Building revitalization efforts on the Fulton Mall, now Fulton Street, in downtown Fresno is going to the locals.
A new investment fund that launched Thursday will allow members of the community to pool their money, buy downtown real estate and fix it up. No need to wait for big developers or wealthy investors.
“What’s happening now is a lot of out-of-towners are coming in and buying (the buildings) up and they’re not necessarily fixing them,” said Craig Scharton, the fund manager.
“We can do this on our own as a community if everyone that is qualified puts in a little bit,” he said. “It’s not that much money. We can go in and start fixing up buildings.”
We can do this on our own as a community if everyone that is qualified puts in a little bit.
Craig Scharton, fund manager
Scharton, who owns Peeve’s Public House on the mall and is a longtime downtown revitalization advocate, is leading the crowdfunding effort through Fulton Street Investors, LLC, a direct public offering.
DPOs are growing in popularity. They are similar to an initial public offering in which people can buy shares of a company, but they don’t trade on the stock market and do not have to be registered with the federal government. There’s also little paperwork involved, just an annual permit from the state Department of Business Oversight.
Communities nationwide have used DPOs to raise money for neighborhood grocery stores, public markets and small businesses, said Brian Beckon, managing attorney for Cutting Edge Counsel, an Oakland-based law firm with experience helping groups establish DPOs. The firm is working with Fulton Street Investors.
The Fulton Street Investors goal, said Scharton, who will make up to $60,000 as the fund manager, is to raise $1 million in six months to activate the fund, then buy a building. The maximum amount the group can raise in the first year is $4.5 million. The group would look for one- to three-story buildings on Fulton Street or near it to buy and renovate using local contractors.
“I want to go after the least appealing, homeliest, walk-by-it-and-never-notice-it type of building and turn it into the stars,” Scharton said.
All transactions would be conducted in cash – no loans will be used.
This creates a vehicle for people to put their money where their mouth is.
“I’ve lived through too many economic cycles to want to lose people’s investment,” Scharton said. “I don’t want to do this and have an economic downturn and now we’re missing payments and all of that. I’m trying to be as conservative as possible with other people’s money.”
People can invest as little as $500. There are income and financial requirements. Investors would receive a dividend from the rent paid by tenants and from the sale of buildings in the future.
“This is an opportunity for people who believe in downtown Fresno to actually invest, not just with their hearts,” Scharton said. “This creates a vehicle for people to put their money where their mouth is.”
Aaron Blair, president and chief executive officer of the Downtown Fresno Partnership, said he has to learn more about the fund and its format, but “it’s a creative avenue for downtown investment.” Downtowns with a high level of community involvement are always more successful, he said.
“I think it’s a new philosophy that Craig’s putting together to do something unique and to continue the growth of downtown,” Blair said. “I wish them all the best. I want it to work.”