Community Investment Trust An On-Ramp to Financial Inclusion

Why? The Economic Boom had its costs of Gentrification and Displacement Asset Poverty & Financial Inclusion is a pressing challenge in Oregon and the nation 1 in 4 Oregonians (24%) live in a condition of asset poverty (Without income for 3 mos. they must rely on friends, family or public assistance) 17% of Oregonians have zero or negative net worth People want to invest but have little in excess funds to invest People want to be part of something larger & local, like real estate in their neighborhood People want to learn and understand goal planning, budgeting and investing

What? We must design innovations and products that are designed to be chosen and used* Moving from Owing to Owning People embrace the opportunity to take action for themselves They rebel against being left out Everyone wants access and opportunities, and to learn and understand We all yearn to join into and be part of something larger People want to invest in real estate People’s motivation for long-term investments: Children’s education Family emergency Purchase a home Retirement Get out of debt, start a business, buy a car The financial product to achieve these was missing *Nudge: Improving Decisions about Health, Wealth and Happiness Author, Richard Thaler -2017 Nobel Prize in Economics Recipient

Our Answer: The Community Investment Trust Traditional REIT The Community Investment Trust REIT Mercy Corps built a local team of expert advisors from: Real estate development Law Investments and banking Community engagement A New Type of Private REIT: Neighborhood investors Targeting low-income, first time investors Open to everyone Low monthly investment levels ($10-$100) Downside loss protection 4

Where? Outer East Portland - Gresham Population in the four zip codes around Plaza 122 has approximately: 185,000 people 26% of Portland’s population 40% of Portland’s students 65% of residents are renters Poverty rate is 22% 90% of children in closest elementary school qualify for free or reduced lunch Median family income is 67% of Portland metro’s median Ethnically diverse (Hispanic, Russian, Somali, Vietnamese, Arabic) Plaza 122

Outer East Portland (“the Numbers”) Big circle- NE Portland- Blue color and minority population Small circle- SE Portland- Middle class population Thick line- 82nd Ave- where “proper Portland” ends 6

Outer East Portland (“the Numbers”) Big circle- NE Portland- Blue color and minority population Small circle- SE Portland- Middle class population Thick line- 82nd Ave- where “proper Portland” ends 7

Outer East Portland (“the Numbers”)

The Missing Step in Traditional Community Economic Development Thinking

The CIT Meets Government Community Economic Development Aspirations Equitable Development Inclusive Financial Growth Makes Gentrification Work for All Catalyst for Future Development

Located on SE 122nd Ave in East Portland The First CIT – Plaza 122 Located on SE 122nd Ave in East Portland 28,972 square feet strip mall on 1.43 acres Built in 1962 on farmland Retail/Commercia l zoning Now at ~95% Occupancy 26 Nonprofit & Business tenants Latina-owned Hair salon Tax preparers Funeral planner Small businesses Russian-owned lotion importer Somali-owned taxi company Chiropractor Transgender youth support Health & Wellness entrepreneurs

How the money flows After taking the class, people will be able to invest in the CIT They will subscribe to invest from $10 to 100 per month which will buy shares in the CIT The property is a commercial business that makes an income as tenants pay rent and pays expenses. What is left over is profit. From the profits, an dividend is paid out annually to each investor – the amount depends on how many shares an investor has and how profitable the business was that year. The other side of the profit picture is the increase in share price – see next slide for that 12

How the CIT Works Over Time Over time, the loan is paid down and property value changes. The combination of the two factors then affects the value of the CIT shares. As more and more people enroll to invest monthly, the neighbors owned percentage of shares in the property increases until they are all owned by the Community Investment Trust. In 2017: Building Worth: $1.54M Mortgage: $920,000 Impact Investors: approx. $450,000 MCNW Note: approx. $170,000 Expect the equity in the building (approximately $450,000) to be bought out by all neighbor investors in 3-5 years 13

What We Will Measure Financial Success of the Investor Tenant Success Track investor engagement. Do they open saving accounts, start/plan a business, buy a house, stick to their investment plan. Financial Success of the Investor Does community ownership of the building affect the success of tenant businesses? What type of tenants tend to see the biggest change? Tenant Success Will the immediate area around Plaza 122 see a change in crime rate and type of petty crime? What is the engagement with community through volunteering and voting registration? Community Health and Engagement The 3 measures of Success for the CIT 14

Where is the East Portland CIT Now Financial Action Curriculum “Owing to Owning” is accessible and facilitated by community members 70+ Neighbors trained Offered in English, Spanish, Arabic, Russian and Vietnamese, (to add 2 more languages) LEARN Launched in October- 2017! First investors made automatic investments on November 1st Aim for 150 neighbor investors by end of 2018 INVEST 95% occupancy = steady income to East Portland CIT Lower and stabilize operating expenses Increased property attractiveness Introduce first food truck to parking lot = Evolve Business Model PROFIT

Steps for Replication Exploration Organize your community and apply the Human Centered Design Approach Evaluate community needs and desires Organize Get Experts (Real Estate, Finance, Legal, Community Development) Designate an Lead Advocate Organization Find Potential Funders Advisory Board Complete Organization Self-Assessment (Starter CIT Tool-kit w/ CIT Services) Identify Potential Properties Build Financing Paths Ide Explore 16

Meet Germaine