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Friday, December 3, 2021

A union-backed trust is funding housing projects in the Twin Cities

At University and Fairview Avenues in St. Paul, the developers behind Morrow Apartments – a two-building, 243-unit affordable housing complex – were able to get construction from the ground up at the height of the pandemic by borrowing about $80 million from a public office. The pension fund that has favored Minnesota for decades.

The same applies to the Wilder Square Apartments on Milton Street, also in St. Paul, where a single fund financed a third of the $33 million top-to-bottom rehab of a 136-unit affordable housing complex built in the 1970s. Has been doing.

For more than 35 years, a labor-backed mutual fund has pooled union pension dollars, institutional investments, and other assets to fund new real estate construction across the country, with a general focus on housing—about half of it affordable. Accommodation. Headed by former St. Paul Mayor Chris Coleman, the AFL-CIO Housing Investment Trust, or HIT, is fueling new development by financing construction and purchasing mortgage-backed securities in 21 cities, including Boston, Chicago, Detroit, San Francisco, and Boston. Milwaukee, but it holds a special place in its heart for Minnesota, where more than a quarter of its active projects have taken up residence during the pandemic.

small print? One of the requirements for HIT-financed projects is that they employ building trades, which is not always the preferred option for cost-conscious developers. But neither the pandemic nor the recession has prevented union-funded, union-built apartments from taking root in urban corners, where everyday workers work hard to find quality housing they can afford. The loans are paid back into a $7 billion fund, allowing it to grow.

“For me, it’s a double-bottom line,” Coleman said in an interview. “You are investing the Union Pension Fund in creating union jobs and affordable housing across the country.”

10 Minnesota Projects Under Construction

In Boston, where heavy investments in life-sciences companies have attracted high-paying jobs, but in low-income neighborhoods, HIT has focused on adding “workforce housing” for middle-income workers. In Milwaukee, the Trust is supporting Couture, a 44-story skyscraper set to become Wisconsin’s tallest residential building. In West Virginia, the fund has supported teacher housing.

The fund has now supported more than 100 projects in Minnesota, with 10 currently under construction: Morrow Apartments, Wilder Square, Sundance in the Settler’s Ridge townhome community in Woodbury, the Zvago Cooperative at Stillwater Senior Living and the 128-unit Gateway in Minneapolis. Northeast Multifamily Development. Four Minnesota projects received funding from HIT this year: Amber Union Affordable Apartments in Wilder Square, Falcon Heights, the 68-unit Old Cedar Apartments in Bloomington and the 87-unit senior housing cooperative, Anoka’s American Cooperative.

In Morrow, HIT and Bridgewater Bank took over all construction financing – a $50 million commitment – at a lower interest rate. “Tomorrow is an affordable housing project with a 16-month construction schedule, and we did not want to take interest rate risk during that time period, given all the uncertainty from the pandemic,” said Paul Keenan, vice president at Reuters Walton. , a St. Louis Park-based developer that expects residents to start moving into the first building by the end of the year.

In Wilder Square, CommonBond Communities is reconfiguring the building interior, building systems, office space, community space and entrance with a view to safety.

“They provide consistent-value capital, and they do it with simpler, faster terms than some of our other options,” said Deidre Schmidt, CommonBond’s chief executive officer, who joined the trust’s board three years ago. “We were able to increase the number of units receiving rental assistance, and this is really important at a time when so many people are burdened with rents.”

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So why has the Trust taken such a keen interest in Minnesota?

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