April 4, 2013
By Joe Maniscalco
Queens, New York – After months of relentless pressure from the New York City District Council of Carpenters and its allies, the world’s second largest pension fund has decided to sell its interests in a building “sweatshop” located at 5-11 47th Avenue in Long Island City to its former development partner for almost $22 million.
TIAA-CREF’s decision to divest itself from the 12-story, 181-unit Queens development now under construction without the benefit of unionized workers, could signal a significant win for organized labor as the pension fund rethinks the way it approaches new development projects into the future.
“TIAA-CREF has essentially raised the white flag which signals a major victory over a financial powerhouse for the New York City District Council of Carpenters, Corporate Campaign and working people,” Corporate Campaign, Inc. Director Ray Rogers told LaborPress.
Until now, TIAA-CREF, headed by Obama administration insider Roger Ferguson, was partners with O’Connor Capital Partners and McGowan Builders on the controversial 47th Avenue development. The pension fund’s involvement in the project raised hackles because despite handling the retirement accounts for scores of union men and women throughout the nation, builders in Long Island City were not honoring area standards, wages and benefits.
The New York City District Council of Carpenters and its allies have been relentless in their opposition to TIAA-CREF’s involvement, leafletting and protesting outside the pension fund’s headquarters and affiliated sites for months. In February, demonstrators even confronted Ferguson personally in Atlanta, Georgia, where they were subsequently threatened with arrest.
Sister unions and local elected officials also applied pressure to the pension fund in an effort to spur a change of heart in a situation that was quickly proving to be extremely embarrassing for TIAA-CREF.
The pension fund did not respond to requests for comment, but earlier this week, lawyers for TIAA-CREFreportedly contacted their counterparts at the New York City of District Council of Carpenters, both confirming their client’s decision to pull out of the 47th Avenue project, and seeking an end to continued protests against TIAA-CREF.
But while the carpenters and their supporters are rejoicing in TIAA-CREF’s almost $22 million sale to O’Connor Capital Partners, they’re not convinced that the deal, which also includes well over a half-million dollars in real estate fees, is the end of the story.
According to Rogers, TIAA-CREF’s general counsel assured him that the pension fund would both re-write its business code of conduct to insure that responsible contractors and developers are put on all future jobs, and make sure it now has greater control over the hiring and firing of contractors and subcontractors.
So, before anyone breaks out the confetti, Rogers wants to make sure that TIAA-CREF actually puts those principals into practice.
“Coca-Cola has some of the best codes of conduct anybody can probably read – but they don’t mean anything,” Rogers said.
Despite a dismal labor record honoring area standards, wages and benefits, as well as a sketchy history of employing subcontractors with dubious connections, opponents of the 47th Avenue development are not hopeful that a responsible contractor will ever be a part of the project.
Councilman Jimmy Van Bramer called the recent discussions he had with the head of O'Connor Capital Partners "One of the least pleasent meetings I've had."
With that in mind, the caprenters and their allies are determined to see that similar scenarios are not replayed elsewhere.
“There’s a source of power where you need to focus your energy,” Rogers said. “You’ve got to start looking behind the scenes at all the players that are sitting back there benefitting from all of this.”
The Corporate Campaign, Inc. director calls the banks, insurance companies and other financial institutions that extend invaluable credit to building developers their “food and water supply.”
“If you can understand how to bring pressure to bear on them, you could clean up a lot of these construction sweatshop situations,” Rogers said.