The Community Capital Investment Initiative and The Bay Area Family of Funds

1
The Community Capital Investment Initiative
andThe Bay Area Family of Funds
MetroBusinessNet Miami, Florida February 17-18,
2005 Elizabeth Y.A. Ferguson, Bay Area
Council Victor Hsi, Alliance for Community
Development
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Bay Area Council

• Business civic organization of the 275 largest
  employers in the Bay Area, represented by the CEO
  or highest ranking officer
• Business community encouraged Bay Area Council to
  sponsor the Bay Area Family of Funds because
• Poverty in many neighborhoods is one of the major
  challenges to prosperity
• Sustainable economic development requires
  engagement of the market since funding from
  government and foundations is limited and not
  sustainable
• Smart Growth requires buy-in from current
  residents, which means current residents need to
  share in wealth created
• Investors in the Bay Area Family of Funds are
  diverse
• Banks, insurance companies, foundations, pension
  fund, corporations, and individuals

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Community Capital Investment Initiative

• Engages business, community, environmental, and
  government leaders to collaborate in using market
  forces to reduce poverty and promote smart growth
• Encourages private investments in or near
  priority Bay Area low- and moderate-income (LMI)
  neighborhoods 80 or less of county household
  median income

4
Bay Area Family of Funds

• Bay Area Smart Growth Fund invests in mixed-use,
  mixed-income, transit-oriented real estate
  developments
• Bay Area Equity Fund A Double Bottom Line Fund
  invests in businesses that create jobs and wealth
  in or near priority neighborhoods
• California Environmental Redevelopment Fund
  (CERF), statewide environmental clean-up fund
  with 25 going to the Bay Area
• Each fund invests in projects or companies
  located in or near LMI neighborhoods
• 175 Million raised, with 103.8 Million invested

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Double Bottom Line

• First bottom line risk adjusted market rate of
  financial return
• Second bottom line substantial economic, social,
  and environmental returns, including
• Location in or near a priority neighborhood
• Job creation particularly livable wage jobs for
  local LMI residents
• Community benefits such as affordable housing,
  joint ventures with community developers, local
  and minority contracting, and supporting
  community groups
• Economic development stimulation of additional
  economic activity in the neighborhood
• Wealth creation health care, employee ownership,
  financial education
• Environmental performance energy conservation,
  waste reduction, recycling, pollution prevention,
  and green building
• Community participation such as internships,
  volunteer programs in schools and neighborhoods

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Priority Neighborhoods

• Priority areas are neighborhoods with household
  median income at 80 or less of county household
  median income

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Partner Organizations

• Community Capital Investment Initiative
• Organized as a Business Council, a Community
  Council, and a Government Advisory Council
• Co-Chaired by Elizabeth Y. A. Ferguson, Executive
  Vice President of the Bay Area Council and Juliet
  Ellis, Executive Director, Urban Habitat Program
• Bay Area Council the business-sponsored, CEO-led
  public policy advocacy organization for the Bay
  Area
• Alliance for Community Development non-profit
  corporation made up of leaders from community
  economic development organizations and business
  associations

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Structure
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Bay Area Smart Growth Fund

• Sponsored by the Bay Area Council
• Managed by Pacific Coast Capital Partners
• Raised 65.8 million
• Investing in community shopping centers,
  affordable homeownership opportunities,
  commercial and office developments in
  redevelopment areas

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Bay Area Smart Growth Fund Investments

• Oakland Airport Business Park constructing an
  office park, with carpenters union as lead
  tenant, 6.7 million
• Ascend rehabbing affordable infill housing, 2.7
  million
• Casa del Prado Townhomes converted 81 units of
  rental housing to affordable condos, sold at 85
  AMI, 4.1 million
• Cinema Place theater/commercial development that
  is key to Hayward revitalization, 4.3 million
• Marin City Gateway Retail Center joint venture
  with the community to purchase and revitalize a
  shopping center, 7.9 million
• North Richmond Land building 173 units of
  affordable for sale housing, 2.7 million

• Pacific Cannery Lofts constructing 161 units of
  affordable entry-level homes for sale to 80 of
  AMI, 7.8 million
• Santa Clara Industrial Portfolio undertaking
  commercial reuse of 7 vacant industrial
  buildings, 6 million
• Story King Shopping Center building a community
  shopping center, 5 million
• Vallejo Plaza repositioning shopping center to
  serve Asian neighborhood market, 5.2
  million
• Waterstone Condominiums rehabbing 180 condo
  units to affordable entry level homes,
  premarketing sales at 68-83 of AMI, 5.9 million

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Marin City Gateway Retail Center

• Shopping Center in Marin City, a low income
  neighborhood in Marin County
• Joint venture between Bay Area Smart Growth Fund
  and community non-profit 7.9 million
  investment
• Preserved community ownership that provides
  funding for affordable housing and community
  services
• Created joint ventures between Marin City and
  regional businesses to provide security,
  painting, landscaping, and maintenance
• Awarded real estate deal of the year in its
  category, by S.F. Business Times

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Alliance for Community Development

• Co-Sponsor of the Bay Area Equity Fund, Special
  Limited Partner, and member of the Advisory
  Committee
• Providing
• Deal referrals
• Business development assistance
• Monitoring and evaluation of second bottom line
  returns
• Interfacing with neighborhoods where business are
  located
• Outreach recent networking event featured the
  California Lieutenant Governor and Deputy
  Insurance Commissioner

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Bay Area Equity Fund A Double Bottom Line Fund

• Sponsored by the Bay Area Council and the
  Alliance for Community Development, managed by
  JPMorgan HQ
• 90 of the fund investing in emerging growth
  companies in technology, health care, or
  specialty consumer
• 10 of the fund in strategic equity companies
  that anchor communities
• Raised 75 million
• Target of creating 1,500 new jobs, with at least
  750 jobs for low- and moderate-income residents

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Accomplishing The Second Bottom Line

• Assessment before investment is made to determine
  2nd bottom line potential
• Letter of agreement signed by company to
  develop/implement 2nd bottom line strategy,
  choosing from cafeteria plan of best 2nd bottom
  line practices
• Consultation to formulate enhanced strategy and
  action plan
• On-going joint implementation of the action plan
• Narrative Evaluations and Impact Reports for
  individual companies and portfolio as a whole,
  addressing
• Job creation/LMI job creation
• Wealth creation
• Community benefits
• Environmental performance

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Second Bottom Line Impact Report
Low-income employees are defined as individuals
who had household incomes that were 80 of the
county median income before the individuals were
hired
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Bay Area Equity Fund Investments

• Elephant Pharmacy natural health retailer
  providing both traditional and alternative
  wellness solutions, 2.2 million
• Reshape, Inc Electronic Design Automation
  software provider for integrated circuit
  manufacturers, 1.8 million
• Efficas developer of nutritional bioactives that
  maintain health in humans and animals, 2.3
  million
• Expression Diagnostics (XDx) developer of a
  blood-based molecular diagnostics test to detect
  rejection in transplant patients for the heart
  and other organs, 3 million
• Peninsula Pharmaceuticals commercializing
  antibiotics to treat life-threatening infections,
  1 million
• Five Prime Therapeutics biotechnology
  company-therapeutic proteins and antibodies for
  oncology, immune disorders, diabetes and
  regenerative medicine, 1 million

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California Environmental Redevelopment Fund (CERF)

• Sponsored by Bay Area Council, the Federal
  Reserve Bank of San Francisco and the Los Angeles
  Chamber of Commerce
• Managed by Peter Hollingworth, President and CEO
• Raised 34.4 million
• Provider of Cal ReUSE funds
• Innovative, financing solutions for remediation
  of brownfields throughout the Bay Area and
  California

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CERF Debt Equity Investments

• Curtis Park Sacramento, remediation of
  contaminated rail yard, 5 million
• Bugatto Santa Rosa, remediation for a housing
  development, 0.8 million
• Fairfield Independent Business Fairfield,
  rehabilitation of an independently owned
  smog/autobody shop, 0.5 million
• Pittsburg River Park, LLC Pittsburg, site
  acquisition remediation for new single family
  housing/retail use, 5 million
• Habitat for Humanity-SF San Francisco,
  environmental remediation and new condominium
  construction, 1 million
• South County Housing Gilroy, acquisition
  remediation of contaminated site for LMI housing
  development, 1.9 million
• SunQuest Sun Valley, environmental remediation,
  pre-development and grading, 5 million

• Samir San Bernadino, acquisition cleanup of
  gas station, 0.8 million
• Samir Colton, acquisition cleanup of gas
  station, 0.8 million
• Surfas, Inc Culver City, site/building
  acquisition facility improvements, 1.8 million
• Surfas, Inc (II) Culver City, site/building
  acquisition, site remediation facility
  improvements, 5 million
• Nabil Redlands, site acquisition and new
  equipment purchase, 0.6 million
• St. Clair Norco, refinance/cleanup, housing
  development , 7.3 million
• Stanton Orange County, site acquisition,
  facility rehabilitation/equipment purchase for
  business, 0.6 million

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Conclusion

• The success of CCII and the Bay Area Family of
  Funds demonstrates the regional economic impact
  that business civic organizations can have by
  initiating a double bottom line initiative and
  fund family
• Based on their success in the Bay Area, the Bay
  Area Council and the Alliance for Community
  Development have emerged as national leaders in
  the emerging field of double bottom line investing