The Community Capital The Community Capital Investment Initiative Investment Initiative

andandThe Bay Area Family of FundsThe Bay Area Family of Funds

MetroBusinessNetMetroBusinessNet

Miami, Florida – February 17-18, 2005Miami, Florida – February 17-18, 2005Elizabeth Y.A. Ferguson, Bay Area CouncilElizabeth Y.A. Ferguson, Bay Area Council

Victor Hsi, Alliance for Community DevelopmentVictor Hsi, Alliance for Community Development

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

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

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

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

Priority NeighborhoodsPriority Neighborhoods

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

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

Structure

Government Advisory CouncilState of California -

Business, Transportation & Housing Agency

Business CouncilBay Area Council

Community CouncilNational Economic Development & Law Center (NEDLC)

PolicyLinkUrban Habitat Program

Community Capital Investment Initiative (CCII)

Bay Area Family of FundsBay Area Council

California Environmental Redevelopment Fund (CERF)Sponsored by:

Bay Area Council, Federal Reserve Bank of San Francisco & Los Angeles Chamber of Commerce

Bay Area Equity FundSponsored by:

Alliance for Community DevelopmentBay Area Council

Bay Area Smart Growth FundSponsored by:

Bay Area Council

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

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

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

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

Bay Area Equity Fund: A Double Bottom Line Fund Sponsored by the Bay Area Council and the Alliance for

Community Development, managed by JPMorgan H&Q 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

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

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

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

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

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

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