Community Capital Investment Initiative
Community Capital Investment Initiative
A high-priority implementation strategy for the Bay Area
Alliance is the Community Capital Investment Initiative to attract private
investment into the poorest neighborhoods in a partnership
between the business leaders and the community. The Community Capital
Investment Initiative is intended to simultaneously tackle
poverty with market-based solutions and promote smart growth. Work on this
Initiative will provide valuable real-time information
and practical lessons on the potential for infill, land recycling, and
neighborhood
revitalization as strategies for sustainable development.
For more information on this initiative follow the links below and if you
have further
questions, contact the Bay Area Alliance at (510)467-7879
or CCIIBAA@BayAreaAlliance.org.
Contents
What
is the Community Capital Investment Initiative?
Why
is CCII Necessary?
What
Are the Objectives for CCII?
What
Strategies Will CCII Follow?
What
is the Role of the Bay Area Family of Funds?
How
is CCII Structured?
What
is the CCII Workplan?
Download
Detailed Documents about CCII
The Community Capital Investment Initiative (CCII) is a
regional effort to attract private investment into the poorest neighborhoods
in the
Bay Area to tackle poverty with market-based solutions
and, simultaneously, to promote smart growth.
CCII mobilizes Bay Area business leadership in partnership
with community, environmental, and government leaders to facilitate large-scale
market-based investments in keystone developments in the
priority Bay Area neighborhoods with concentrated, persistent poverty.
In association with CCII, the Bay Area Family of Funds
provides investment tools to accomplish double bottom line financial and
social
returns in the priority neighborhoods. The Bay Area
Family of Funds includes a real estate fund, a business equity fund, and
a brownfield
clean-up fund.
CCII is being organized by the Bay Area Council, a regional
business-sponsored, CEO-led, public policy organization, and Urban Habitat
Program, a regional social equity and environmental justice
policy organization, in association with the Bay Area Alliance for Sustainable
Development and the Partnership for Regional Livability.
According to recent analyses of Bay Area comparative economic
advantages, the increasing rate of poverty is identified as one of the
top
five challenges to the region’s long-term economic prosperity.
The other challenges are: the lack of affordable housing in proximity to
jobs;
a congested transportation system; poor K-12 educational
performance; and environmental problems. This has led to a growing movement
for sustainable development and “smart growth.”
The Bay Area Partnership study, A Guide to the Bay Area’s
Most Impoverished Neighborhoods -- By County, identified 46
neighborhoods in the Bay Area with concentrated, persistent,
and, in many cases, increasing levels of poverty. These neighborhoods
offer
large markets, a strong potential workforce, and strategic
locations from which to export goods and services to the surrounding regional
and global economy.
Although significant amounts of capital flow in and through
the Bay Area, inadequate amounts are engaged in these priority neighborhoods,
often on a deal by deal basis without a coherent strategy.
Larger scale developments are needed that generate livable wage jobs for
local
residents and community wealth creation, while avoiding
displacement.
In order to decrease pressure to develop at the region’s
edge, any strategy for smart growth needs to address economic conditions
in these
urban core and inner ring suburban areas. One of
the important ways to “grow inward, not outward” is to create better community
businesses, housing, and schools leading to vital downtown
centers and neighborhoods.
CCII is based, in part, on the recognition that a new
smart growth sustainable development paradigm is needed and is emerging.
According to this paradigm successful development involves
all the relevant stakeholders and produces a combination of Economic
prosperity, Environmental quality, and social Equity (the
‘three Es of sustainable development and smart growth).
The specific CCII double bottom line objectives include:
? Offering economically viable rates of return.
? Reducing poverty, producing high quality jobs, and promoting
community wealth creation, while avoiding displacement and mitigating
adverse impacts.
? Encouraging smart growth, decreasing pressure to develop
at the region’s edge.
CCII will integrate: “place-based” strategies promoting
neighborhood-serving development; “sector-based” strategies connecting
communities to the regional economy; and “people-based”
strategies strengthening community development capacity.
These strategies are designed to build partnerships linking
business, community, environmental, and public leadership. Such partnerships
can reduce conflict, increase certainty, and expedite
the desired types of development that are in the interests of all the stakeholders.
CCII will develop comprehensive financial, social equity,
and environmental “due diligence” criteria and a selection, support, and
monitoring
process to establish a set of standards and an evaluation
process to use in identifying deal flow and selecting keystone developments.
Once keystone developments have been selected, CCII will
support the developments by assisting in the preparation of investment
prospectuses, attracting investment funds, and undertaking
monitoring to help resolve problems that may arise.
The three funds in the Bay Area Family of Funds are being
initiated in association with CCII to encourage investments in the 46 priority
neighborhoods. The investment criteria of each fund are
consistent with the objectives of CCII.
The Bay Area Smart Growth Fund will invest equity in real
estate developments, including mixed-use and mixed-income projects and
commercial, housing, and industrial uses, that can be
made commercially viable, but are not yet sufficiently attractive to private
developers.
The Smart Growth Fund, to be capitalized with $75 million
to $100 million in equity, projects returns in the mid-teens.
The Smart Growth Fund is being sponsored by the Bay Area
Council, who is also a special limited partner for the fund to assist the
professional investment manager, who will make all investment
decisions for the fund. The Bay Area Council also serves as the overall
coordinator for the Family of Funds.
The Bay Area Community Equity Fund will invest equity in
profitable growing businesses capable of generating substantial job and
wealth
creation in the 46 target neighborhoods. The Community
Equity Fund, to be capitalized with $75 million to $100 million in equity
investments, projects blended returns in the high teens
to low twenties (high single digit returns for its patient equity window,
25% to 35%
returns for its start-up window, and high teens returns
for its mezzanine capital window.)
The Community Equity Fund is being sponsored by the Alliance
for Community Development, which includes representatives of community
based development and finance organizations throughout
the Bay Area. The Alliance for Community Development will serve as
a
community co-manager for the fund to assist the professional
investment manager, who will make all investment decisions for the fund.
The California Environmental Redevelopment Fund (CERF)
is being established to invest in the clean-up of brownfields throughout
the
entire State of California. Investors will invest $50
million to $75 million in debt and equity in the fund, which will in turn
be invested,
primarily in the form of debt, in environmental clean-up
activities. CERF projects high single digit returns. Twenty
five percent of the
CERF funds will be targeted to the Bay Area.
The three funds in the Family of Funds reinforce each other
to produce economically viable rates of return while reducing risk for
each
individual fund. CERF will clean-up land for the
Smart Growth Fund. The Smart Growth Fund will invest in the creation of
space for
growing firms financed by the Community Equity Fund.
CCII will present keystone developments and business investments that pass
its
due diligence criteria to the three funds, however, each
fund will have its own organizational structure and fund managers who will
make
final investment decisions.
Combined, the three funds expect to raise between $200
million and $275 million, with roughly 1/3 coming from banks, 1/3 from
institutional investors, and 1/3 from major corporations.
This capital will be used to attempt to leverage a minimum of $1 billion
in additional
investments for the targeted neighborhoods.
CCII is being structured as a Business Council, a Community
Council, and a Government Advisory Council that form a Community
Investment Roundtable.
Lead agencies are the Bay Area Council for the Business
Council and Urban Habitat Program, National Economic Development and Law
Center, and PolicyLink for the Community Council. The
Housing and Urban Development (HUD) federal agency and the California State
Treasurer’s Office are the co-conveners for the Government
Advisory Council.
The Bay Area Family of Funds will be coordinated through
an Executive Coordinating Committee, housed in the Bay Area Council.
Each
fund will have representation on the Executive Coordinating
Committee, along with representatives from CCII and the primary investors.
The CCII workplan for the first year focuses on:
Organization of the three
Councils, the Roundtable, and the Executive Coordinating Committee.
Adoption of the comprehensive
financial, social equity, and environmental due diligence criteria.
Raising the capital to close
the funds in the Family of Funds and making the first investments.
Approval of 3 to 5 keystone
developments in the priority neighborhoods leading to substantial private,
public, and community
investment.
The stakes are high. Without smart growth in the Bay Area,
farmland and open space will continue to be consumed at the edge of the
region, traffic and air quality will worsen, and the continued
prosperity of the region will be degraded.
Smart growth means that development needs to be focused
in the urban core and inner ring suburbs. However, if this development
is not to
produce displacement of current residents, it must also
address poverty reduction through private, public, community partnership
in
keystone developments that provide livable wage jobs and
community wealth creation opportunities for local residents.
To download detailed documents relating to the CCII, the
Bay Area Family of Funds and the Double Bottom-line document that support
the ability to achieve viable economic returns and social
and environmental benefits for existing low-income residents go to
http://www.xdrive.com and login with the words "BayAreaCouncil"
and use the password "2222". Identify the Folder for CCII and the
Bay Area Family of Funds and choose individual files download.
More information is available on C2IT, including a feasibility study,
a matrix of community investment intermediaries, and a list of potential
keystone developments. Contact Andrew Michael, Bay Area Council: 415-981-6600;
amichael@bayareacouncil.org
Next Section | Return to C2IT Homepage | Bay Area Alliance for Sustainable Development