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Genesis L.A. to Establish Private Investment Fund

Development: Mayor's initiative will funnel capital to manufacturing and tech firms in low-income areas.

October 25, 2000|LEE ROMNEY | TIMES STAFF WRITER

Genesis L.A., Mayor Richard Riordan's inner-city economic development initiative, will launch a private investment fund to channel expansion capital to manufacturing and technology companies mostly in poor parts of Los Angeles, city officials said Tuesday.

The new fund broadens the scope of Genesis L.A., which was designed to attract private capital to key development sites and supplement the projects with public funding when needed.

The initiative, begun 19 months ago by Riordan's office, targets 21 sites in some of the city's most distressed areas. Eleven of those are on their way to development, representing $680 million in private development capital and the potential for 13,000 jobs, Riordan said. Furthermore, the City Council earlier this month voted to commit $32 million in economic development grants and loans to bolster six of the projects.

The new fund was announced Tuesday at the East Los Angeles Sears building, one of the Genesis sites. City officials also heralded a $1-million contribution from Kmart to the nonprofit Genesis L.A. Economic Growth Corp. The retailer is reviewing Genesis sites for one or more new stores, said Rockard Delgadillo, deputy mayor for economic development.

The contributions from Kmart, McDonald's and Washington Mutual Bank, among others, have helped propel Genesis L.A. forward, said Deborah J. La Franchi, president and chief executive of the nonprofit corporation.

The entity has attracted hundreds of thousands of dollars in recent pro bono commitments to help clean up contaminated sites and prepare them for development and is applying for grants to bring job training, computer education and other services to some of the sites.

The nonprofit also has helped convince corporate investors and banks to channel $85 million into the Genesis L.A. Real Estate Investment Fund. The fund is privately managed by Burbank-based Shamrock Holdings Inc. and invests in developments in low- to moderate-income parts of the city. It is not limited to investing in Genesis sites, but La Franchi said Shamrock managers are reviewing three Genesis proposals.

The success of the real estate fund in attracting private capital led to plans to launch the second private fund. It is expected to raise $50 million to $100 million in equity and mezzanine financing for expanding manufacturing and technology firms.

While most would be in low- to moderate-income neighborhoods, the fund also would finance some small and medium-size businesses in wealthier areas, with an emphasis on women- and minority-owned firms, Delgadillo said.

City officials will begin seeking a fund manager for the venture in the coming weeks.

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