for the region s public bus and rail systems. The project s design includes such energy efficient features as a green roof and solar hot water system. All on-site construction work at 333 Harrison was performed under collective bargaining agreements with local building and construction trades unions, generating approximately 730 union construction jobs. In San Francisco for the period 2010 to 2011, it was impossible to get financing for projects, but the AFL-CIO HIT provided two-thirds of the financing needed for Rincon Green. It took just six months for all of the units at the Rincon Green at 333 Harrison to be fully leased after it opened in This shows how critically needed this project was. S. Osborn Erickson Chairman, The Emerald Fund, Inc. AFL-CIO HOUSING INVESTMENT TRUST SAN FRANCISCO INVESTMENT REPORT 13

16 ADDITIONAL PROJECTS POTRERO LAUNCH Central Waterfront $80 million mixed-use complex in Central Waterfront. HIT financing of $2.6 million. 196 apartments with 39 affordable to low-income residents. Includes grocery store, child-care center, retail stores, underground parking, and open space. Generated approximately 575 union construction jobs. BERNAL GATEWAY Mission District $14 million mixed-use development in the Mission District. $5.4 million HIT investment. 55 total units, all affordable to low- and moderate income families. Includes a community resource center providing services for low-income families. Provided an estimated 75 jobs for union construction workers. ALEMANY PLAZA Ocean View Terrace $96 million redevelopment of a retail center in Ocean View. $60.0 million of HIT financing. 400 total units, with 80 affordable units. Includes retail space. Good access to mass transit. Created approximately 650 jobs for members of the building and construction trades. 14 AFL-CIO HOUSING INVESTMENT TRUST SAN FRANCISCO INVESTMENT REPORT

17 HERITAGE HOMES Visitacion Valley $28 million complex in the Visitacion Valley area. $7.4 million HIT investment. 148 apartments including 33 affordable units with project-based Section 8 subsidies. Generated approximately 150 union construction jobs. ONE EMBARCADERO SOUTH South Beach $47 million apartment complex adjacent to retail space. The HIT was an early investor in the revitalization of South Beach with an investment of $42.0 million. 233 apartments, including 46 affordable units. Created an estimated 360 jobs for union construction workers. MARKET HEIGHTS Bernal Heights $2.7 million residential complex in Bernal Heights. HIT provided $3.6 million Section 8 budget authority for 22 units through its Community Investment Demonstration project. 46 total units, all affordable to low- and moderate income families. Created approximately 20 jobs for members of the building and construction trades. AFL-CIO HOUSING INVESTMENT TRUST SAN FRANCISCO INVESTMENT REPORT 15

18 ABOUT THE HIT The AFL-CIO Housing Investment Trust (HIT) is a $5 billion fixed-income mutual fund that specializes in high credit quality multifamily mortgage-backed securities. The HIT has a 30-year history of generating competitive returns for pension funds and labor organizations while also providing the vital collateral benefits of union construction jobs and affordable housing for working people. One hundred percent of on-site construction work financed by the HIT is done with union labor. created over 100,000 housing units, with 65% affordable to low- and moderate- income families. Since its inception in 1984, the HIT 5 has: invested $7 billion ($8.5 billion in current dollars) in over 450 projects in 29 states, created nearly 75,000 union construction jobs, or over 150 million hours of work and over 84,000 other jobs across industries in local communities around the country, generated total economic impact estimated at $24.8 billion, produced personal income, including salaries and benefits, of $9.7 billion, including $4.9 billion for union construction workers, 6 and 5 Together with its wholly owned subsidiary Building America CDE, Inc., which has provided $85 million in New Markets Tax Credits to 11 projects across the U.S. 6 Source: Pinnacle Economics, Inc. and HIT. Figures provided by Pinnacle are estimates calculated using an IMPLAN input-output model based on HIT project data and secondary source material dollars. 101 Polk means a great deal to me. It means that I can provide for my family. And that I have a place to work every day until the project is done. It also means a new beginning for me working for a great General Contractor like Pacific Structures, after working for a Subcontractor for many years. I am glad to be here and I look forward to work every day. Jeremiah Garcia Operating Engineers, Local# AFL-CIO HOUSING INVESTMENT TRUST SAN FRANCISCO INVESTMENT REPORT

19 APPENDICES AFL-CIO HOUSING INVESTMENT TRUST SAN FRANCISCO INVESTMENT REPORT 17

20 Appendix A HIT Projects Financed in San Francisco ( ) Year Project Total Units Afford. Units HIT Investment Total Development Investment Construction Jobs Polk $58,084,400 $82,847, Rincon Harrison $70,001,400 $105,000, Arc Light Apartments $32,462,900 $47,948, Potrero Launch Apartments $2,585,000 $80,400, Bernal Gateway $5,406,536 $14,300, Alemany Plaza (Ocean View Terrace) $60,000,000 $96,332, Heritage Homes $7,400,000 $27,999, One Embarcadero South $42,000,000 $46,666, Market Heights $2,340,000 $2,574, Total 1, $280,280,236 $504,069,349 3, AFL-CIO HOUSING INVESTMENT TRUST SAN FRANCISCO INVESTMENT REPORT

21 Appendix B San Francisco Economic and Fiscal Impacts Table 1: Economic Impacts by Type (2014 dollars) Type of Spending Output Personal income Jobs Hours Worked Direct - Hard Cost $501,251,000 $234,617,000 3,448 6,935,200 Direct - Soft Cost $50,432,000 $29,315, ,800 Indirect $199,499,000 $68,322,000 1,043 1,992,700 Induced $315,268,000 $105,358,000 2,021 3,781,600 Total $1,066,450,000 $437,611,000 6,863 13,358,300 Table 2: Total Economic Impacts, by Major Industry Sector (2014 dollars) Major Industry Sector Output Personal income Jobs Hours Worked Agriculture $3,438,000 $1,014, ,300 Mining $3,768,000 $600, ,700 Construction $505,733,000 $237,053,000 3,483 7,005,100 Manufacturing $109,015,000 $17,517, ,000 TIPU $23,281,000 $7,272, ,800 Trade $55,415,000 $25,530, ,900 Service $355,963,000 $141,816,000 2,316 4,341,900 Government $9,837,000 $6,809, ,600 All Industry Sectors $1,066,450,000 $437,611,000 6,863 13,358,300 Note: TIPU stands for transportation, information and public utilities. AFL-CIO HOUSING INVESTMENT TRUST SAN FRANCISCO INVESTMENT REPORT 19

22 Table 3: Jobs Created by Trade Trade Jobs Hours Worked Asbestos and insulation 45 90,200 Boilermakers 34 69,400 Bricklayers (including tile setters) ,600 Carpenters 624 1,255,300 Cement Masons ,500 Electrical Workers 517 1,040,300 Elevator Constructors 17 34,700 Ironworkers ,100 Laborers ,900 Operating Engineers ,700 Other ,000 Painters ,800 Plumbers ,900 Roofers ,800 Sheet Metal Workers ,000 Teamsters ,000 All Trades 3,448 6,935,200 Table 4: Fiscal Impacts by Type (2014 dollars) Type of Spending State and Local Taxes and Fees Federal Taxes and Fees Total All Taxes and Fees Direct - Hard Cost $14,753,000 $38,661,000 $53,414,000 Direct - Soft Cost $1,582,000 $4,375,000 $5,957,000 Indirect $8,387,000 $29,940,000 $38,327,000 Induced $20,863,000 $11,777,000 $32,640,000 Total $45,584,000 $84,753,000 $130,337,000 Source: Pinnacle Economics, Inc. and HIT. Figures provided by Pinnacle are estimates calculated using an IMPLAN input-output model based on HIT project data and secondary source material dollars. 20 AFL-CIO HOUSING INVESTMENT TRUST SAN FRANCISCO INVESTMENT REPORT

23 COMMUNITY PARTNERS 1410 Partners Amalgamated Transit Union Local 256 Retirees Health & Welfare Trust Bay Area Painters and Tapers Pension Trust Fund CB Richard Ellis Citibank City & County of San Francisco Mayor s Office of Housing and Community Development City of San Francisco Supervisors Contra Costa County Employees Retirement Association District Council of Plasterers, Cement Masons & Shop hands of Northern California Electrical Workers Health & Welfare Trust Fund for Contra Costa County IBEW District 9 IBEW Local #617 Work Preservation Fund IBEW Local 332 Pension Plan ILWU-PMA Pension Plan Marin County Building Trades Martin Building Co. Carpenters Pension Trust Fund for Northern California Northern California District Council of Laborers Pipe Trades District Council #36 Pension Trust Fund Red Capital Group San Francisco Building and Construction Trades Council San Francisco Culinary, Bartenders, and Service Employees Pension Fund San Francisco City and County Employees Retirement System State Building and Construction Trades Council of California Stationary Engineers Local No.39 Pension Fund State Building and Construction Trades Council of California TerraCorp Inc. The Emerald Fund

24 AFL-CIO HOUSING INVESTMENT TRUST Steve Coyle, Chief Executive Officer 2401 Pennsylvania Avenue, NW, Suite 200, Washington, DC Phone (202) Fax (202) Emily Johnstone Managing Director, Business Development Western Regional Office (415) Fall 2015