Transcript South Florida Smart Growth Fund

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?
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Regional Initiatives oversee Private Equity Funds
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Double Bottom Line Funds
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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
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$3 billion managed by proven fund managers
Upper quartile private equity returns attract investors
The First Bottom Line: upper quartile market returns for investors
The Second Bottom Line—The Three Es: Sustainable E1conomic
Development; Social E2quity, and Sound E3nvironmental impact.
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 impact—Billions!
 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:
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Mixed-use commercial, industrial & housing projects
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Affordable and mixed-income housing
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Urban infill and brownfield cleanup
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Transit-oriented development
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Job and wealth creating business ventures
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Profitable investment for developers and investors
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Measurable job and wealth for community residents
Double Bottom line Funds Are
Capitalized to Succeed
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Private equity produces higher returns by
capitalizing on market imperfections
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Proven, incented private management
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High investor returns are appropriate to risk
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$3 billion invested by banks, pension funds, insurance
companies, foundations, endowments and others
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Community sponsors oversee most funds
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Close working relationship with the public sector
Double Bottom Line Funds
Use Private Market Discipline
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Fund managers chosen in competitive process
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Investors & community involved in selection
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Fund managers protected by firewall & at risk
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Accountability to community stakeholders
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Sponsors participate in economic returns
Successful Fund Managers
Find & Fix Market Failure:
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Low Income Neighborhoods are Not Disadvantaged—
They are Domestic Emerging Markets!
They have:
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Successful Fund Managers address these market failures for the
benefit of both investors and community stakeholders
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The nation’s 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.
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.
Double Bottom Line Funds:
Investors Appreciate Returns
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Banks like CRA credit plus high returns
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Insurance industry likes avoiding CRA plus high returns
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Public Pension Funds like DBL plus high returns
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Foundations like high corpus returns, not low PRI returns
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Faith based investors slow to come on board
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Corporations & high net worth individuals are joining
Double Bottom Line Funds
Capitalize Strong Demand
$300
millions
$250
$200
Housing
$150
Comm./Ind
.
Total
$100
Column 4
$50
$0
Demand
Fund I
San Diego Smart Growth 2002-2010
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$ Millions
Not a just a Fund; a System!
Funds I II & III
$240
$220
$200
$180
$160
$140
$120
$100
$80
$60
$40
$20
$0
Fund I
Fund II
Fund III
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2
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9 10 11 12 13 14 15 16 17 18 19 20
Years
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Genesis
LA Real
Estate
Funds
Double Bottom Line Funds
have exploded across the US
Puget Sound
Portland
Coastal Maine
Boston
New York
Philadelphia
Sacramento
Bay Area
Los Angeles
St. Louis
Baltimore/
Washington
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
Shamrock
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Real Estate Fund II Workforce Housing Fund I Business Equity Fund I
$30M
$150M
$60M
Shamrock
Phoenix
Fulcrum
Many Models:
Genesis LA Family of Funds
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Genesis LA Not-for-Profit oversees the Funds
$300 Million currently under management
$1.5 Billion in deals generated
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$85 Million Genesis LA Real Estate Fund I
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$150Million Genesis LA Real Estate Fund II
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Managed by Phoenix Realty
Supports “workforce housing” in LA’s urban core
$30Million Business Equity Fund I
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Now being built because of success of Fund I
$60Million Genesis Workforce Housing Fund I
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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
Invests in minority entrepreneurs in LMI neighborhoods
Many Models:
$217Million Coastal Enterprises
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$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 Models:
Massachusetts Life Initiative
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1997 Massachusetts “CRA” Insurance legislation
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Community Advocates/Legis Oversee Funds
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$100 Million Massachusetts Life Initiative
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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, 60%LMI
Real value not $, but capacity building
$80M Massachusetts P&C Initiative
Many Models:
American Ventures
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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
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