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Market-rate Community Equity Funds
Double Bottom Line, market-rate community equity funds are designed to attract large-scale
capital managed by proven fund managers into
low income neighborhoods.
Community sponsors structure the funds to provide investors with market
returns and community stakeholders with community revitalization and
measurable job and wealth creation. These community equity funds
invest in smart growth in walkable or transit-oriented inner city neighborhoods
with underutilized workforces, as well as industrial and public infrastructure;
address poverty, build mixed-income and mixed-use developments; grow local
businesses, and clean up contaminated sites with market-based solutions.
To date, these double bottom line equity funds now have more than $2.5 billion
under management. Financial returns to private equity investors have
equaled or exceeded risk-adjusted market rates of return of "plain vanilla"
funds of the same vintage. Following is a description of the
paradigm fund designed by Economic Innovation and a list of the beta funds created by the firm.
The Alpha Paradigm Fund:
The Bay Area Family
of Funds (1999-2004)
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$180 million Bay Area Family of Funds
is an initiative, a family of funds, and three individual funds. Together,
they are the result of a very successful collaboration of Sustainable
Systems and Economic Innovation. Sustainable Systems is the lead Initiative
Builder; Economic Innovation is the lead Fund Builder; both firms have
collaborated together on all aspects of the effort.
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Sponsored by the Bay Area Council (the CEO-led regional public policy
organization) and community stakeholders, to leverage $1 billion targeted to
the 52 neighborhoods in the Bay Area with high levels of poverty. These
paradigm funds create powerful private sector and community stakeholder
leadership in a self-sufficient not-for-profit sponsor to ensure that the
three market-rate private equity funds with world class fund managers
achieve both their internal market-rate of return for investors
and the social equity and environmental returns expected of community
stakeholders. |
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The $66
million
Bay Area Smart Growth Fund,
managed by Pacific Coast Capital Partners (PCCP), invests in mixed-income
housing and in mixed-use commercial and industrial real estate development
to recreate vital inner city neighborhoods. The Fund, which had its final
closing on 12/31/02, is now more than 50% invested in an array of community
revitalization projects. The Fund is on track to produce the market returns
(net 15-18%) expected by investors, and the job, wealth and environmental
returns expected by community sponsors. |
| The
$75
million Bay Area Equity Fund,
managed by JP Morgan H&Q, invests in technology, health, specialty food and
life style companies at the moment of inflection when firms go from early
stage to take off. An alpha paradigm “doble bottom line” system developed
by Sustainable Systems assists invested firms with local hiring,
neighborhood wealth creation, environmental and workplace benefits. The
Fund has had its first close, expects its final close to be at $75 million
and is now investing in its first deals. |
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The $40 million California Environmental
Redevelopment Fund (CERF),
invests in brownfield cleanup and expects to achieve appropriate returns in
the high single or low double digits. |
Similar Beta Funds
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Economic Innovation International, Inc.