Organized Labor

Amalgamated Bank Using Union Funds to Create Union Jobs on $120 Million Condo Project

By Paul Burton
Contributing Writer

Developers of the One Hawthorne Street project held a groundbreaking meeting on April 2 for the new condominium project.

One Hawthorne will be a reinforced concrete, 24-story luxury condominium tower with 165 condominium units, 3,000 square feet of retail space on the ground floor and 124 below grade parking spaces on four levels. The four-story office building on the site was demolished to make way for the new development.

The project is being developed by One Hawthorne, LLC, and MacFarlane Partners with Jackson Pacific Ventures. Webcor Builders is the general contractor. Funding for the development comes from construction loans from union-owned Amalgamated Bank and Bank of America. The total construction loan will be for up to $120 million, with Amalgamated Bank's ULTRA Construction Loan Fund as the lead lender financing $60 million, and Bank of America as participating lender financing the remaining $60 million, according to Amalgamated Bank's Senior Vice President Matt Erieg, who was on hand for the groundbreaking.

Erieg said that Amalgamated Bank's Construction Loan Fund provides construction loans for 100 percent union labor projects, as One Hawthorne Place will be. "This is a good partnership of business and labor," he said. "It is creating employment for union members and work for union contractors and provides a good return for our union pension fund investors."

Jackson Pacific Ventures Ezra Mersey said that One Hawthorne Place would be the sixth project his firm has developed in partnership with Webcor, and that, "They've all been built right and done on schedule." Mersey thanked Amalgamated Bank as well as the unions involved in funding and building the project. "We've always been a friend of labor," he said. "You play a critical role in the success of the project."

"The Trades value any project like this, but especially in a down economy," said Mike Theriault, head of the SFBCTC who was in negotiations with the San Francisco Unified School District over a Project Labor Agreement and unable to attend the groundbreaking. "We thank Mr. Mersey and Amalgamated Bank for their foresight and perseverance."

Carpenters Local 22 Field Rep Jim Salinas said he was proud that he could tell his members that their pension funds were being invested in a project that would be built with union labor, benefiting union members in a number of ways.

"This is a project we've worked very hard on with Ezra Mersey, who we've worked with in the past when he was with Tishman Speyer," Salinas said. "It's good that these developers are learning that the unions can be their best partners. We provide the best qualified labor, and we like to see our pension funds used to bring back benefits for our members by creating jobs, by getting a good return on our investment and by bringing something back to the community with the development of more housing."

Shane Harris, Webcor's Project Manager for One Hawthorne Place said that the project is expected to create approximately 352,000 hours of union labor. Union trades represented will include Carpenters, Laborers, Cement Masons, Operating Engineers, Glaziers, Plumbers and Pipe Fitters, Sprinkler Fitters, Teamsters, Electricians, Sheet Metal Workers, Painters and Tapers, Plasterers, Roofers and Waterproofers, Elevator Constructors, Ironworkers, Piledrivers, Tilesetters, Bricklayers, and Carpet Layers.

Webcor's Senior Superintendent Eric Thatcher said there would be between 20 and 30 carpenters and laborers on the job once Webcor Concrete began work. Terry Dunnigan of Ironworkers Local 377 said he anticipated that between 15 and 20 ironworkers would be employed for rebar work with several more for stairway and handrail installation later in the job.

For the past 10 years, the ULTRA Construction Loan Fund has been providing competitive returns to its pension fund investors while providing tens of millions of hours of employment for union members and union contractors, said Erieg. The ULTRA Fund has over $1 billion in assets with 54 investors in a portfolio of constructions loans diversified by both geographic location and property type.

Local investors in the Construction Loan Fund for One Hawthorne Place are International Union of Operating Engineers Local 3 Pension Trust Fund, Carpenters Pension Trust Fund of Northern California, Carpenters Annuity Trust Fund of Northern California, Pacific Coast IBEW Pension Fund, Inland Boatman's Union Pension Fund, and San Mateo Hotel and Restaurant Employees Pension Fund. National investors are the National Automatic Sprinkler Industry Pension Fund, SEIU International Union Pension Fund, UNITE Staff Pension Fund, ILGWU National Retirement Fund, AFL-CIO Staff Pension Fund, Bakery & Confectionery Pension Fund, UNITE Retirement Fund, Carpenters Labor-Management Pension Fund, Bricklayers National Pension Fund, and Painters Industry Pension Fund.

Amalgamated Bank's Matt Erieg said that the construction loan funds are reinvested in new projects, creating new jobs for union construction workers. He said that for every $30 million invested 231,000 hours of union employment are created.

Amalgamated Bank is a 100 percent union-owned commercial bank established in 1923 by the Amalgamated Clothing Workers of America. In 1995 the Amalgamated Clothing & Textile Workers and the International Ladies Garment Workers Union merged to form the Union of Needletrades, Industrial and Textile Employees (UNITE!). UNITE! merged with the Hotel Employees and Restaurant Employees International Union (HERE) in 2004; the Bank is owned by UNITE HERE.

Amalgamated Bank's construction loan strategy began in November 1998. To date, four projects are complete and paid off, with another eight active projects being developed. The fund has assets of $132 million. MacFarlane Partners is a leading real estate investment management firm founded in 1987 with $20 billion in assets under management.

Condominium sales at One Hawthorne are expected to start in late 2009 with anticipated completion in spring 2010. The project, on the corner of Howard Street; west of Second Street, will also feature amenities including a landscaped common roof terrace with views, 24-hour valet parking, business center, 24-hour concierge, and climate controlled wine storage. Unit sizes will average 1,021 square feet and will include stainless steel appliances, garbage disposals, dishwashers, hardwood flooring, stone counter tops, washers/dryers in units and private patios in many units. Tower units will have unobstructed views of the San Francisco Bay and the San Francisco downtown skyline, according to the developers.