A Path Forward: Investing in Richmond
FINANCING THE DEVELOPMENT of the Berkeley Global Campus is a time-sensitive and critical component to ensuring that this anchor institution benefits low-income residents of Richmond. A Community Development Entity (CDE) is the strongest finance model when considering the demands of the projects and the needs of the community. A pathway to achieving the efficient and equitable CDE model is broadly outlined below.
If an existing CDE is the desired path, Stage I, Establishing a CDE, could be substituted with a stage of establishing a partnership between the CDE and a project advisory board.
Establish the CDE
- Establish a working group to coordinate establishing the CDE. A working group that includes at least one development professional, community leader, and grant-maker/investor would be responsible for securing initial funding and recruiting board members.
- Secure initial funding. Grant funding is needed to begin the process of establishing a CDE model.
- Assemble an advisory board. The CDE will assemble a team of stakeholders and third party professionals to serve as an advisory board. These professionals would meet the standards of the CDE as well as the University. The team would include: representative(s) of the low-income community that the CDE is designated to serve (minimum of 20 percent of the advisory board); technical assistance expert(s) familiar with CDE operations and similar projects; developers and design and project architects with extensive previous experience working with universities on facilities similar to the Berkeley Global Campus; civil, structural, and mechanical engineers versed in the specific requirement of space required; and professionals in finance, law, and accounting with the independence and professional liability to assume risks associated with their respective specialties.55
- Legally establish the CDE. With the assistance of legal experts, the advisory board will oversee the legal establishment of a 501(c)(3) Certified Development Entity, independent of the City of Richmond and UC Berkeley.
- Prepare the proposal. The CDE will develop a Master Plan that fulfills UC Berkeley’s objectives as well as the community’s goals.
- Bid on the RFP. The CDE will submit its proposal alongside private developers in the public bidding process.
Development (if bid secured)
- As master developer, the CDE will build and operate facilities and infrastructure as designated by UC Berkeley. Terms and costs would be detailed in the contract.
- The CDE will secure supplemental capital.
- Development fees are instead absorbed as CDE income and invested into the community. The CDE will take responsibility for job training, job placement, small business growth, and other mission-driven objectives to serve Richmond’s low-income communities.
Private investors would initiate and support the CDE in cooperation with Richmond community groups until further capital is secured. There are two main types of private funding this project needs to be successful:
FUNDING FOR PRE-DEVELOPMENT COSTS
- Purpose: Establish the CDE, execute the agreement, secure and coordinate the developers and team, prepare the project proposal. The CDE, initiated by foundations and community groups of Richmond, will require seed capital to get off the ground.
- Estimate: $300,000–$400,000
- Type: Grant (potentially recoverable) If the CDE wins the bid in Stage III, then the grant could potentially be repaid by first financing closing on the first facility to be built
- Timing: Required Immediately (within 60–90 days of finalizing team)
- Budget description: Establish the CDE hire necessary for the team to execute the agreement, provide initial payment to team, and prepare plan/proposal for RFP (prepare budgeting, computer-generated models, contract, etc.)
INITIAL DEVELOPMENT FUNDING FOR SOFT COSTS
- Purpose: After securing the bid, an investment is needed to provide the initial funding for specific soft costs associated with the development.
- Estimate: $3–$4 million
- Type: Loan Investment will be recovered and paid back
- Timing: Stage III; Immediately if the CDE wins the bid
- Budget description: The initial soft costs for the Berkeley Global Campus will likely be comparable to those generated in the development of UC San Francisco’s neuroscience research facility.
- 55. Recchie, Joe