$100M Fund Targets Worker Housing

Marci Wiseman, acting CEO at Genesis, tells GlobeSt.com that the local group has named New York City's Phoenix Realty Group, which has opened Phoenix Realty West in LA, as the fund's manager. Wiseman says the fund's goal is to finance projects for about 3,000 homes, including single-family homes, condominiums and apartments, with the emphasis on for-sale housing for workers earning $40,000 to $60,000 per year.

The fund will provide equity and mezzanine financing for acquisition of land and construction of for-rent and for-sale housing in a structure will allow flexibility so the projects are viable without the use of low-income housing credits, which "are limited and difficult to obtain," a Genesis announcement says.

"Our fund is required to do at least 50% of the units for sale and we expect about 70% to be for sale and the rest rental," Wiseman tells GlobeSt.com.

The new Workforce Fund will address the shortage of affordable housing in the Los Angeles region, but not through subsidized projects such as Section 8 rent assistance programs or tax-credit-financed developments. Those programs typically target households earning below 60% of the prevailing median income. Wiseman says the fund is targeting market-rate housing that is affordable for income levels of 80% to 120% of the average or about $40,000 to $60,000 annually per household. "Our fund is being created because the people we are targeting are not generally eligible for Section 8 or for housing in projects financed by tax credits," she explains.

The new homes and apartments will be built in high-density population centers, mostly in LA County, in places like the Northeast San Fernando Valley, South Los Angeles and East Los Angeles. Wiseman says Genesis hopes to have at least six projects under consideration as potential investments by fund's first closing in June, but she tells GlobeSt.com that's about all she can say right now because Genesis is in a quiet period under SEC regulations and cannot discuss details of prospective investments.

Wiseman can say that rents probably will range from $1.50 per sf to $1.70 per sf at apartments financed by the fund and that the multifamily development would include a large proportion of two-bedroom units. Units of two-bedrooms and larger are in short supply in the Los Angeles Basin, housing experts say, because much of the demand is for family housing.

Whether it's houses, condos or apartments, Wiseman says, the Workforce housing will be "geared toward working families, whether it is a single mother with two kids or two police officers who have a family and would rather live in the city than in some outlying area."

Likely investors envisioned for the new fund, which expects its final closing near the end of the year, will be banks and others that have community reinvestment goals as well as pension funds, insurance companies and others.

The Workforce fund will be the third created by Genesis LA, which also includes the Genesis LA Real Estate Fund and the Fulcrum Capital Partners Growth Capital Fund. The former provides financing for job-creating projects in low- to moderate-income areas of Los Angeles while the Fulcrum Fund provides expansion capital to businesses owned or managed by minority entrepreneurs in low- to moderate-income communities.

Investors in the initial Genesis funds included Bank of America, Bank of the West, California Community Foundation, Citicorp, City National Bank, Far East National Bank, Nehemiah Corporation, Stewart Title, Union Bank of California, US Bancorp, Washington Mutual and Wells Fargo Bank.