There have been a few misconceptions about Carrboro's Revolving Loan Fund floating around recently. I would like to clear them up.
In June of 1985 the NC Dept of Natural Resources and Community Development gave Carrboro the right to use program income from the repayment of principal and interest from 3 economic development loans made to businesses in Carrboro to start the Carrboro Revolving Loan Fund. The loan proceeds from the three loans totaled $275,000. To date no local tax dollars have been added to this fund, all funds have accrued from the principal and interest from the repayment of the original three loans. There is also some additional interest accrued on the repayment amounts added to the fund from the investment of the repayment dollars. The three original businesses are still operating and employing people.
Over a period of 21 years the Town of Carrboro has loaned money to 33 businesses. Weaver St Market, the first to receive a loan has expanded once in it's original location and has since expanded to Southern Village and soon to Hillsborough. It is a major employer.
After making 33 loans and helping many town businesses get started, the current balance available to loan is $480,000. Since the loan started there has only been one foreclosure for the which the town obtained collateral and the proceeds will go back to the RLF.
The town just completed a three day new business start up program for 30 citizens. Participants received sufficient training by the Small Business Technology Development Center to compete for a Carrboro loan if they meet the criteria.
Over a twenty year period 19 of the 33 businesses or 58% that received a loan are still in business. A significant improvement over the national average of 44% of new businesses that survive the first four years.
The businesses that have received loans from the RLF include:
Weaver St Market-a key part of the revitalization of downtown and a key employer
Cat's Cradle-a regional leader in the music world
The Acme-recognized by many food journals and Southern Living as one of the best restaurants in region
The Ink Spot
Star Child
Paper Pen and Ink
Mill Town
The Orange County Social Club
and many many others
Having been here for over 31 years I can say without exaggeration that the RLF has changed the face of Carrboro and set the stage for our next economic step forward. The businesses made possible by the RLF have created a vibrant town. When the Main St project and others come online in next few years, and help ease the residential tax burden, they will be building on the economic and yes cultural foundation set by businesses like the Cradle, Acme, The Music Loft and many others.
Hey, for a fund that has not used local tax dollars and has managed to grow $275,000 into $480,407 that ain't too shabby! Maybe that is why other small towns want to know how we did it.
Issues:
Comments
To blow my own horn a week
To blow my own horn a week before the election. One of the original sources (if not THE original) of funds for the CRLF was $100,000 (or more?) paid by my (then) company, Cleora Sterling. We borrowed the money from CBGD funds from the federal government adminstered by the state and paid it bsck to Carrboro. This was a really neat way for a business to be involved in the local community. I am certainly pleased to be associated with these businesses and this program. I am sorry that Cleora, (which I sold) has moved to Mebane........
Jacquie - thanks for this
Jacquie - thanks for this post. I agree that the Carrboro RLF is indeed a great thing. I've long thought that a comparable RFL for second mortgages to low-wealth homeowners would be a great way to help keep Carrboro affordable for at least a few more families.
The Orange County EDC is
The Orange County EDC is also starting up a loan fund, partically because it has been effective in Carrboro and other environs. It has been modestly funded by the Commissioners and they will consider additional funding later on.
I'd completely forgotten
I'd completely forgotten about this nifty little thing. It's a great example of how economic policy that works within the confines of the real world can pay huge dividends. Hopefully it will continue to be a useful tool for the town for many, many years to come. Just one more reason why Carrboro is one of the better managed municipalities in NC.
Pittsboro, my lovely home,
Pittsboro, my lovely home, could really use a program like this. I hope we can get some folks to talk to us about how to get something like this actually up and running. There's a lot of talk down here about what we could do, but it's been little more than talk.
Unfortunately the State of
Unfortunately the State of North Carolina administers small town and rural community CDBG money, so you have to apply for a grant through one of their grant programs to get this type of money. Decades ago a small revolving loan fund was an elligible use under North Carolina's CDBG program, but not anymore, I believe.
Duncan--Chatham County is
Duncan--Chatham County is very fortunate to have Dianne Reid as your new economic development director. She's very familiar with Carrboro's Revolving Loan program.
Does anyone know why there
Does anyone know why there is such a large balance in the fund ($480,000)? Are new businesses not applying, applicants can't make the cut, or what?
Another point of consideration in evaluating this program is the availability of commercial space in town. Here's the list:
http://www.co.orange.nc.us/ecodev/realest/index.asp
The average size of these spaces is 1,455 gsf and the median size is 800 gsf.
What's the relationship between commercial space/size and the success of the loan program? And what's the rent on those spaces? I seem to recall one of the recommendations from the ED consultant last year was that the town needed to increase the amount of affordable commercial space.
Is the unused money in that
Is the unused money in that fund kept in an interest-bearing account somewhere? Even at 5% that's about $24,000 a year in interest that could be used for economic development or affordable housing or made payable to me.
Speaking of affordable housing, when I looked into that program, they were telling me that it's hard to find a buyer for those houses. There are income limits which means you have to make under a certain amount to qualify to buy one. I think the amount for a single person was around $36,000 or so, I may be wrong on that figure. Whatever it was, if you did qualify for an 'affordable' home priced at $140 - $180,000 and you are making say $26,000, that means you'd be paying a significant portion of your income for your house and it ends up being a lot cheaper to rent. When faced with $500 a month in rent (less if you have room-mates) or $800-$1000+ a month for mortgage, that can change your views of the benefits of ownership in affordable housing. One of the tenets of the affordable housing programs is that it remains affordable in the future, so your affordable home doesn't really have appreciation benefits like a traditional home purchase would.
In my perfect world, 'affordable housing' means $50,000 - $80,000 or less purchase price. That would keep the payments down to around $400-$900 a month depending on HOA fees (some which can be high) and your down-payment. Comparable to rent but with some of the benefits of ownership.
I think I may have changed the subject, sorry.