PENSION FUNDS TO INVEST IN HOUSING HOMES TO BE DEVELOPED FOR MIDDLE CLASS, MAYOR SAYS.

Byline: RICK ORLOV Staff Writer

Three public pension funds will invest $65 million to develop affordable housing for Los Angeles' shrinking middle class, Mayor Antonio Villaraigosa said Tuesday.

The money will be invested in the Genesis Workforce Housing Fund II, a private equity fund managed by Phoenix Realty Group. The fund will reach $150 million when fully invested, financing 2,250 housing units valued at $750 million, according to the mayor's staff.

``This has to be just the start,'' Villaraigosa said at a news conference to announce the $65 million commitment.

``Only 12 percent of Angelenos can afford to buy a home today,'' Villaraigosa said. ``Los Angeles is losing its middle class. If we want good schools and safe streets, we need to commit ourselves to making Los Angeles a place where a teacher or a policeman can afford to buy a house and raise a family.''

Use of the pension funds is part of an effort to make up for loss of money with the narrow defeat last week of Measure H, a $1 billion affordable housing program.

``We just fell short of the two-thirds vote needed with 62 percent,'' Villaraigosa said. ``I think voters recognize the importance of this and the need to build more housing. This is a step to make up for that.''

The mayor said he believes another bond measure should be submitted to voters in 2008.

``It would be too soon to do it next year,'' Villaraigosa said. ``Also, I think we should wait for an election where we have a larger turnout.''

The next city elections are in March 2007, but there are no citywide races on the ballot.

Villaraigosa said the priority for the pension funds will be to make sure the investment generates an adequate rate of return.

``This has to be responsible to protect the pensions of our workers,'' Villaraigosa said. ``But we can encourage them to look at these investments to help our city and our workers.''

Eric Holomon of the Los Angeles City Employees Retirement System, which has a $10.2 billion fund, said the decision has two benefits.

``First and foremost, it is a good investment and brings us a good rate of return,'' Holomon said. ``Secondly, it will help our members in making more housing available to get them into housing.''

The other participants are the Los Angeles Police and Fire Pension Fund and the Los Angeles County Employee Retirement Association.

Villaraigosa said he hopes to persuade the boards of state employees and teachers pension funds also to invest more in housing.

rick.orlov(at)dailynews.com

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