Community-Based InvestmentDecember 7, 2011
[I’m struggling to determine alternative ways to build the kind of communities we will need to address climate change and peak oil–and to put myself and other built environment colleagues back to work. Although I had placed some of what’s below on the Congress for the New Urbanism – Cascadia Google Group awhile back, I decided to publish it as a blog after reading “Opportunity for New Urbanists: Occupy Wall Street” in New Urban News. To see much movement at all in the real estate development world, we must address the financial and the NUN article does that. However, as I began to think about it, I realized that the NUN title mis-appropriates the name of that popular movement, taking us in a direction opposite what Occupiers are demanding.]
I recently attended two lectures that call into question the long-term viability of depending upon Wall Street based investments–one by Denis Hayes, President of the Bullitt Foundation, the other by Richard Heinburg, Senior Fellow of the Post Carbon Institute.
Hayes watches the stock market on a daily basis for the Bullitt Foundation. He says that economists he follows say it has one or two more runs. Because of the “green bubble,” even those may be in question because we have been ignoring environmental externalities that are coming due.
Heinberg had just finished a solid day of consulting with Portfolio 21, an
alternative investment fund in Portland, about moving money from Wall Street. He is the author of “Power Down,”” The Party’s Over” and most recently, “The End of Growth.” After showing multiple reasons why Wall Street’s day is over he asked “What does a transition to a new economy look like that doesn’t depend on a model of growth based on cheap energy, reckless consumption and financial speculation?”
The messages from these talks coincided with Occupy Wall Street’s successful campaign
to Move Your Money from the big Wall Street banks. Although the Occupy
movement set the target date as Nov 5, in Oregon, we had news stories
on the mainstream media of people transferring their funds from big banks
to local credit unions for several weeks before the target date!
It seems that this is the time to strike with popularizing solutions for
people seeking local investments–investments that will help the built environment
industries too. After Denis Hayes talk, I wrote him asking: *”Would you consider setting up a support arm for the Community-Development Initial Public Offering
(CD-IPO) concept pioneered by Market Creek Community Ventures? Its
investors earned 10% on their money–in 2008 and 2009 when many others were
losing their shirts.”
Market Creek had foundation support from the Jacobs Center for Community Innovation. Here’s what Jacobs has to say:
Ultimately, all assets and social enterprises in The Village at Market
Creek will be owned by the community. Community ownership is key to
long-term change, providing a way for residents to have a voice in how
resources are used and to benefit from community assets.
A resident-led Community Ownership Design Team worked to find a way to
transfer ownership of Market Creek Plaza to residents. They created a
ground-breaking new tool for building wealth in under-invested areas, the
Community-Development Initial Public Offering (CD-IPO).
It took six years of work, 40 drafts by a legal team, and three attempts
to earn approval for the CD-IPO from the California Department of
Corporations. Working hand-in-hand with residents to design the investor
criteria, the CD-IPO transfered 20% ownership in Market Creek Partners,
LLC, the company that owns Market Creek Plaza, to a preferred group of
investors called the Diamond Community Investors. Another 20% is owned by a
community-foundation, the Neighborhood Unity Foundation, which invested
$500,000 in the Plaza and uses the dividends to fund philanthropic efforts
in the community.
The offering opened on July 5, 2006 and closed on October 31, 2006, with
investments ranging from $200 to $10,000. In total, 415 investors purchased
all 50,000 available units, at $10 per unit, for a total of $500,000.
In 2008 and 2009, the Diamond Community Investors received a full 10%
return on their investments.
There are other solutions too–like working to lift some limitations on
credit unions, working with local community development banks and
developing a Community Loan Fund.
In Portland, Springboard Innovation is pioneering a Direct Public Offering to build Hatch, a community-oriented business incubator for social-benefit companies. Hatch aims to serve what founder, Amy Pearl calls “hybrid organizations” by providing space and services for mission-driven organizations.
I see the above as promising ideas to help put New Urbanists and and our friends back to work in addressing the most pressing environmental issue of our day in the way that we New Urbanists do it best–creating walkable neighborhoods.