— by Alexander Conrad —
Would the Orcas Island community support a local Community Loan Fund? Would there be sufficient borrower interest? Would there be sufficient investor interest? How would it work on Orcas?
These are just a few of the questions that a group of islanders (the loan fund task force) convened by OPAL Community Land Trust, have been asking during several months of diligence and business planning. The task force researched existing private community lending on the island and more formalized Community Loan Fund activity in other areas of the USA. Based on this research, the task force created a ‘best fit’ model for Orcas. By mid July, the task force was ready to hear from the community and hosted a ‘Jeffersonian Dinner’ to solicit feedback and ideas from the community.
The response was tremendous. Nearly 80 islanders packed the Episcopal Parish Hall for dinner and conversation about the proposed Community Loan Fund concept. In keeping with the Jeffersonian Dinner concept, a moderator hosted dialogue at each table and introduced new questions with each dinner course. Participants represented a truly dynamic cross-section of the Orcas community: people who already made private loans, some who might be investors, individuals who had borrowed from private lenders, and still others who might be borrowers if a loan fund were created.
Prompted by moderators to talk about why we, as islanders, should care about a Community Loan Fund, stories both reasoned and heartfelt abounded. Borrowers told compelling stories about the positive impacts that community lending had already made to their lives; the type of lending that would be available to a wider audience with a formal Loan Fund. Investors talked about the need to support a sustainable community with investments tackling difficult issues like housing affordability and economic development. Addressing the entire room at the end of the night, dinner participant Maggie Kulyk characterized the proposed Community Loan Fund as a path to invest in tomorrow.
OPAL’s Leadership
OPAL is leading the Community Loan Fund diligence and planning process. OPAL Executive Director, Lisa Byers, explained, “OPAL’s mission is to help sustain a healthy and economically diverse Orcas Island community. Currently we do that by providing permanently affordable homes to families and individuals whose housing needs are not met by the traditional market. The loan fund directly supports this mission and could help more islanders by providing mortgage financing not otherwise available from traditional banks, and by supporting small business economic development so more people earn a living wage and are able to afford their own home.”
How might it work?
While the types of loan products offered by the Loan Fund are likely to grow with time. The fund will initially focus on providing mortgage financing to credit-worthy people valuable to the community’s sustainability who might not qualify for traditional bank financing. A modest small business lending and economic development program will also likely be available in the early stages of the fund. The actual function of the loan fund is quite simple. Investors would provide zero or low-interest loans to the fund as capital. Borrowers would apply for loans and when approved, receive loan funds against a loan agreement with the Fund. Members of the community would comprise the Fund’s Investment Committee.
The entire Task Force would like to thank again everyone who participated in the dinner event. The ideas presented and exchanged not only represent intriguing strategic and tactical opportunities, but also provide ongoing inspiration to the planning process.
What to expect next?
Much work remains, but several key decisions will be made this fall. Like it or not, state and federal regulators will also have a say about what is allowed under the law, and that may impact the proposed business plan. Once the task force completes the business plan, the OPAL Board of Directors will review the plan to determine if it makes sense to move ahead, and if so, if OPAL should sponsor the fund.
Our Orcas Island community demonstrated significant interest and demand for both borrowing and investing in a Loan Fund. As the Task Force winds down its work and potentially moves into a start-up phase, keep an eye out for more community outreach and communication. We promise to keep you in the loop!
For more information or further conversation, contact Alex Conrad: orcasloanfund@gmail.com
I love this example of democracy in action. Great work!