Supporters of Unite Here Local 274 have been mobilizing political support to pressure public pension funds not to invest in a New York fund they say is backing the developer of a Center City convention hotel staffed by nonunion workers.
The 2,500-member union representing hotel, restaurant, and other workers in Philadelphia, says the hotel employs mostly lower-income workers, in compliance with a federal tax break they used to make the project profitable.
In a five-page summary report to the $50 billion Pennsylvania Public School Employees’ Retirement System and the $5 billion Philadelphia City Board of Pensions, union supporters note that Almanac’s Realty Securities Fund VI has committed $200 million in recent years to developer HRI Properties of New Orleans, the majority owner, along with Dennis Maloomian’s Realen Properties of King of Prussia, of the 154-room Starwood Aloft hotel in a long-vacant former financial-company tower at Broad and Arch Streets.
They urge investors not to put money into Almanac’s Fund VIII, which is currently trying to get pension funds to invest millions more.
The Unite Here report notes the Aloft project has collected government funding commitments, including $15 million in federal New Markets Tax Credit financing, which is supposed to go to projects that help improve low-income communities, but has been threatened with defunding by Republicans in Congress after reports it has been used to subsidize luxury projects.
The hotel was also approved for $2 million in matching grants from Pennsylvania’s Redevelopment Assistance Capital Funding program, City Councilman Mark Squilla noted in a separate letter supporting the unionists.
The unionists say the developers were awarded this money even though they didn’t promise to set aside jobs or training for low-income workers in exchange for receiving government aid targeted to economic development of poor areas. They quoted from a letter U.S. Rep. (and city Democratic leader) Bob Brady (D. Pa.) wrote to U.S. Secretary of The Treasury Steve Mnuchin noting that Brady is “deeply troubled” to see federal tax credits targeted to helping poor people used to build a high-end hotel in one of the city’s richer neighborhoods without any “agreements” to “ensure a hiring pipeline from low-income neighborhoods.”
In a letter to investors acknowledging the union campaign, sent by Amanac managing partner Matthew W. Kaplan and managing director Josh K. Overbay, the Almanac investors credit their partner HRI with having “redeveloped a chronically vacant, environmentally contaminated, hazardous eyesore into a new, job-creating hotel attached to the Pennsylvania Convention Center,” with jobs “created for low-income residents,” as the New Markets program requires.
They acknowledge the more than 100 workers at the hotel aren’t represented by a labor union, but add that the hotel was built by contractors employing union labor. (Squilla notes another 100-plus workers were supposed to get jobs at a hotel restaurant that has not materialized.)
What will the pension funds do? While Philadelphia “unfortunately” agreed when it invested with Almanac’s Fund VI that it will not “exit the fund early,” Philadelphia now “has no plans to approve any additional investment,” city finance director Rob Dubow told Squilla’s office and United in an Oct. 19 email provided by the union.
PSERS will consider its own investment in Almanac’s Fund VIII at a meeting in Harrisburg on Thursday. The system’s spokeswoman didn’t immediately respond to an email seeking comment.
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