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of the Central Laborers' Pension, Welfare and Annuity Funds.
"We're very much believers in getting, as we call it, the double bang for our buck, where we get a good return for our
pension investment as well as putting out guys to work," said McAnarney.
Terry Nelson, executive secretary-treasurer of the Carpenters' District Council of Greater Saint Louis and Vicinity,
calls it Business 101.
"It's very simple," said Nelson. "Remember what I'm in business to do. I create man hours. And if I've got a project that
is not being successful or can't get the financing or it's not going to get done, unless somebody steps to the plate and
does something, we're ready to step to the plate and do it with the understanding that we're going to make man hours out of
it. What's so hard to figure out there?" he asked.
The Carpenters and Laborers sometimes select and manage their own loans, but also participate in larger pools like the
Multi-Employer Property Trust or the MetLife Commercial Mortgage Plus Fund. One of the oldest and largest is the AFL-CIO
Housing Investment Trust, with more than 400 investors and $3.5 billion in assets. Helen Kanovsky, chief operating officer
of the HIT, describes the trust as an investment vehicle for unions, Taft-Hartley funds and public funds with union members.
"These pension funds could invest directly," said Kanovsky, "but when they invest with us they get a variety of benefits.
First of all, because they're part of a larger fund, they've got a larger distribution of risk. They've got a group of
professionals managing the fund. Their money is totally liquid. They can get whatever funds they need every month, as
opposed to if they were to invest in a particular building, their money would be in that building until they decided to sell
it. They don't have to be involved in underwriting the transactions and managing the transactions and following the
construction and responding to monthly draw requests that need to be paid. Instead, they give us the money and we take care
of all of that for them," she added.
"But what they also get when they invest with us is the knowledge that everything that we invest in when we invest in
construction - which is our preferred place to invest - is done with 100 percent union labor," said Kanovsky.
Aside from being able to generate jobs and a return on investment for the members' pension dollars, the unions express
great pride in what they are able to accomplish for the communities in which they work. Nelson, for example, says that the
Carpenters' investment in loft developer John Steffan's projects has helped catalyze development in downtown St. Louis.
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"I knew John Steffan when he didn't have two quarters to rub together," Nelson said. "He was on the verge of bankruptcy
and he had an option to buy the Paul Brown Building. He didn't have any money, so guess what? We went out and borrowed $3.5
million gave him the $3.5 million and he bought the building. And five years later, it became the crown jewel of downtown.
It was an absolute 100 percent success. He just now consummated a deal to redevelop the St. Louis Center," added Nelson.
The HIT concentrates on rental housing - from affordable to moderate income to market-rate housing projects. It has
invested some $220 million in 19 projects in St. Louis, including adaptive reuses like the Lofts at Lafayette Square, Forest
Park Lofts, the Continental Light Building, Soulard Market and the Pet Building which is being redeveloped as the Pointe 400
Building by Balke Brown Associates. The HIT has also focused on some of America's hardest hit areas, according to Kanovsky.
"After 9/11 the trust was the first investor to have a groundbreaking through our New York City community investment
initiative" she said. "For that initiative, we committed $750 million of our capital in multi-family rental, commercial and
economic development and homeownership. It was a five-year program and we exceeded our goals in four years. This past
winter, we announced the second phase to that initiative and an additional $750 million."
"Most recently we have announced a very similar program in the New Orleans/Gulf Coast region, where we committed $700
million that will be used to revitalize the gulf coast," Kanovsky said. "Included in that region is from Biloxi to Houston
and New Orleans to Jackson, Miss. So that entire region will benefit from unions' capital being infused to kind of jumpstart
the necessary rebuilding."
All agree that investing in real estate projects can be risky. In fact, McAnarney says, his union is limited to no more
than 15 percent of their pension funds being invested in real estate at any one time. They also agree that sometimes deals
go bad. They do their best to mitigate the risk, but realize that there will be defaults.
"Have we had a failure or two?" asked Nelson. "Absolutely, but anybody that you talk to that's in the development
business will tell you: If you don't do a bad deal now and then, you're not doing enough deals. If you think every deal is
100 percent by everybody, then you're in la la land. We lost $300,000 or $400,000 on a residential subdivision in Pevely,
Mo. We wouldn't have lost a penny, but the contractor/developer died and he was the guy that made it work. When he died, all
of the air just kind of went out of the balloon and we went down. You know what? We're like a wet dog. We jumped in the
water, got out and shook our tail and went on about our business."
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