L.A. Prep Project in Lincoln Heights Secures Financing
Thursday, April 17, 2014 As of 11:05 AM EDT
The Wall Street Journal
L.A. Prep Project in Lincoln Heights Secures Financing
LOS ANGELES--(BUSINESS WIRE)--April 17, 2014--
U.S. Bank, Capital Impact Partners, Los Angeles Development Fund, UrbanAmerica and Civic Enterprise Development have closed on financing for the $17.5 million acquisition and renovation of industrial space in Los Angeles' Lincoln Heights neighborhood. The 56,000-square-foot building will become L.A. Prep, a multi-faceted food production business incubator for local entrepreneurs, and home to the nonprofit L.A. Kitchen.
Most of the space operates as an accelerator for small food producers who have outgrown their startup spaces. L.A. Prep partner and co-founder Food Centricity, a business accelerator focused on early and growth stage food companies, will provide business support and other key services to help tenants succeed. Food Centricity CEO Michel Algazi said, "L.A. Prep will deliver space, community and a suite of services for small food business unlike anywhere else in the country."
L.A. Kitchen is a nonprofit/social enterprise that will collect or purchase surplus fruits and produce from farms and wholesale companies in the region. These products will fuel a 15-week, culinary arts job training program, which will prepare at-risk foster youth and older adults transitioning out of incarceration for jobs in the culinary field, helping reduce systemic patterns and become productive members of the Los Angeles community. Along with staff and volunteers, trainees will help produce thousands of snacks and ethnically diverse meals every day, which will be distributed for free to nonprofit partners or sold through contracts. L.A. Kitchen will serve a wide cross section of programs, but will emphasize partnerships that support senior centers, after-school programs or drug treatment facilities.
L.A. Kitchen is the vision of Robert Egger, the founder of D.C. Central Kitchen, a similar nonprofit organization in Washington, D.C. that has prepared more than 25 million meals for low-income and at-risk individuals since its founding 25 years ago.
"L.A. Kitchen will help provide a basic need, food, to our community members in need, and in doing so, we'll be able to help at-risk individuals learn and create opportunities for themselves," said Egger. "In the United States, approximately 40% of edible food goes to waste, costing more than $165 billion each year. In Los Angeles alone, around 18 million pounds of food are disposed of every day."
To make the project possible, U.S. Bank committed more than $5.1 million in New Markets Tax Credit equity through its community development subsidiary, U.S. Bancorp Community Development Corporation. Capital Impact Partners, as part of the California Fresh Works Fund and in partnership with The California Endowment, Genesis L.A. and Raza Development Fund, provided $11 million in leverage debt in the NMTC structure. The Los Angeles Development Fund and UrbanAmerica, through its community development entity, UA LLC, together contributed a $16 million New Markets Tax Credit allocation to the project.
"We're pleased to play a role in turning this innovative and highly-anticipated project into a reality," said Sean Foley, president of U.S. Bank in Southern California. "Given the growth of small food businesses locally and the lasting success of Egger's D.C. Central Kitchen, L.A. Prep will have a wide-ranging, positive impact on our community for many years to come."
"This project blends job creation; value added food production, and distribution of fresh healthy prepared foods to senior facilities," said Scott Sporte, chief lending officer at Capital Impact Partners. "It illustrates our flexibility for projects with high impact potential and we're very proud to be part of it and expand our impact in the communities that matter most to us."
L.A. Prep will break ground this summer, with first tenants occupying in early 2015. Civic Enterprise Development (CE), founded by Mott Smith and Brian Albert with a focus on urban infill developments in emerging communities in Southern California, will renovate the facility into a state-of-the-art food production center.
"L.A. Prep is a unique development project that will go a long way toward rejuvenating the historic Lincoln Heights neighborhood," said Albert of CE. "As a developer in an urban area like Northeast Los Angeles, it's critical to be able to look at space for what it could become tomorrow, rather than what it was yesterday."
Smith and Albert have a longstanding commitment to small business, neighborhood-scaled investment and creative enterprises. "We'd love to see food do for Lincoln Heights today what music did for the Sunset Strip in the 1960s," said Smith of CE.
L.A. Prep is the culmination of a two-year effort between the development team and the L.A. County Department of Public Health, which oversees food regulation in the County and City of Los Angeles. "With the rapid growth of small food business, we want to offer solutions that support innovation and our entrepreneurial community, while protecting public health. We are pleased to work with L.A. Prep and Civic Enterprise to help launch this exciting program," said Angelo Bellomo, director of environmental health at the L.A. County Department of Public Health.
About Civic Enterprise Development LLC
Civic Enterprise is an L.A.-based urban infill developer focusing on emerging communities in Southern California. www.civicenterprise.com
About Food Centricity
Food Centricity is a business accelerator focused on breaking market, business and financial barriers for early and growth stage food companies. It connects and streamlines all necessary resources to launch, groom and grow food businesses in Southern California and beyond. Food Centricity also powers The Fine Foods Group, a community of over one thousand food makers in Southern California. Learn more at www.foodcentricity.com.
About L.A. Kitchen
L.A. Kitchen is new, but built upon the proven work of Robert Egger, who founded the nationally recognized DC Central Kitchen in 1989. The DC Kitchen is now a $12M, self-sustaining, social enterprise that has prepared over 29 million meals and helped 1,000 men and women gain full time employment.
About Capital Impact Partners
Capital Impact Partners (formerly known as NCB Capital Impact), is a leader in financial and social innovation for communities. A nonprofit organization and Community Development Financial Institution, we bring our roots in cooperative development, diverse network of partners and problem solving know-how to connect communities to capital and capabilities that together create social change. Learn more at www.capitalimpact.org
About Los Angeles Development Fund
The Los Angeles Development Fund (LADF) is a California non-profit corporation established by the City of Los Angeles in September 2006 to manage its New Markets Tax Credit program. LADF is certified by the U.S. Treasury Department's Community Development Financial Institutions Fund as a Community Development Entity and has been awarded $125 million in allocation. LADF uses its allocation to support qualified projects within the City of Los Angeles. For more information please visit www.ladfnewmarkets.org.
UrbanAmerica (UrbanAmerica Principals III, LLC) a minority-controlled real estate investment advisor, launched in 1998, was one of the first investment advisors to focus on developing and acquiring properties in America's urban markets and low-to-moderate income (LMI) areas. As a pioneer in urban investing, UrbanAmerica addressed the lack of access to capital in LMI communities and in areas of diversity nationwide, where a dearth of goods and services existed and where unemployment was high. To date, UrbanAmerica has over $1 billion in equity under management across two private equity investment funds. In addition, through the NMTC program, as a Community Development Entity, UrbanAmerica continues to invest capital in these areas bringing schools, health care centers, retail, affordable housing, community services and jobs to LMI communities nationwide. For more information please visit http://www.urbanamericaadvisors.com
About U.S. Bank in Los Angeles
U.S. Bank has 222 branches and employs more than 2,700 people in greater Los Angeles. The number of U.S. Bank employees in the market has more than doubled since 2008, and the same is true across California where the number of U.S. Bank employees jumped from 3,500 in 2008 to 7,000 today.
U.S. Bancorp (NYSE: USB), with $371 billion in assets as of March 31, 2014, is the parent company of U.S. Bank National Association, the 5th largest commercial bank in the United States. The Company operates 3,083 banking offices in 25 states and 4,878 ATMs and provides a comprehensive line of banking, brokerage, insurance, investment, mortgage, trust and payment services products to consumers, businesses and institutions. Visit U.S. Bancorp on the web at usbank.com.