Investments steered to central cities

By Jim Wasserman, The Associated Press
Saturday November 24, 2001

SACRAMENTO —They were abandoned buildings in a forlorn part of downtown Santa Ana. Now they’re lively monuments to a shakeup in state investment strategy. 

State Treasurer Phil Angelides says it’s all about making money while turning around decaying corners of California. 

“We turned an old abandoned church into a theater and performance center and brought 1,000 young people of diverse backgrounds back into this urban corridor,” Angelides says. 

The former developer, a Democrat who touts more development in existing cities, calls it a “double bottom line.” Since taking office in 1999, he says he’s steered up to $12 billion in state money and pension fund investments to bypassed corners of California. 

For example, a $20 million state loan prodded the Orange County High School of the Arts to restore three empty buildings in Santa Ana, rather than build a new campus in Newport Beach or Anaheim. 

“When I started as treasurer I began looking at all our foreign investments, investments in Malaysia, Indonesia, the Philippines, where we were, as a pension fund, committing billions of dollars to unstable markets,” says Angelides. “At the same time we had our own emerging markets here at home that had needs, but also opportunities.” 

As treasurer and as a manager of “probably the largest aggregation of capital in the world,” he’s trying to invest more in east Los Angeles, south central Los Angeles and the Central Valley. 

“You know, for all its problems, the San Joaquin Valley doesn’t need a CIA report to underwrite its stability,” he says. “It is inherently part of the fifth largest economy in the world. And we’ve been looking past our own market places of opportunity.” 

Carol Whiteside, who has called the Valley a western “Appalachia” as director of the Modesto-based Great Valley Center, says it’s “not only a good investment decision, but keeps the economy of the state robust.” 

Many believe the fast-growing Valley threatens California’s long-term prosperity with its impoverished rural towns and high unemployment. 

Angelides says he’s steered capital from California’s $300 billion pension funds for state employees and teachers into Korean-American banks in Los Angeles that made more small business loans than bigger banks. Statewide, he says, pension funds have deposited $3 billion with Chinese-American, black and Hispanic-owned banks and local banks that invest in central cities. 

The state also has invested in retail chains that opened stores in low-income neighborhoods. It’s offered special home loans to teachers who work in low-performing schools. The treasurer’s office also steers state infrastructure funds to development projects near transit lines and within walking distance of schools — central cities get priority. 

The Orange County arts school is an example. 

It brought new life to a “ghost town,” says arts school president Ralph Opacic. 

“If you were able to see the transformation in just a year and a half, you’d realize for both the city and the treasurer, the idea of using the high school of the arts as a tool for urban redevelopment has been very effective,” Opacic says. 

Angelides says it’s not about “shoveling money out the door,” but “spending it in ways that promote good growth patterns for California. It’s a pretty simple notion,” he says, “but not one that’s imbued in our culture.” 

The treasurer insists these investments earn the same returns as traditional strategies. 

Some growth watchers liken Angelides’ philosophy to that of Maryland Gov. Parris Glendening, who steers state funds to strategic growth areas. 

“Phil has done a lot with a more limited set of tools that a governor would have,” says Steve Sanders, a California growth and land use consultant. 

“I don’t make any assertions here that we’re changing the world,” Angelides says. “Rather I hope that by the way we’re looking at the financial resources that we control that we can set some models for others to follow.” 


On the Net: 

Read more at www.treasurer.ca.gov.