3c hapter - Index of

A Model to LIONize 99
Some members set aside just a small amount of their overall
portfolio for local investments, say 5 percent or 10 percent, and
view it as another asset class to diversify their holdings. Others,
such as Kolff and his wife, Helen, have invested 20 percent of
their retirement assets in local business and land. “It’s a signifi cant
part of our investment strategy,” says Kolff, who served as mayor of
Port Townsend from 2001 to 2003.
Kolff says one of his borrowers, a candlemaking company,
had to extend the term of its loan for a couple of years when the
once- successful operation began to struggle. The business eventually
folded, but the owners honored the loan and paid it back in
full. “We knew them personally and we understood the situation,”
says Kolff. His loan didn’t save the business, “but it at least allowed
them to shut it down in an orderly way.” (Try that with Bank of
America.)
That kind of personal connection and understanding is at the
heart of local investing. It’s the kind of lending that banks used to
do, when they were small and community- rooted.
Kolff has even made a zero- interest loan. When Chauncey
Tudhope- Locklear, a 20-something born and raised in Port Townsend,
had an idea to start a nonprofi t bike collective, it resonated with
Kolff. The Recyclery, as it is called, rebuilds and repairs bikes and
holds free workshops. It also sells affordable, rebuilt bikes and runs
an adopt- a- bike program for Port Washington youths. On the other
hand, Kolff gets 7 percent interest on his loan to the Broken Spoke,
the decidedly for- profi t bike shop on Water Street.
But of all Kolff’s investments, the Mt. Townsend Creamery may
be his favorite—and not just because he has elected to take part of
his dividends in cheese. The creamery’s founders, Matt Day and
Ryan Trail, set out to revive the area’s vanishing dairy tradition. At
the time, there was just one local cheese maker, who made a small
amount of goat cheese mainly for herself. The partners found a
location in town to build their plant and a farmer who would supply
milk, but the endeavor required a signifi cant amount of capital.
They mustered about $180,000 in personal equity, presented
their business plan to LION, and raised $150,000 in equity (for a
25 percent stake).