As Downtown Investment Authority CEO Aundra Wallace was asked Thursday about the potential for a private funding source to spark progress, a buzz erupted.
It culminated with a succinct pronouncement from one of the mayoral transition subcommittee members.
“It exists,” said Steve Crosby, president of CSX Real Property and the executive working to make such a fund a reality.
Crosby said after the meeting the fund should be formed by the end of summer and will model those in Cincinnati and Detroit.
It will then be “going about the business of both raising investment funds and finding the right kinds of projects to invest in,” he said.
He said there was no target amount of money to be raised and that more details would be shared later.
Crosby has been on loan since last fall to the private Jacksonville Civic Council and JAX Chamber to design the fund. He also is a member of Downtown Vision Inc.’s board of directors.
“Bringing patient private capital is what it’s all about,” Crosby said after the meeting.
“The whole reason for doing this is to help projects happen that otherwise might not,” he said, and to provide capital that is more flexible than what the market would provide.
Such capital is privately raised and invested for the long term with no expectation of turning a quick profit. In this case, it would be directed at first toward Downtown development.
The fund was not discussed further during the fourth of eight scheduled meetings of Mayor-elect Lenny Curry’s 18-member Economic Development Transition Subcommittee.
Jacksonville Civic Council Executive Director Jeanne Miller, also a subcommittee member, said after the meeting that Crosby has spent “many months” of due diligence on the fund’s creation and structure.
The working name of the fund is InvestJax, she said.
While the fund would work with the DIA, it also could invest in projects it independently chooses.
The fund would not have to be the only source of capital, either. It could provide gap financing to developers or business owners who already have loans or other assistance but need more to make a deal work.
Miller said there are no formal boundaries but the fund will start with an immediate focus on the urban core of the Downtown Northbank.
“For right now and the foreseeable future, these funds will be focused on Downtown,” she said.
Miller, a lawyer, said a small group of Civic Council and chamber members visited Cincinnati to review the funds there and she met with their counsel about structure.
For example, the Cincinnati New Markets Fund is a private organization comprising 13 leading Cincinnati corporations, according to 3CDC.org. It focuses on making loans and equity investments that help to revitalize and strengthen the center city of Cincinnati, including both the central business district and the adjacent Over-the-Rhine neighborhood.
In 2004, the staff of the 3CDC, which is the Cincinnati Center City Development Corp., took on the daily operating responsibilities for the Cincinnati New Markets Fund and The Cincinnati Equity Fund.
The Cincinnati Equity Fund supports real estate development and complements the low-income housing market by providing market-rate housing units to create mixed-income neighborhoods. It also provides gap financing for downtown real estate development projects that would not otherwise happen without its help.
Miller said Cincinnati operates several funds as well as a development company, although that is not the immediate goal for Jacksonville’s effort.
Meanwhile, Invest Detroit is a community development financial institution and a source of private-sector gap financing to support economic and community development in underserved communities, primarily in the city of Detroit. Its website is investdetroit.com.
Miller said in most cases, projects would tend to be local deals. “It’s taking what we have locally and helping those individuals expand their businesses,” she said.
Miller sees it as encouragement for businesses to open or grow in Downtown.
“It’s not always the home runs,” she said. “It’s the singles and doubles that rebuild the urban core. It will be one project at a time.”
Those multiple smaller projects build on each other, she said.
The idea of a patient capital fund in Jacksonville surfaced in January 2013. Peter Rummell, founding chairman of the Civic Council, said then that a group of Jacksonville business leaders wanted to examine creating a private investment group that would pool funds to assist Downtown development and other efforts.
He said the DIA, then in its infancy, would provide “focus and muscle” to the redevelopment efforts.
The transition subcommittee next meets at 8 a.m. Monday at UNF to discuss sports and entertainment. The 9 a.m. Thursday meeting is expected to feature new city CFO Mike Weinstein, who was executive director of the former Jacksonville Economic Development Commission.