Union Pension Board Puts Its Capital to Work to Help Revitalize a Historic San Francisco Neighborhood
Years ago, the leadership and members of Plumbers, Steamfitters & HVAC/R Local 38 posed for themselves a bold question. To produce long-term, stable income for the union’s pension fund, could they redevelop and own the properties surrounding their headquarters in downtown San Francisco? Today the answer is the emerging transformation of a half block of residential and commercial buildings along the city’s famed Market Street.
Now through the work of an all-union construction force, a new community within the neighborhood is coming to life. As planned, it will comprise retail spaces and 579 units of mixed-income housing including 96 units of permanent supportive housing for persons who have experienced homelessness; the renovation of an old hotel property into new studio apartments; a public plaza tying the development together, and a brand-new union hall. Under a 99-year lease agreement with its private developer partner, the union’s pension fund will receive yearly payments, ensuring members financial returns far into the future.
“Local 38’s Market Street project stands as a model for others to follow,” says Chang Suh, CEO of the AFL-CIO Housing Investment Trust (HIT) which is helping to finance the development’s $52.5 million permanent supportive housing project known as the Jazzie Collins Apartments. “Their’s is an example of how local unions anywhere can leverage pension fund capital to create more union jobs, more affordable housing, more reliable revenue, and importantly, a strong and vibrant sense of community.”
It began when the late Joe Mazzola proposed an audacious idea to his pension fund board. As the union’s business manager and financial secretary treasurer in the 1950s, Mazzola envisioned transforming the two-acre parcel surrounding the Plumbers’ union hall. Mazzola began overseeing the union’s purchase of properties. Before he could see the full vision realized, Mazzola died in an automobile accident in 1989.
His son, Larry Mazzola Sr., who succeeded him in office, took up the task to further pursue his father’s dream. Upon Mazzola Sr.’s retirement, the pension board assigned the responsibility of the project to Larry Mazzola Jr., who became chairman of Local 38’s board of trustees in 2008.
Through the years, pension fund board members encountered their fair share of resistance. They ignored the advice of city officials and others who pushed the union to sell the site of the original union hall. Developers urged them to build a new union hall elsewhere. Many told them that the entire vision was simply too grandiose. But they stuck to their guns.
The challenges continued as recently as the current decade. “There were unique hurdles to cross during the COVID period. And yet the real momentum began during the pandemic when everyone else in town put their projects on hold,” Mazzola Jr. says. “Our Market Street project helped provide good jobs for our members and other building trades union members in a uniquely tough economic climate. And they now see the results of their labor serve the needs of the city they love.”
“The trustees never wavered in their commitment to a great vision for their community,” says Suh. “The HIT is eager to work with other local unions around the country who seek to achieve important goals, similar to those of Local 38, through the innovative investment of pension capital,” says Suh.
About the HIT: The HIT is a fixed-income, investment-grade mutual fund with $6.1 billion in net assets. For nearly 40 years, the HIT has been a leader in putting union and public pension capital to work to produce competitive returns and achieve mission-related collateral objectives. Investors should consider HIT’s investment objectives, risks, and expenses carefully before investing. Investors may view the HIT’s current prospectus, which contains more complete information, on its website at www.aflcio-hit.com and may obtain a copy from the HIT by calling the Marketing and Investor Relations Department collect at 202-331-8055. Investors should read the current prospectus carefully before investing. Job and economic impact figures are estimates calculated using IMPLAN, an input-output model, based on HIT and HIT Subsidiary Building America CDE, Inc. project data. The data is current as of June 30, 2023. Economic impact data is in 2022 dollars and all other figures are nominal.