HCS is officially a PRI Network Supporter 
HCS is officially a PRI Network Supporter
Interview with Steve Coyle
As the grandfather of pension-capitalized responsible funds in the U.S., the AFL-CIO Housing Investment Trust (HIT) manages $4.2 billion in pension and institutional assets. HIT has created 69,000 jobs, building 101,000 affordable, workforce and market rate housing units. These investments have earned $6.3 billion in net assets.
I interviewed Steve Coyle, the CEO of HIT since 1992, who believes strongly that “American workers need to take control of their pension funds to invest wisely in rebuilding communities.”
Q: In 2009, the HIT pledged to the new Obama Administration (and to America) that it would create 10,000 new construction jobs by 2011. You’ve surpassed that goal and are now moving toward 15,000 jobs. How did this effort come about? And how HIT achieved this despite the Great Recession?
A: The HIT Jobs Initiative is the most important thing that HIT has done in decades. Let’s go back to the fall of 2008. Obama is elected President. The banks are failing and Fannie and Freddie are collapsing. Between January of that year and today, nearly 2 million construction workers lost their jobs. And these families are suffering 30-40% unemployment rates.
For the most part, HIT had preserved its capital, which had been around $3.5 billion in assets. HIT did not get suckered in by the subprime nonsense and the other dangerous short-term gain (long-term loss) schemes of the modern-day Barbary pirates. These pirates took the economy into the drink, by the way, and then jumped into different ships when things got difficult. They were not held accountable for their damages.
Our team observed the following trends:
In 2009, Rich Trumka and Mark Ayers (the President,AFL-CIO Building and Construction Trades Department) set up meetings at the White House, and we learned quickly that the Administration would be beefing up FHA and other loan guarantee vehicles. To help the economy, the HIT volunteered to launch its Construction Jobs Initiative, in conjunction with the job creation priorities of the AFL-CIO and BCTD, to promote full economic recovery. The Trust vowed to create 10,000 jobs by mid-2011. So, we set out to build as many multi-family housing and other workforce housing projects as possible. Already, the Trust’s investments have generated over 11,188 jobs (summer 2011), so the HIT is raising its goal to a new target of 15,000 jobs by the end of 2012.
We also made some simple suggestions to the Administration to standardize all federally-subsidized housing incentives—for instance, streamline and synch the decision timelines for low-income tax credits, historic credits, new markets, etc. Unfortunately, many of these ideas were not adopted.
Nonetheless, we’re proud of our initiative, as it’s helped tens of thousands of people in cities all across the country.
Q: HIT has been participating in the Clinton Global Initiative with the AFL-CIO team. There have already been some important announcements from President Trumka about the Initiative? What is happening on that front?
A: As you know, the AFL-CIO is pushing hard to bring together responsible investments in infrastructure and energy efficiency. The HIT is seeking out job-generating projects where retrofits will promote energy efficiency while stimulating much-needed construction employment. The HIT is working closely with housing authorities, housing finance agencies, mortgage bankers and other partners to identify proposed retrofit projects and structure financing to make them financially feasible. HIT’s green retrofit guidelines require that the project meet at least one of a number of “green” certification standards in the marketplace, such as LEED.
We’ve already invested $230 million of union pension capital for rehab and retrofit work at five affordable housing projects, with a total development investment of $397 million, that is expected to create over 1,500 union construction jobs. These include the Washington Beech project in Boston, Lawndale Terrace Apartments in Chicago, Riverside Plaza Apartments in Minneapolis and the Penn South Cooperative in New York City.
HIT’s current green retrofit investment pipeline includes six projects with combined investments of $264 million and total development investments of almost $300 million, which should provide over 1,500 union construction jobs and 3,620 housing units.
Q: What is the Third Wave of responsible pension investment (RI)?
A: The AFL-CIO’s HIT has broken new ground in the pension investment movement—creating a third wave of investment—by combining construction and permanent jobs strategies with a broad community revitalization campaign entailing job training, youth services, community organizing and economic development, and incorporating green construction and smart city principles. By focusing on providing a market rate of return for HIT’s investors while also providing the collateral benefits of union job creation, the construction of affordable housing and investment in community economic development, the HIT is able to meet its “double bottom line.”
In 2010, HIT created a new subsidiary, Building America CDE, Inc. (BACDE), to help us in this regard. BACDE’s mission of financing projects in disadvantaged communities fits closely with long-held labor investment goals, and brings us closer to the vision of the ‘auxiliary housing corporation’ first voiced nearly 50 years ago by the AFL-CIO’s founding president, George Meany. The projects financed through BACDE should help transform neglected communities by meeting their urgent needs for housing, business development, and good union jobs.
The CDE was recently awarded a $35 million allocation under the federal New Markets Tax Credit program. BACDE is using the tax credits to attract capital for high-impact projects in under-served communities, creating needed housing, jobs and economic development. The federal tax credits to private investors encourage them to bring needed capital to low-income communities. BACDE has identified prospective projects that include mixed-use housing and commercial developments, as well as health care facilities.
Q: You are the inaugural sponsor of Heartland Capital Strategies (HCS). Why did you sponsor Heartland, and what would you tell other responsible fund managers, labor leaders and capital stewards about Heartland?
A: Our business is development. Our team is raising capital, doing deals, focusing on projects. We don’t have enough time to tell stories. As a movement, we need Heartland to get the story out to pension leaders and share our experience. What Heartland has done well over the years is say to capital stewards: here’s how people can do this. Now we can stand back and look at the success of innumerable partnerships, and how our funds have created new innovations.
Heartland can provide some of the force needed to change gears, to encourage pension investments to be redirected to responsible and worker-friendly funds, rather than short-term disasters. And make no mistake, some of the madness on Wall Street was capitalized by pension funds. Workers lost hundreds of billions of dollars in the process, if not trillions. Trustees must take responsibility for their results, and the impacts of their investment decisions. They need to stand up and say, wait a minute, this is our capital!
There’s never been a greater need to get working people to understand what can be accomplished if we amalgamate the power of labor’s assets. We need our capital stewards to understand what can be accomplished by RI, especially by labor-friendly investment funds. I want to see not just HIT but many new funds flourish; new investments in housing and industry but also energy efficiency, infrastructure, renewable energy, etc. There are so many fantastic investment opportunities that can help rebuild our cities and put people to work. We can make it work.
There’s so much to do. We jumped at the opportunity to re-launch Heartland.
About Steve Coyle….
Stephen Coyle has served as Chief Executive Officer of the AFL-CIO Housing Investment Trust (HIT) since 1992. During that period the HIT’s assets have grown from approximately $500 million to $4.2 billion. Steve takes pride in the growth of these programs and the considerable social benefits produced for working people.
Mr. Coyle has been active in housing production and finance, economic development, and urban planning for nearly 40 years. Before coming to the AFL-CIO Investment Program, Mr. Coyle served for seven years as the Director of the Boston Redevelopment Authority, and was Executive Vice President of a national architectural and planning firm based in San Francisco, from 1981 to 1984. He served the federal government in Washington, D.C., as Deputy Undersecretary of the U.S. Department of HHS and, earlier, as Executive Assistant to the Secretary of the Department of HUD. Mr. Coyle earned a Bachelor's Degree from Brandeis University, a Master's degree from the Kennedy School of Government at Harvard University, and a Jurist Doctor degree from Stanford Law School.
