Two major San Diego banking institutions have announced plans to invest $2 million in a statewide program charged with upgrading tarnished urban neighborhoods, a move officials say should provide seed money to build low-income housing projects in Southeast San Diego.
Home Federal Savings & Loan and Great American First Savings Bank announced Tuesday that they will contribute $1 million each to the California Equity Fund, a new investment program established to finance the building of low-income housing in urban settings.
The investment made by the two banks should help build critically needed housing units in the downtown area and Southeast San Diego, said County Supervisor Leon Williams, co-chairman of the City-County Reinvestment Task Force.
Although specific projects have yet to be identified, there is a possibility money will be used to help build a 90-room residential hotel in the downtown area, or finance smaller-scale projects in Barrio Logan and Mid-City, said Howard Gong, the equity fund manager. The fund, which has amassed $10.75 million statewide, will be used to contract only with nonprofit developers--primarily community-based organizations with social service experience--and will supply loans for worthy housing projects.
“The involvement of these two major lending institutions, both of them well known, in an effort to reinvest in the older part of the community will send a signal to the rest of the county,” said Supervisor Williams. “Not only are there economic advantages for the parties, primarily tax advantages, it gives them a chance to help the broader community.”
Home Federal and Great American are the first two San Diego County corporations to enroll in the investment program, which was established in January, and represent a rare appearance by the private sector in low-income housing development. Traditionally, these projects have been sponsored and paid for by the government.
“We’ve always had a strong commitment to the community and its housing needs,” said Monica Wiley, a Home Federal spokeswoman. “Certainly the need for low-income housing is great and getting greater all the time. We see this as a winning situation for everybody. We’re getting tax credits and at the same time contributing to the housing effort.”
Financial institutions that participate in the program can obtain tax credits for financing new construction or for rehabilitation of low-income housing.
Brian Luscomb of Great American offered a similar reason for taking part in the program: “We see this an another way of servicing the needs of homeowners in the inner-city community.”
The City-County Reinvestment Task Force, co-chaired by Williams and Councilman Bob Filner, was instrumental in courting the two banks’ participation in the investment program.
For the last six years the task force has been designated to promote the rehabilitation, through repairs and new construction, of San Diego’s deteriorating neighborhoods, Williams said.
“For years now, across the nation, old neighborhoods have been rotting away and people have been following a ‘throw-away’ philosophy,” he said. “We’re trying to change that by helping residents improve their perception of their neighborhood.”
Williams said the task force pursues its objective in three ways: by assisting nonprofit organizations in finding funding for capital projects; by acting as a negotiator for parties seeking loans from financial institutions and by being an advocate in the legislative process for more low-cost housing.
During the last eight months, the task force sought to identify financial “players” capable of funding low-incoming housing projects in San Diego, Williams said.
“We had breakfast meetings where we informed business leaders about the purpose of the California Equity Fund and what kind of advantages they could receive under the federal tax laws,” Williams said.
The continuing advances by the task force persuaded the two banks to contribute to the equity fund, Williams said. He hopes, and predicts, that others will follow their lead.
“Just even in the last eight years, the amount of spending on the federal level for low-income housing has dropped dramatically,” Williams said. “Coupled with the fact that housing costs have skyrocketed, the current situation only underlines the fact that we need more low-cost housing. There is ample opportunity for investment. We’ll be continually urging others to take part.”
The California Equity Fund is a program operated by the Local Initiative Support Corp. (LISC), said Gong, the fund’s manager, in a telephone interview from San Francisco.
Established by the Ford Foundation in 1980, LISC is the largest private, nonprofit community development organization in the country, with more than $160 million in assets.