A state pension fund and a General Motors subsidiary have agreed to jointly finance a low-cost housing program, state Treasurer Kathleen Brown announced late last week.
Under the agreement. Residential Funding Corp., a subsidiary of General Motors Acceptance Corp., will provide a $25 million line of credit that will be used to invest in housing construction projects. The state Public Employees' Retirement System and other investors will commit $87 million.
"This is an example of how we can build public/private partnerships that will boost California's economy and secure attractive returns for PERS and other investors," Brown said in a release.
This is the first time in the nation that a major public pension fund and a subsidiary of one of the country's largest financial companies have jointly agreed to finance affordable home construction, the treasurer said in the release.
The commitment was negotiated by Hearthkone Advisors, which will invest the money in the construction of homes between $90,000 and $200,000. Homes built under the agreement will be located in Los Angeles, San Diego, Sacramento. the San Francisco-Oakland area, and the Central Valley.
Housing construction financed through the employees retirement system is already under way in Chula Vista and Palmdale.
"This program will not only result in potentially 1,500 homes that California's middle class can afford. but also provide hundreds of jobs that will keep them employed," the treasurer said.
Brown said General Motors Acceptance Corp.'s investment may grow to 100 million in the next year.