Your Money Working For You

This is the second in a series on ways benefit issues impact BAC members and their families.

MEPT’s $51 million commitment to the Westin Bellevue project in Bellevue, WA convinced developers to switch to a union general contractor.

Making fund investments work in the interest of fund participants, BAC members, was a focus of a panel discussion at the 2000 Trowel Trades Trust Fund Educational Conference. By investing in union-only real estate investments, funds can receive a competitive rate of return, create work opportunities for fund participants and, as a result, improve the funds’ financial health.

Representatives from the AFL-CIO’s Housing and Building Investment Trusts (HIT/BIT), Union Labor Life’s J for Jobs program, and the Multi-Employer Property Trust (MEPT) updated BAC fund trustees on how each of their investment programs directly benefit BAC members today and in their retirement. Real estate is an appropriate investment for BAC pension funds for several reasons, Jack Marco, President of the Marco Consulting Group and the panel’s moderator, told trustees:

• The 10-15% allocation is a great diversifier for a fund portfolio.
• It is a solid long term investment.
• By using BAC signatory employers on real estate projects, these investment funds create jobs. The working participants in turn have contributions made to their pension funds to enhance their retirement. The real estate funds use profits to invest in future job opportunities.

MEPT + Investments = Union Work

At a cost of more than $57 million, Cambridge Place, in Cambridge, Massachusetts, is representative of a J for Jobs union construction project.

BAC Local and International pension funds’ $74.5 million investment in the Multi-Employer Property Trust (MEPT), has produced a competitive rate of return for the funds and created more than 26.6 million job hours for BAC members and other union construction workers across the U.S. Landon Butler, a member of the MEPT Policy Board, reported that, “we want to continue to carry the union-friendly concept to different sectors of the construction economy where we can create new jobs and establish new beach heads.” One of MEPT’s recent initiatives is the development of hotels, such as the Westin Bellevue in Bellevue, Washington. The hotel will be part of Lincoln Square, a $320 million development totaling 1.2 million square feet of office, retail, hotel, and condominium space. As part of the deal, MEPT committed $51.2 million to the 300-room Westin and required that the project switch to a union general contractor, creating five times the original union work.

J for Jobs—Promoting Union Construction

Union Labor Life’s J for Jobs program offers another way for BAC pension funds to invest in union construction projects. In this case, funds are invested in construction loans. A condition of the loans is that the projects must be 100% union-built. “We are able to require union-only construction with less assets,” said Ken Hartman of the Union Labor Life Insurance Company. “We completed a high rise condominium project in Honolulu just last year. Total cost was $100 million. The total financing package was $85 million. J for Jobs put $5 million in the deal, so for $5 million we controlled a $100 million project. And we’ve put the money we got back to work in other places across the country,” Hartman added.

HIT/BIT—40 Million Hours of Union Work

The rehabilitation of the Washington Building in Los Angeles, CA, financed by the AFL-CIO Building Investment Trust, generated substantial work hours for PCC members.

According to Mike Arnold of the AFL-CIO’s Housing and Building Investment Trusts (HIT/BIT), during the last ten years alone, “we’ve invested over $4 billion in union-built single and multifamily housing, and commercial real estate throughout the country. That’s more than 300 projects, involving 42,000 housing units, 10 million square feet of commercial space, 1,400 hotel rooms, and most important, over 40 million hours of union construction work.” Financing by the Building Investment Trust has led to the rehabilitation of many masonry buildings, such as the 91-year old Washington Building in Los Angeles, California. Older commercial structures such as this tend to be masonry, and rehab investments add up to more hours for BAC members. It put $13 million into restoring the Washington Building’s thirteen stories and 110,000 square feet, and “has provided a lot of work for BAC PCC members,” he added.