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COLLINS CENTER HOPES INVESTMENT FUNDS WILL HELP KICK-START REDEVELOPMENT IN INNER-CITY NEIGHBORHOODS
By Sharon Harvey Rosenberg
Urban redevelopment projects in Miami's Overtown section and neglected areas of Broward and West Palm Beach have come and gone.
But where many sponsors of those initiatives have failed, the Collins Center for Public Policy believes it has a plan that will succeed because it intends to receive a boost from private investors and developers.
The nonprofit organization, with offices in Miami, West Palm Beach and Tallahassee, is launching a series of investment funds - the South Florida Family of Inner City Smart Growth Funds - to promote urban growth in selected downtrodden areas of Miami-Dade, Broward and Palm Beach counties. The fund organizers are trying to raise over $200 million.
"We're trying to bring the private investment dollars here," says Bernice Butler, head of real estate development for the Collins Center. Whereas most urban development programs have been typically limited to the government and community groups, the Collins Center is trying to actively court the private sector in an effort to create programs that are sustainable and replicable, says Butler.
The Collins Center is trying to convince the private sector that it's possible to "make money, while doing good," she says.
The Collins Center is backed with grants from the John D. and Catherine T. MacArthur Foundation, the Ford Foundation and the John. S. and James L. Knight foundation.
Established in 1988, the Collins Center is named for former Florida Gov. LeRoy Collins, who believed that a public-private partnership could research and implement viable programs to fix economic and quality of life problems in Florida.
The 31-member board of trustees includes attorney Joseph P. Klock in the Miami office of Steel Hector & Davis, Miami-Dade State Attorney Katherine Fernandez Rundle, and Merrett Stierheim, former Miami-Dade County manager. Calls to those board members were not returned by press time.
But Stierheim's wife, Judy Cannon Stierheim, said her husband supports the center because "he definitely believes in professional management and quality public policy."
Developing "mixed-use, mixed-income" projects that are pedestrian oriented in South Florida is the mandate, says Butler.
To that end, the Collins Center is looking to launch three investment funds over the next 12 to 18 months.
The fund organizers hope to raise at least $10 million in grant money for a Community Land Trust Fund.
The fund's objective is to encourage private developers, community development groups and other investors to reinvest in older urban areas.
"A lot of developers are looking at these underdeveloped areas," said Anthony Seijas, president of the Miami-Dade County division of Lennar Homes, which is part of Miami-based Lennar Corp. Redevelopment programs provide the opportunity to improve the community while earning a profit, says Seijas.
"We're looking and we're considering joining the Collins Center in some of their pursuits," says Seijas. Lennar is bullish on the Collins Center because of its organizational structure and management team. Moreover, the Collins Center's efforts to involve the private sector differentiates them from other community development groups, he says.
At the minimum level, Lennar will continue to provide consulting services to the Collins Center. Lennar will also consider building sites for the Collins Center, but there are no definite plans at this time, says Seijas.
In addition to courting the private sector, the Community Land Trust will enable local community groups, developers and others to purchase parcels of land for redevelopment. Through owning land earmarked for development, neighborhood development groups will retain a voice and an equity stake in the revitalization of urban areas, says Butler.
By partially underwriting the land purchases with money from private investors, the Community Land Trust should "dramatically" lower the cost of redevelopment and reduce the displacement of existing residents who are typically priced out of reviving neighborhoods, she added.
Funds will also be used to clean up brownfields, environmentally tainted areas that developers typically shun.
The regional community trust will begin with Overtown - a minority neighborhood north of downtown Miami - and ultimately expand to Broward and Palm Beach counties.
The family of funds will also include an equity real estate fund, a blind pool of money that will provide equity for developers that launch projects in inner-city neighborhoods. The fund organizers are hoping to raise $50 million to $100 million in investments for that fund.
Collins Center hopes to lure developers into inner-city neighborhoods by providing an equity stake in development projects, thereby lowering the amount of debt developers will need to finance a project. "Risk capital is the key," says Roderick Petrey, an attorney with Holland & Knight and president of the Collins Center.
Petrey says that there are successful mixed-use, mixed-income redevelopment enterprises in Philadelphia and New Jersey and other areas of the country.
Fund-raising efforts will be aimed at pension funds, banks and private foundations. Over the last year, Collins Center executives have had group and individual meetings with top executives from banks, pension funds and foundations.
In February, the Collins Center held a meeting with foundation chief financial officers in San Francisco. Additionally, Collins Center executives are in the process of trying to plan a high-level meeting with regional bank chief executives in Florida. "We want their investment dollars," says Butler. To attract attendance and participation at the meeting, the Collins Center is trying to line up U.S. Secretary of Treasury Paul H. O'Neill to speak at the event.
The South Florida equity fund is being modeled after a program launched by Genesis LA, a 2-year-old urban revitalization program in Los Angeles. Genesis LA is a public-private partnership that has already raised $80 million for a blind-pool real estate equity fund.
"The model is being replicated in other parts of the country," said Stephanie Bradfield, a spokeswoman for Genesis LA. "It's been unique in the way it has packaged everything. But what really sets it apart is its financing."
Genesis LA provides last-resort financing for properties that developers would normally shun, due to rehabilitation, clean-up and other costs related to developing inner-city sites. Genesis has 21 sites under development, and it runs its own nonprofit financing arm. It has also spun off a for-profit investment unit that is operated by a third party.
The institution is in the process of launching Genesis LA Growth Capital Fund, a for-profit fund that will provide venture capital, mezzanine financing and subordinated debt to technology and manufacturing companies that set up operations in low- to middle-income neighborhoods.
Executives from the Collins Center visited with Genesis LA officials during a four-day fact finding trip last year.
Collins Center executives are also trying to hire Belden Daniels, a Boston-based equity fund consultant who has launched similar projects in Los Angeles, San Francisco, Sacramento, Ireland and Israel, Petrey said.
Finally, the Collins Center is looking to launch a third funding pool, called a Low Interest Loan Fund. Affordable financing for redevelopment will be provided by area banks, with the Collins Center serving as a clearinghouse. The loan fund target is $50 million to $100 million.
Web Published Thursday, April 5, 2001 Published in Daily Business Review on: Thursday, April 5, 2001