Stagnant interest from American investors in funding the construction of 20,000 new San Francisco homes has driven developer Lennar to a Chinese investment bank in search of $1.7 billion in startup capital.
The Miami-based housing giant is in negotiations with the China Development Bank to start construction on two city-approved redevelopment projects on former Navy bases — Hunters Point and Treasure Island — a company spokesman confirmed Monday.
While China has funded housing, roads, commercial buildings and other infrastructure projects across the globe, large undertakings have been focused on the developing world and are mostly unprecedented in the United States. Chinese foreign investment also is often carried out by roving Chinese laborers, a practice that would face scrutiny in San Francisco, where city contracts require a percentage of workers to be local.
Both of the plans rely on California infrastructure financing programs that allow San Francisco agencies to use state bonds to fund part of the construction based on repayment from future property tax revenue. But that money will cover only a fraction of the two projects’ combined price tag, estimated at more than $10 billion.
Tim Paulson, executive director of the San Francisco Labor Council, said while any investment to jumpstart building projects is welcome news for the ailing construction industry, he’d prefer to see more confidence coming from American companies.
“I’m extremely disappointed that they had to go outside the United States,” Paulson said. “I just think it’s incredibly ironic that the Chinese financial institutions are more interested in jobs and housing than American corporations.”
Paulson added that strictly bottom-line thinking among American investors appears to be forcing some to seek out foreign sources of capital.
“They don’t really care about American workers and American families,” he said.
Having elected The City’s first Chinese-American mayor in November, San Francisco also has a history of efforts to build economic relations with the rising superpower. The China SF program, launched in 2008, aims to help Chinese companies connect with business investment and relocation opportunities in San Francisco.
Some of the same goals are held by the San Francisco Center for Economic Development, which counts former Mayor Willie Brown among its leaders and has been keenly interested in seeing the Hunters Point project come to fruition. The program boasts that the Bay Area attracts 36 percent of the nation’s total venture capital investments — both foreign and domestic.