ERIE, Pa. (June 30, 2020) – Erie Insurance (ERIE) and The Erie Community Foundation (ECF) have joined forces with Arctaris Impact Investors, LLC (Arctaris Impact or Arctaris), a national impact investor located in Boston, to bring new capital investments to Erie, Pennsylvania through a program called Arctaris Erie. This program will provide public and private sector investment capital to transform the city center into an inclusive space where all residents will want to work, live, eat and play.
Through this partnership with Arctaris Impact, ERIE and ECF will enable $40 million of investments in Erie. The intention is to invest the majority in Erie Downtown Development Corporation (EDDC) shovel-ready projects and the remainder in other mission related investments (MRI) within Erie County Opportunity Zones. An impact dashboard will be developed to assess and evaluate the social and community benefits of a potential investment in an Opportunity Zone project.
“We’re thrilled that we’ve attracted an investor of Arctaris Impact’s caliber to Erie,” said Tim NeCastro, president and CEO of Erie Insurance. “This significant infusion of capital accelerates our work to revitalize Erie’s downtown and encourages other potential investors.”
Arctaris Impact is focused on revitalizing disinvested cities and targeted rural communities. They have partnered with multiple foundations, federal and state government agencies to invest in Opportunity Zones, inner cities and targeted rural communities throughout the U.S., with the aim of delivering above-market investment returns alongside positive social impact. The Kresge Foundation selected Arctaris Impact to develop best practice models for investments in Opportunity Zones across the nation.
Based on Arctaris’ interest in investing in the city, discussions began with EDDC, Erie Insurance and ECF to design a collaborative approach to investing in Erie projects. Erie Insurance is initially investing $25 million in the Arctaris Opportunity Zone Funds and is looking to expand to $50M during the second half of 2020. The Erie Community Foundation has made a $5 million commitment to invest in mission related projects. For Erie Insurance and the ECF, investing in Arctaris’ Opportunity Zone Funds allows for an infusion of new capital investments in the city’s revitalization efforts at a higher level than either organization could invest independently.
“Arctaris is excited to partner with Erie Insurance and The Erie Community Foundation to invest long-term, growth-oriented capital into Erie, generating economic development that supports local businesses and creates an inclusive space for all residents to enjoy,” said Jonathan Tower, managing partner of Arctaris. “Our nationwide strategy is to partner with cities, creating programs where we provide 80% of the capital for community investments, alongside 20% from local foundations and government partners, to encourage job creation and growth in underserved communities.”
Arctaris Erie will be replicated in cities throughout the country as part of Arctaris’ new Opportunity Zone Investments initiative. Arctaris has successfully invested in similar programs in Washington, D.C., Maine, Baltimore, Michigan and Ohio.
“Arctaris brings 11 years of expertise and substantial financial, government and philanthropic relationships that can be leveraged for additional grants and investments in Erie,” said Erie Community Foundation President Michael Batchelor. “The Kresge Foundation’s support of Arctaris, and their partnership with Harvard’s Institute for a Competitive Inner City, will provide Erie with direct access to research and important best practice models.”
A representative of Erie Insurance will have voting rights on the Arctaris Investment Committee and a seat on the Community Advisory Committee. Both Erie Insurance and The Erie Community Foundation will have seats on the Arctaris Erie advisory board. Arctaris will serve as investment adviser and fund manager and will maintain at least one full-time employee in Erie.
With ERIE’s investment in Arctaris Impact, the company’s OZ investments will increase from the original OZ fund of $50 million to $75 million in the second half of 2020. Other Erie Insurance Opportunity Zone investments include $6.5 million in the EDDC food hall project and $1.2 million in Whitethorn Games, a wholesome video game developer with offices in Erie. Other Opportunity Zone investments continue to be evaluated.