WASHINGTON, D.C.-The AFL-CIO Housing Investment Trust is looking to create 25,000 construction jobs by 2015, and it's employing some creative financing to get the job done. The organization applies for, and uses, new market tax credits and its making private placements with state housing finance agencies, as well as using direct loans, according to Ted Chandler, COO.
The tax credit strategy was rolled out when HIT started a jobs initiative back in 2009, he says. “In the face of the Great Recession, President Obama asked the labor movement how it could help address the nation's high unemployment rate. We made a commitment to create 10,000 construction jobs by the end of 2011.”
HIT didn't know how it was going to meet that goal, Chandler tells GlobeSt.com. “We had to figure it out. We formed a subsidiary, Building America Community Development Entity Inc., which applies for and uses new market tax credits to provide the equity that's needed for real estate projects.” Building America received $85 million in tax credits during its first two years of operation, Chandler notes, and has invested about $69 million in various projects since 2011. “It provides the equity to close any gaps,” he says.
Now, HIT is using its existing green jobs initiative for the next part of its job creation effort. “Historically, we had invested a great deal in projects that were environmentally sustainable but we'd never looked at financing through the lens of environmental efficiency,” Chandler says. “The AFL-CIO has made a commitment to invest $10 billion in infrastructure and retrofit projects, so we have a particular focus on building those, and we have done new forms of financing to make that happen. What's worked for us is private placements with state housing finance agencies and direct loans for a couple of large co-op projects.”
For example, he notes, “in New York City we issued an $89 million loan for a retrofit of the Amalgamated Warbasse Houses [a housing project on Brooklyn's West 5th Street] for Hurricane Sandy recovery. Our funds will be used to relocate equipment above ground and to future-proof the project.” The organization also recently broke ground on a $131 million mixed-use development in Hoboken, NJ.
The new funding and the job creation work that money is supporting all stem from a concern over the state of employment in the construction industry. “Unemployment in construction remains double the national average,” says Chandler. “The industry still needs stimulus.”
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Rayna Katz
Rayna Katz is a seasoned business journalist whose extensive experience includes coverage of the lodging sector, travel and the culinary space. She was most recently content director for a business-to-business publisher, overseeing four publications. While at Meeting News, a travel trade publication, she received a Best Reporting award for a story on meeting cancellations in New Orleans during Hurricane Katrina.
