Fundrise proposes South LA apartments in the land of OZ

Crowdfunder is building in Los Angeles Opportunity Zones

Feb.February 05, 2020 03:09 PM
Ben Miller, Fundrise CEO, wants to change this car clinic into an apartment building (Credit: Google Maps)
Ben Miller, Fundrise CEO, wants to change this car clinic into an apartment building (Credit: Google Maps)

A company linked to crowdfunding real estate firm Fundrise has sought permission to build an 81-unit residential building in South Los Angeles, one of a slew of projects the company has proposed for the city with an eye on Opportunity Zone tax breaks.

CNP 107 limited liability company asked the city of Los Angeles on Tuesday to ease density restrictions, enabling the developer to build apartment units at 3518 S. Crenshaw Boulevard in the Jefferson Park neighborhood.

The developer is applying for the density bonus under the city’s increasingly utilized Transit Oriented Communities program that lets developers build more if projects are within a half-mile of a public transit stop and include an affordable housing component.

The proposed project would set aside nine of the 81 units for tenants who make less than 30 percent of the area’s median income. It would replace the Crenshaw Car Clinic, an auto body shop.

Messages left with Washington, D.C.-based Fundrise and its real estate investment offshoot, RSE Capital Partners, were not returned.

The proposal looks to be part of an Opportunity Zone-induced development spree for Fundrise, a firm started by Benjamin Miller, who is a signatory on the LLC’s California registration.

In 2018, Fundrise announced a $500 million fund to finance projects in Opportunity Zones, areas selected by the state government and approved by the Treasury Department as distressed and eligible for capital gains tax breaks.

According to the Fundrise website, there are more than 50 L.A. development projects in the pipeline. Almost all of these, including the Jefferson Park development, are in designated Opportunity Zones. Other areas in which Fundrise is looking to build include the working class seaside community of San Pedro and University of Southern California-adjacent Exposition Park neighborhood.

In each of these advertised projects, Fundrise occasionally bills an equity investor, but it is mostly soliciting financing from a broad pool of accredited and unaccredited investors. For example, a $9.2 million mixed-use project in East Hollywood includes $2.8 million in financing from Mainspring Equities but is soliciting $6.4 million.

A search of the company’s website did not yield the 3518 S. Crenshaw Blvd. project.

Fundrise was started in 2010 by former private equity manager Benjamin Miller, and expanded its crowdfunded real estate investment portfolio after the 2012 federal JOBS Act eased restrictions on companies soliciting money from unaccredited — or lay — investors.

Fundrise has an especially low investment floor — $500 — among crowdfunded real estate outfits, and a 2015 TRD investigation examined whether it was being fully forthcoming with lay investors.

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