Investment banker and Wells Fargo heir F. Warren Hellman is teaming up with KQED and the UC-Berkeley J-school to create a nonprofit news organization to fill gaps in local news coverage left by the decline of the Chronicle and other daily papers. The Hellman Family Foundation is contributing $5 million to the Bay Area News Project, which is also in talks with The New York Times and other potential participants.

(Coverage: NYT, SF Business Times, Chronicle, AP and press release from Hellman.)

“We’ve lost a lot,” Hellman told the Chron. He bemoaned dwindling reporting on subjects like the San Francisco Ballet, local business openings and vetting of political candidates. “We’re going to be meeting an unmet need.”

“I was appalled by how much the Chronicle has shrunk, how thin the Examiner is, and how little coverage there is for local news,” he told AP. “I couldn’t help but believe that local politics will be affected. We will have even weaker candidates than we have now with less local coverage, and it seemed to me there was something we could do about it.”

Berkeley J-school dean Neil Henry told the AP that collaborating with Hellman makes sense both for the school and its 120 students, who already are producing stories for Web sites focused on seven San Francisco Bay area communities. Besides content for the new news venture, the journalism school expects to provide overall editorial guidance and possibly technological and fundraising expertise, Henry said.