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Chicago Spire Still May Soar

Tuesday, December 22nd, 2009

The Chicago Spire may restart construction, thanks to a group of union pension funds that want to put their members back to work and are in discussions to lend Irish developer Shelbourne Development Group $170 million to complete what would become the nation’s tallest building.

The Spire’s construction came to a halt when the global financial crisis set off battles between bankers, architect Santiago Calatrava and the developer.  The pension funds would pay off an approximately $64 million loan made by Anglo Irish Bank and settle liens against several firms, including one associated with architect Santiago Calatrava, who says Shelbourne owes him $11 million.

According to Tom Villanova, president of the Chicago and Cook County Building and Construction Trades Council, the loans will be made by an AFL-CIO pension fund and Union Life Insurance Company, among others.  “This would be 7.5 million man-hours for my members and I have locals that have 30 percent unemployment,” Villanova said.  That adds up to four years of construction for two dozen unions with approximately 100,000 members.

Villanova did not address the impact of adding 1,200 new condominiums in a city that is currently experiencing a glut of unsold units.  According to the Spire’s developer, 30 percent of the units are already sold.  Because the Spire is years from completion, the market could improve significantly during that time.  Additionally, the arrangement now under consideration would make the trusts the Spire’s first mortgage holder.  If the project ultimately failed, the trusts would be “first in line” to take possession of the building.

At completion, the Spire will be 2,000 feet tall and have 150 stories.

AFL-CIO May Ride to Chicago Spire’s Rescue

Friday, May 1st, 2009

A rather unexpected source may rescue the stalled Chicago Spire  condominium project – and pump significant money into Chicago’s battered economy by creating thousands of construction jobs.  Representatives from the AFL-CIO Housing Investment Trusts are in early discussions with developer Shelbourne Development Group to revive construction of the twisting Santiago Calatrava-designed condominium tower, located on a high-profile 400 North Lake Shore Drive site.chicago-spire-1

According to Tom Villanova, president of the Chicago and Cook County Building Trades Council – which represents 24 trades locally – talks with Irish developer Garrett Kelleher started in January and are still in the very early stages.  “The main thing is jobs,” according to Villanova.  “We can use our own funds to benefit members.  The Spire is going to be five years of construction, which is just phenomenal for us.  It’s thousands of jobs.”  If the deep-pocketed investment fund does invest in the Chicago Spire’s construction, the project would be a 100 percent union job.

The AFL-CIO has three investment trusts, including the Building Investment Trust.  This pooled real estate fund has more than $2.5 billion in assets as of the 4th quarter of 2008.  It was created in 1988 to provide risk-adjusted returns for participants, as well as a way to create commercial real estate construction jobs.  To date, the fund has invested more than $1 billion in Chicago projects.

It’s a fascinating twist in the populism which is currently shaping our economy.  As the country has lost 4.5 million jobs since December of 2007 and seen billions of dollars of abandoned projects, the idea of addressing the two in one bold stroke is fresh and original.  With TALF addressing the securities side of the business, and the Department of Housing and Urban Development, Fannie Mae and Freddie Mac only funding a narrow group of product types, the idea of tapping the pension funds to capitalize major projects that generate employment for the AFL-CIO’s members is definitely worth exploring.