Phil Angelides may be heading the most ambitious workforce housing effort to date.

The former California state treasurer—and one-time gubernatorial candidate—has taken the helm of a real estate investment fund that’s planning to pump $2 billion into workforce housing projects across the nation. Canyon Capital Realty Advisors’ partnership with Magic Johnson Enterprises brings the venture star power and street credibility in the urban communities the fund is targeting.

It’s not the first workforce housing fund in the nation, but the Canyon-Johnson Urban Communities Fund looks like the largest yet, as its size dwarfs the $100 million Maryland Regional Workforce Housing Fund launched last year and an earlier $100 million fund set up by the Phoenix Realty Group. The Laramar Group came close in size last year with a $350 million value-added fund that, once leveraged, was expected to create $1.4 billion in buying power.

“We are forming this fund to respond to what we see as a crying need for quality workforce rental housing in America’s burgeoning urban communities,” said Angelides. “We see a great need to provide quality housing to families that rent by necessity—you know, they don’t qualify for subsidized rental housing and haven’t got the resources to buy a home.”

Millions of families need quality housing in the United States, if government figures are any guide. Almost one in every three U.S. households lives in rental housing, according to data from a Census Bureau report released in 2006. Just 6.5 million of the 34 million U.S. renter households receive housing subsidies or live in government-supplied housing, leaving more than 27 million paying market-rate rents.

The number of renter households grew by 336,000 in the two years since the Census Bureau last conducted its American Housing Survey, yet even as the need grew, renter incomes barely budged. The median annual income for renter households increased by just $68 in the two years between surveys, and most of that gain was eaten up by a $43 rise in housing costs.

Homeowners—however they may have fared since the mortgage crisis hit in 2007—were in much better shape in 2006. Their annual incomes increased by $2,768, while their housing costs grew by just $91.

Although Angelides may not have had the charisma or name recognition to K.O. Arnold Schwarzenegger in the 2006 race for governor, he’s got plenty of experience in real estate. He headed his own real estate investment firm for more than a decade before he took office as the Golden State’s treasurer in 1999, where he chaired the California Debt Limit Allocation Committee and the California Tax Credit Allocation Committee. He’s also got the political connections to make things happen. In addition to his stint as treasurer, Angelides served as chair of the state Democratic Party in the early 1990s and helped elect current state Sens. Barbara Boxer and Dianne Feinstein.

The plan for the fund is to acquire Class C apartment communities in urban areas, especially infill locations along transit lines, and add value by taking care of deferred maintenance, improving units with new paint, carpeting, appliances, and amenities such as fitness centers and swimming pools. The communities will be transformed into Class B properties, said Bobby Turner, a managing partner with Canyon Capital Realty Advisors.

In addition, the fund aims to implement energy-efficiency measures from installation of more efficient boilers and reflective roof treatments to simple moves such as replacing incandescent light bulbs with compact fluorescents. Reducing consumption by 25 percent can knock as much as 4 percent off operating costs, said Angelides. “We’re [going to] green the properties, make them energy efficient, use sustainable materials so they’re healthy for tenants.”

Such improvements will allow the fund to restrain rents as well as offer special set-asides for specific classes of renters. The fund, which targets households earning 80 percent to 120 percent of area median income, aims to set aside anywhere from 3 percent to 5 percent of the units at its properties for service workers such as teachers, retired teachers, and police officers, Angelides said.

The fund, which was raising capital as of mid-February, is expected to be composed of between $1 billion and $1.5 billion in equity, with the rest of its investments coming in the form of debt. Angelides said he expected to begin making investments by the end of the second quarter or early in the third quarter and be fully invested within 12 to 24 months.

The fund will target communities of 200 or more units and will look at some mixed-use properties with ground-floor retail and perhaps a floor or two of office space, Angelides said. Those properties will likely be where the Magic Johnson brand contributes the most value through its relationships with retailers and restaurants such as Burger King, AMC Theaters, and the 24 Hour Fitness chain of gyms.

“We’re confident that we have both the skills and knowledge of the urban marketplace to be able to provide urban renters with the kind of quality housing they need and want,” said Angelides.