Double Bottom Line Funds: Successful Private Equity Funds to Revitalize Low Income Neighborhoods

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Double Bottom Line Funds Successful Private
Equity Funds to Revitalize Low Income
Neighborhoods

• 2005 MetroBusinessNet Annual Convening
• Miami, Florida
• February 17-18,2005
• Belden Hull Daniels, President CEO
• Economic Innovation International, Inc
• www.economic-innovation.com

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What are Double Bottom Line Initiatives and Funds?

• Regional Initiatives oversee Private Equity Funds
  
• 3 billion managed by proven fund managers
• Upper quartile private equity returns attract
  investors
• Double Bottom Line Funds
• Pull growth back into the urban core
• Fully redeploy inner city infrastructure
• Fund mixed-use, mixed-income and job generating
  projects
• Generate large scale job, wealth community
  impacts
• Two Bottom Lines
• The First Bottom Line upper quartile market
  returns for investors
• The Second Bottom LineThe Three Es Sustainable
  E1conomic Development Social E2quity, and Sound
  E3nvironmental impact.

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Double Bottom Line Initiatives Funds have
unique qualities

• Regional Initiatives link low income areas to the
  larger region
• Low income areas only prosper by exporting to the
  larger region
• Regions can only prosper if low income areas
  prosper
• Large Scale makes a substantial impactBillions!
• Private Market Discipline drives the Initiatives
  and Funds
• Double Bottom Line DNA is deeply embedded in the
  Funds
• Successful Fund Managers profit by recognizing
  and addressing market failure
• Initiatives measure and report success with both
  bottom lines

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Double Bottom Line Funds Focus Investments in

• Mixed-use commercial, industrial housing
  projects
• Affordable and mixed-income housing
• Urban infill and brownfield cleanup
• Transit-oriented development
• Job and wealth creating business ventures
• Profitable investment for developers and
  investors
• Measurable job and wealth for community residents

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Double Bottom line Funds Are
Capitalized to Succeed

• Private equity produces higher returns by
• capitalizing on market imperfections
• Proven, incented private management
• High investor returns are appropriate to risk
• 3 billion invested by banks, pension funds,
  insurance companies, foundations, endowments and
  others
• Community sponsors oversee most funds
• Close working relationship with the public sector

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Double Bottom Line Funds Use Private Market
Discipline

• Fund managers chosen in competitive process
• Investors community involved in selection
• Fund managers protected by firewall at risk
• Accountability to community stakeholders
• Sponsors participate in economic returns

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Successful Fund ManagersFind Fix Market
Failure

• Low Income Neighborhoods are Not Disadvantaged
  They are Domestic Emerging Markets!
• They have
• The nations only untapped labor force
• Vast untapped disposable income to buy
• Large tracts of underappreciated land close to
  the Central City
• In place, and often underutilized,
  infrastructure.
• Successful Fund Managers address these market
  failures for the benefit of both investors and
  community stakeholders
• Private Equity Funds only make money when
  they find and fix a
  market failure
• Community Stakeholders reap the jobs, wealth and
  community revitalization from success as a
  domestic emerging market.

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Double Bottom Line Funds Investors Appreciate
Returns

• Banks like CRA credit plus high returns
• Insurance industry likes avoiding CRA plus high
  returns
• Public Pension Funds like DBL plus high returns
• Foundations like high corpus returns, not low PRI
  returns
• Faith based investors slow to come on board
• Corporations high net worth individuals are
  joining

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Double Bottom Line FundsCapitalize Strong Demand
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Not a just a Fund a System! Funds I II III
Genesis LA Real Estate Funds
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Double Bottom Line Funds have exploded across
the US
Puget Sound
Portland
Coastal Maine
Boston
New York
Sacramento
Philadelphia
Bay Area
Baltimore/Washington
St. Louis
Los Angeles
Albuquerque
San Diego
Shreveport
Miami
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Not Just a Fund A Family of Funds!
Genesis LA Not-for-Profit
Real Estate Fund I 85M
Real Estate Fund II 150M
Workforce Housing Fund I 60M
Business Equity Fund I 30M
Shamrock
Shamrock
Fulcrum
Phoenix
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Many ModelsGenesis LA Family of Funds

• Genesis LA Not-for-Profit oversees the Funds
• 300 Million currently under management
• 1.5 Billion in deals generated
• 85 Million Genesis LA Real Estate Fund I
• Managed by Shamrock, the Disney Family Fund
  Manager
• Returns far above promised high teens
• Success in first fund leads to 150M Genesis LA
  Fund II
• 150Million Genesis LA Real Estate Fund II
• Now being built because of success of Fund I
• 60Million Genesis Workforce Housing Fund I
• Managed by Phoenix Realty
• Supports workforce housing in LAs urban core
• 30Million Business Equity Fund I
• Invests in minority entrepreneurs in LMI
  neighborhoods

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Many Models217Million Coastal Enterprises

• 53M Coastal Enterprises, Inc.the NFP parent
  owner
• 25-year-old broad based CDC
• Over 1,000 loans and investments in coastal Maine
  
• Deal flow micro loans, subordinated term loans
  venture capital
• 25M CEI Ventures, Inc.wholly owned for-profit
  mgt firm
• 5.5M Coastal Ventures Fund I
• 20M Coastal Ventures Fund II
• Similar Subsidiary Structures for
• CDFI 10M CEI Community Ventures Fund
• NMTC 129M CEI Capital Management

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Many ModelsMassachusetts Life Initiative

• 1997 Massachusetts CRA Insurance legislation
• Community Advocates/Legis Oversee Funds
• 100 Million Massachusetts Life Initiative
• Totally funded by Mass Life Insurance Industry
• Invests with CDCs and Housing Associations
• 100M already invested starting 2nd cycle
• Based on 25 yr, 500M MCRC 18,000 jobs, 60LMI
• Real value not , but capacity building
• 80M Massachusetts PC Initiative

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Many ModelsAmerican Ventures

• South Florida Urban Initiative Fund
• 30M first closing 75M final closing
• Focuses on Miami-Dade, Broward Palm Beach
• dense development
• mixed-use, mixed-income
• transit-related developments
• Knight Foundation initiated process
• Investors include Citicorp, Wachovia, Knight
• Albuquerque Urban Initiative Fund
• Other regions in negotiation