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Illinois State Treasury Invests $75 Million with Ullico in Move to Spur Infrastructure

December 1, 2023

Illinois State Treasurer Michael Frerichs recently gathered with labor leaders and Ullico executives at the IBEW Local 134 in Chicago’s South Side to announce the launch of the state’s FIRST Fund, an investment vehicle that intends to spur statewide infrastructure development and job creation while seeking prudent financial returns. As its first investment, the treasury chose to allocate $75 million to the Ullico Infrastructure Fund (UIF).

“If we have better roads, better housing, better utilities, that’s going to benefit our businesses, but the way to build something that lasts is to build it right the first time,” said Frerichs. “By building it right, you work with skilled labor, and that’s also why we’re not having this press conference today in a State of Illinois building but in a union hall, because I want to send the message that when we are investing, we invest for the long-term. We invest in companies that are going to build right, who hire skilled workers.”

State-Level Support for Infrastructure Investment

The FIRST Fund is authorized by the Infrastructure Development Act, passed by the Illinois General Assembly. The legislation is a novel approach to financing infrastructure and real estate development, at the state level. It allows the Illinois State Treasury to allocate up to 5 percent of its portfolio to create and maintain infrastructure and real estate assets within the state. Allocations must go to infrastructure development firms with a significant presence in the state.

“We know that infrastructure is the backbone of our daily lives and communities. It underpins economic activity and catalyzes growth and development,” said Frerichs. “This is an opportunity to provide much needed development capital to revenue-producing projects that will not only benefit Illinois citizens but also produce economic impact and generate a positive investment return.”

To ensure the state’s investments have their intended impact, all funds in which the state invests are required to invest 2x the commitment amount to the fund into Illinois-based projects. For example, if the state allocates $10 million to an investment fund, that fund must invest at least $20 million in Illinois-based projects.

“We will show you can do this by using skilled labor, to ensure the best quality and resilience,” said Frerichs. “This investment program is putting Illinois first by creating jobs across our local communities, building economic and social infrastructure, and supporting skilled labor.”

A Blueprint for State Treasurers Across America

Institutional investors typically evaluate infrastructure investments in terms of their potential financial returns. But infrastructure investments also have tangible social benefits. They are part of a sound financial investment strategy, but they are also an investment in local communities.

“You’re making a commitment to the community where that asset lives, to the people who built it, who maintain it, and who operate that asset,” said Brian Hale, President and COO of Ullico Inc. “Those are middle class jobs that can be created or sustained when you invest responsibly in infrastructure.”

The FIRST Fund is an example of how investment dollars can be used to benefit taxpayers while promoting economic growth and strengthening local communities. By encouraging developers with a presence in the state to invest in the state’s infrastructure, a virtuous cycle is created.

“This new partnership will help union members and employers to protect their families, employees’ businesses and investments for many, many, generations to come,” said Tim Drea, President of Illinois AFL-CIO.

Frerichs made it clear that while the FIRST Fund is dedicated to Illinois, the model is one that other states can, and probably will, adopt. “We’re going to start this off right here and share this story with other treasurers, so they can also go to their legislatures and get this authority and put good people to work building infrastructure in their states,” he said. “Together we will set the blueprint as the first state in the nation to successfully approve, launch, and execute a program like the FIRST Fund.”

State Senator Steve Stadelman’s remarks echoed this sentiment: “This is the type of legislation lawmakers love to pass,” he said. “It takes capital to fund quality projects, so it made all the sense in the world to allow the state treasurer to invest in these types of infrastructure projects.”

Ullico’s Mission Aligns with FIRST Fund Objectives

With its unique approach to infrastructure investment, UIF is in many ways an ideal recipient of FIRST Fund allocations. “We strive to achieve a competitive risk adjusted return for all of our investors, but we also strive to create opportunity for working people, for union members, by investing responsibly with them in mind, and for the long haul,” said Hale.

In fact, Ullico already has a distinguished track record of investments in Illinois. The UIF team’s offices are located in downtown Chicago, in a building constructed with the help of financing from Ullico’s flagship real estate investment vehicle, “J for Jobs.” Moreover, the building is cooled by a UIF-investment, the company CenTrio, which operates the largest carbon-zero district energy cooling system in the U.S., serving over 53 million square feet of space in downtown Chicago. “Ullico creates market leading investment tools, which also create great jobs,” said Robert Reiter, Jr., president of the Chicago Federation of Labor. “We’re proud of what labor’s company, Ullico, does every day with our pension fund money to make sure that our money works for us, that it creates jobs, gets us great returns for our pensions funds, and is able to help the state of Illinois accomplish its mission.”