Nonprofit lender Craft3 opening doors for community projects

By: Kathleen Ellyn - Oct 18, 2016
Source: Wallowa County Chieftain

A unique regional lender that played a key role in the Wallowa Lake Lodge acquisition last spring recently opened a new office in Walla Walla.

Craft3, a nonprofit community Development Financial Institution (CDFI), is hosting an open house Oct. 20 at its new office at 103 E. Main St. in Walla Walla that will serve Eastern Oregon and Southwest Washington.

Craft3 works to support businesses, nonprofits and individuals with barriers to traditional lending. Their goal is to support community and ecological projects and they are well known for funding small, family businesses, agriculture, value-added food processing and manufacturing, and retail and tourism projects.

In the case of the Wallowa Lake Lodge, a conservation loan from Craft3 was used as a bridge loan to allow the newly created Lake Wallowa Lodge LLC to purchase and preserve the nearly 100-year-old lodge and surrounding nine acres before the sales deadline.

A portion of the money needed for the $2.75 million purchase was intended to come from selling off some of the surrounding land to a group interested in conservation of the wetlands and fisheries. The LLC group was in conversation with the Nez Perce tribe on that, but no finalized plans had been made, which triggered the need for a bridge loan.

The configuration of the loan was unusual, said Craft3 Senior Business Lender Brad Hunter.

“Traditionally we work with land trusts, but this was an opportunity to do something with a newly formed community investment group,” Hunter said. “It was almost like lending to a start-up.”

From the point of view of making a conservation loan, several factors gave Hunter confidence that the loan would be paid back: the land did have a high conservation value and, as mentioned, conservation plans already were under discussion with the Nez Perce Tribe. Additionally, the conservation plan had the support of Oregon Department of Fish and Wildlife.

The fact that the lodge was the only collateral the LLC could offer to secure the loan was another issue to be examined, but again Hunter found several facts that supported the risk: lodge management was being retained to preserve business continuity, group chairman James Monteith’s background as co-founder of the nonprofit Wallowa Land Trust, and an examination of the makeup of the oversight committee of the group.

“We love the idea of community ownership,” Hunter said. “(but) we had to get used to the idea of a community investment group with about 120 members and understand who was on the management committee and determine if they had the diverse skill set to oversee this.”

In the end, Hunter was convinced by the quality of individuals involved.

Craft3 has had other experiences in the Wallowa County area. It also served as a lender on the Integrated Biomass Plant project in Wallowa, lending over $430,000 to that project back in 2013.

Since its inception, Craft 3 has invested more than $399 million in over 4,800 individuals and businesses in Oregon and Washington, Hunter said.

“It’s about place and caring about community,” said Carl Seip, Vice President for External Affairs. “We want the deals we do to be of things that are supported by the community and build family, community and environmental resilience.”

National recognition

Craft3 was recognized by the U.S. Department of the Treasury’s Community Development Financial Institutions Fund (CDFI Fund) for its exceptional work this year. The company earned an honorable mention and $25,000 for innovative approaches to increasing investment in underserved rural areas.

Specifically, the award recognized Craft3’s Clean Water Loan product, previously implemented on the county level and expanded to a regional strategy. The new configuration allowed on-site sewage system professionals to discuss the same financing option with potential borrowers regardless of physical location.

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