State & Local Investments

MODELS & BEST PRACTICES

AFL-CIO Housing and Investment Trust (Washington, DC)
www.aflcio-hit.com
The AFL-CIO Housing Investment Trust (HIT) is one of the nation’s largest pension investment programs specializing in housing investment.

Alaska Permanent Fund Corporation
www.apfc.org
As a result of a 1976 voter initiative, the state of Alaska invests a minimum of 25% of oil and mineral royalty payments in a trust fund, with residents receiving an annual payment from the fund. As of February 2005, the fund totaled $30 billion. Annual dividends over the past five years have ranged from $900 to $1,900 per person. Payments are made for every man, woman, and child — providing a significant support to family income.

Bank of North Dakota
www.banknd.com
The Bank of North Dakota provides an example of state promotion of economic development through the provision of subordinated financing. The Bank of North Dakota opened in 1919 with $2 million of capital. Today, the Bank operates with more than $160 million in capital. In partnership with over 100 other North Dakota financial institutions, the Bank continues to meet its mission to promote the development of agriculture, commerce and industry in North Dakota.

Bioadvance (Pennsylvania)
www.bioadvance.com
A Philadelphia-based seed fund for southern Pennsylvania biotechnology firms, this group was seeded with $33.8 million in tobacco settlement money to use as venture capital to assist with commercialization of locally developed biotechnology (Two other funds were similarly funded in other parts of the state). The fund is part of a larger statewide effort that involved dedicating 19% or $2 billion worth of the state’s tobacco settlement money to develop biotechnology in Pennsylvania.

CalPERS, “California Investments”
www.calpers.ca.gov/index.jsp?bc=/investments/
assets/califinvestments.xml
As of Dec. 31, 2004, CalPERS, the state’s leading employee retirement pension fund had investments totaling $20.6 billion in in-state firms, an amount that is equivalent to 11.2% of total assets.

Colorado Public Employees’ Retirement Association
www.copera.org/pera/about/investments.stm
This pension fund, as of December 31, 2003, had dedicated roughly $900 million of its $30 billion in pension funds to local investments, including nearly $500 million in state venture capital and related investments.

Colorado Venture Capital Association, “CVM Equity Partners”
www.coloradovca.org/members/19.html
CVM Equity of Colorado, which has invested $15 million to date, has made investments that have helped create 350 jobs and developed eight new private companies in areas of rural Colorado, and has had its first two funds close in the top quartile of venture funds.

Future Forward (North Carolina)
http://www.future-forward.net
Future Forward is a regional economic development initiative aimed at creating a comprehensive economic development strategy for twelve counties in the Western Piedmont and Mountains of North Carolina.

Maryland Venture Fund
www.choosemaryland.org/businessservices/
marylandventurefund/mvf.html
The Maryland Investment Financing Group invests in Maryland business through direct investments in seed companies (Challenge Fund), in somewhat more developed emerging technology companies (Enterprise Investment Fund), and through its participation in venture capital limited partnerships.

Massachusetts Technology Development Corporation (Boston, MA)
www.mtdc.com
In 1978, Massachusetts’ state government established the Massachusetts Technology Development Corporation to address the "capital gap" for start-up and expansion of early-stage technology companies. Since that time, MTDC has pursued the following four basic objectives:
1) To help create primary employment in Massachusetts; 2) To attract and leverage private investment in state companies; 3) To foster the application of technological innovations where state companies are, or can be, market leaders; and 4) To nurture entrepreneurship among state citizens to support Massachusetts’ long-term economic development.

New York City Comptroller, “Economically targeted investments”
www.comptroller.nyc.gov/bureaus/bam/eti.shtm
In 2003, the New York City Comptroller’s office made new economically-targeted investments or financial commitments of city worker pensions totaling $234.5 million, including $142 million in mortgages, $67.5 million in the AFL-CIO’s Housing and Investment Trust, and $25 million in the Community Preservation Corporation’s revolving loan fund, which invests in commercial properties and affordable housing in low and moderate income New York City communities. As of Dec. 31, 2003, New York City had over $1 billion in economically targeted investments.

Pacific Community Ventures (San Francisco, CA)
www.pacificcommunityventures.org
PCV is a community development venture capital firm whose largest investor is CalPERS, the state employee pension fund. CalPERS’ investment has helped bring capital to low-income communities. For instance, PCV invested $400,000 in Niman Ranch, an Oakland-based natural meat product distributor that employs 110 workers in a low-income neighborhood, with wages averaging $14 an hour and annual sales in excess of $50 million.

Queens County Overall Economic Development
Corporation (Queens, NY)
http://www.queensny.org/index.php
The Queens County Overall Economic Development Corporation, a partnership between the state, city, borough, and local business sector in New York City, operates the Prospect Street Discovery Fund, which makes equity investments in the amount of $1 to $9 million in local firms in many industries including interactive media, medical devices, telecommunications, biotechnology, robotics and computer-related products.

Retirement Systems of Alabama
www.rsa.state.al.us
This fund has long been considered among the more aggressive funds in using pension capital to finance state economic development. RSA is best known for financing the development of the
Robert Trent Jones Golf trail, providing tourism jobs in state, as well as a good return for pensioners.

State of Wisconsin Investment Board, “Invest In Wisconsin”
www.swib.state.wi.us/investinwisconsin.asp
Between July 2003 and June 2004, this pension fund made a total of $684 million in new investments in its home state of Wisconsin. Overall, it is pension fund policy to maintain between $2.7 and $4.5 billion of pension funds invested within the state of Wisconsin.

Tri-County Economic Development Corporation (northern California)
www.tricountyedc.org
The Tri-County Economic Development Corporation of Butte, Glenn, and Tehama Counties of Northern California manages a total of seven loan funds to promote local economic development. Between 1988 and 2000, the Tri-County EDC made loans totaling $7.6 million, leveraging $44 million in private funds, and creating over 1,100 jobs.

ULLICO (Union Labor Life Insurance Co., Washington, D.C.)
www.ullico.com/b/
One of the nation’s leading union-friendly investors, the Union Labor Life Insurance Company (ULLICO) is working to support sustainable development through labor-based pension activism such as the “J for Jobs” program, a tax-exempt pension plan that invests in income-producing properties that are exclusively union built.

Washington State Investment Board, “Economically targeted investments”
www.sib.wa.gov/financial/invrep_iw_eti.html
In March 2003, the Washington State Investment Board adopted a new policy requiring annual reports of the pension funds in-state investments. In January 2004, the pension board reinforced this action by reaching a memorandum of understanding to coordinate efforts to promote in-state, high-tech business with the Washington Technology Center. According to their 2004 report, the pension fund currently invests $1.3 billion in in-state companies.