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San Diego
Sunday, May 26, 2024

‘Smart Growth’ Investment Fund Unveiled

The $90 million San Diego Smart Growth Fund is up and running, according to the San Diego Capital Collaborative and Phoenix Realty Group, which, on Nov. 1, announced the completion of capitalization.

The fund has been established to provide housing for middle-income households and community-revitalizing commercial projects in urban neighborhoods across San Diego County.

An initial investment of $60 million was provided by the California Public Employees Retirement System. The remaining $30 million has been contributed by investments from the Northwestern Mutual Life Insurance Co., Washington Mutual and Phoenix Realty Group (PRG). The fund’s equity will be leveraged to provide more than $500 million of residential and commercial development.

The construction of the San Diego Smart Growth Fund’s developments will yield an estimated $18 million in sales tax revenue, while providing more than 2,400 jobs. The completed housing and retail development is expected to yield annual property and sales tax revenue of more than $10 million.

According to Keith Rosenthal, PRG co-founder and president, there is a growing interest among banks, pension funds, and insurers in creating value in urban areas through the addition of “vibrant housing communities.”

“They look at workforce housing as a long-term investment opportunity that complements their overall real estate investments and enables them to diversify their investment portfolios,” he said.

The need for market-rate housing for middle-income households will continue to increase, he believes, driven not only by housing price considerations, but also by the benefits of urban neighborhoods and lifestyles.

“The rising cost of gasoline means more people will value living closer to their jobs in the city,” he said.

The fund primarily will support the construction of attached housing, with a median price of $400,000, and is targeted at households making 80 percent to 200 percent of the San Diego median income of about $63,000.

“The San Diego Smart Growth Fund is an innovative financing solution to the housing crisis facing San Diego,” said Barry J. Schultz, chief executive officer of the Capital Collaborative, which was formed by the San Diego City-County Reinvestment Task Force under the direction of County Supervisor Ron Roberts and City Councilman Tony Young.

The Capital Collaborative is the adviser to the managers of the fund, which provides capital and expertise to urban developers and community organizations.

“Middle-income families now will be able to purchase affordable urban housing, have a stake in their communities, reduce lengthy and expensive commutes between home and work, and have more time for family, friends, and community service,” said J. Michael Fried, cofounder and chief executive officer of Phoenix Realty Group.

“Because housing is created near key employment centers, employers can attract and retain workers more easily,” he added.

Pat Broderick


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