1. Community Investment Trust An On-Ramp to Financial Inclusion

2. 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

3. 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 Nobel Prize in Economics Recipient

4. 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

5. 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

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 6

7. 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

8. Outer East Portland (“the Numbers”)

9. The Missing Step in Traditional Community
Economic Development Thinking

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

11. 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 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

12. 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

13. 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

14. 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

15. 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

16. 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

17. Meet Germaine