One of the pride and joys of the local living economy movement is the Carrboro revolving loan fund (CRLF). Created by a grant of non-local state funds, the CRLF lends money at less than market interest rates to businesses that supposedly can’t get loans from private capital lenders.

Recently one CRLF recipient (Original Ornaments) went belly up in the hotly competitive Carrboro glass bead business. The town of Carrboro invested $70,000 in a small retail beading business in the midst of the worse financial downturn since the Great Depression.

Mr. James Harris, Carrboro’s ED director, foresaw no problem in issuing the owner, Ms. Schlatter, a loan of $70,000 from town coffers. He even foresaw no problem with Ms. Schlatter only putting up $25,000 in assets. (Try getting that debt-to-collateral ratio in the real business world.) The term was six years. The interest rate was 3%.

Turns out, that the Schlatter loan wasn’t the only undercollateralized loan approved by Mr. Harris in his rush to empty the CRLF coffers. Around the same time, Mr. Harris sent another CRLF loan to the Boa for approval. The business plan was to rent cubicle space in a common office in Carrboro. So many great businesses have been launched from coworking space. The loan was for $90,000 at 2% interest (a rate one–third better than even Ms. Schlatter got) over six years. The payment plan was interest only for the first six months, then interest and principal payments.

So what was the collateral for the $90,000 loan? It was $40,000 in home equity. The collateral was a second mortgage position on the business owners’ home.

Why would the town of Carrboro accept less than 50% collateral on a business that, unlike Original Ornaments, didn’t even have an inventory to help secure the loan?

The answer is simple if you recognize the time-honored tradition of Carrboro politics, reward your pals. Turns out that the requesting business, Yesh Thirty Seven LLC dba Carrboro Coworking, is owned by a married couple. Mr. Brian Russell is one partner. Ms. Ruby Sinreich is the other. Yes, it’s the same Ms. Sinreich who is a longtime friend of Mayor Mark Chilton.

Pulpsters will remember that as a college-educated, private secondary school educated, single female she received a low–interest loan from Empowerment, Inc. courtesy of Mr. Chilton. Ms. Sinreich denied that the loan was in return for her supporting Mr. Chilton in his run for Carrboro office. Ms. Sinreich also operates the local censored political blog known as Orange Politics. Despite, Ms. Sinreich never having lived in Carrboro, she's avidly supports Mr. Chilton in all of his developer/mayor schemes.

Pulpsters should note that as of June 2008, the town of Carrboro was sitting on over $400,000 in CRLF cash. Within the next year, the town had exhausted the fund. Here’s a table showing the wise dispersals creating dozens of well paying jobs and oodles of boodle in sales taxes, at least if you're Mr. Harris.

Note the Carrboro Raw “juice bar in a van” is so dedicated to repaying your loan money that it closed for business over the Christmas break.

No word on when the Boa will require Mr. Harris to produce an actual accounting that shows how much money has been given over the past decade to create exactly how much in additional tax revenue for the town.

In most of North Carolina, business owners look at Orange County and see a business community that feeds off the table scraps of UNC, the economic engine of Orange County. UNC extracts financial resources from the other 99 counties in North Carolina to the tune of over half a billion dollars annually. Much of that money is fed into the local Orange County economy, some directly, some indirectly through the salaries of thousands of UNC employees and contractors living in Orange County. Yes, in most of North Carolina, Orange County is the last place one would point to as an example of a “local living economy”

Orange County is so not like the rest of North Carolina. Here, overly narcissistic dilettantes dabbling as “business owners” can talk of the need to support a local living economy while ignoring the hypocrisy and sheer nonsense of their position. Yes, Orange Progressive values include simply ignoring inconvenient truths. Simply ignore the fact that the vast bulk of moneys flowing through the Orange County economy are NOT local in origin. They aren’t even voluntarily spent here. They come through that most socialistic mechanism of all, taxation.

Pulpsters can only laugh at the latest feel good pronouncement from the land of the loons. A merry band of local business owners, community leaders, and citizens are working together to build and sustain Carrboro’s local living economy. They call themselves “LocalMotive”. LocalMotive is becoming a network member of the neo-Luddite school of economic development called The Business Alliance for Local Living Economies (BALLE).

If you have a real business that can survive without government support or a voluntary form of local mercantilism/tariffs, then you needn’t apply. No, LocalMotive is for businesses that require customers who want to pay more for goods or services than they have to in a regional or national economy. According to LocalMotive, “the success of your [Carrboro] business is almost certainly tied to the community thriving. Up to now, you have had to operate independently when addressing all issues big and small, sometimes to the detriment of spending time building and maintaining your business.” Shudder the thought that Carrboro would want to attract a business that doesn’t depend on the immediate community surrounding its facility.

The LocalMotive roster of economic roundhouses already includes: Carrboro Creative Coworking, a professional shared workspace with a community atmosphere; Carrboro Raw, a smoothie juice bar; Happy Human, a spice rub purveyor; Protea Digital, a web based marketing company; the good old Weave, Weaver Street Market; and Wootini, an art gallery. All businesses, which for the most part, couldn’t survive in a town or city with a vibrant, successful regional economy.

LocalMotive is supported by the great green anarchist, Alderman Dan Coleman, another local Carrboro “businessman” with no known source of revenues, other than a non-locally working spouse. Mr. Coleman introduced a resolution to “BUY CARRBORO WEEK 2009” (December 5 to 12) during the latest BOA meeting. As usual, Mr. Coleman dispenses with the facts. According to AlderDan, Carrboro's locally-owned businesses create more high-paying jobs in our community. Yes, AlderDan wants you to give up shopping on the Internet, which may come as a surprise to LocalMotive member Protea Digital, a business which makes money from businesses that use web marketing. Gee, this planned economy thing is complicated.

One thing is for certain, no one will provide any metrics to measure the success of the campaign. Carrboro’s ED guru, Mr. James Harris, is just too busy doing whatever it is he does to occupy his time.

No word on whether or not Alderman Coleman will break into the line with LocalMotive, as he did for his son to ride on the Little Blue Choo.

In most of North Carolina, a town wouldn’t invest $70,000 in a small retail beading business in the midst of the worse financial downturn since the Great Depression. The reluctance to invest would be enhanced if another bead retailer moved into town just prior to the first bead retailer asking the town for money. At the very least, town officials would require hard assets for collateral, assets such as real estate.

However, Carrboro loves to “keep it weird” in all things. It’s not like most of North Carolina. Flaccid ED is the norm in Carrboro, not the exception. It’s what the town has paid out over $1,000,000 for in the last decade, over $1,000,000 for an unaccountably flaccid ED office.

It should come as no surprise to Pulpsters to learn that the Original Ornament, a bead retailer located in Carr Mill Mall, has closed its doors after sixteen years in business. What may be of interest are the particulars behind the closing.

A last ditch Carrboro revolving loan given without hard collateral has made Carrboro the proud owner of a pile of glass beads.

Blue Skys - Happier Days
The original ornament was started by Ms. Casey Schlatter in 1992. According to Ms. Schlatter, for almost ten years there was no competition to this full service bead store. Business was fine.

Then the Internet exploded onto the retail scene. The Original Ornament started moving to upscale customers and custom jewelry, items suitable for those with disposable income, items that don’t sell well in economic downturns.

Dark Clouds - Retail Competition Arrives
With the 19 September 2008 opening of Rare Earth Beads but a few blocks away on West Main Street in Carrboro, the business pressure on Original Ornaments ratcheted considerably higher. Why would anyone believe that Carrboro could support two retail bead outlets?

The owner of the new store David Sterling, was quoted as being unconcerned. “We have a very different business and a very different clientele. I personally wish [Original Ornament] every success. I’m not doing this business to be competitive to anybody.”

Ms. Schlatter didn’t see things in the same light. “They are competition – especially, when we’re in the same town.” (See Carrboro Commons Bead Story).

Reaching For The Revolver - The $70,000 Bead Loan
Ms. Schlatter was apparently concerned enough to go over and seek out money from the infamous Carrboro revolving economic loan fund. It's the first and last stop for Carrboro creative entrepreneurs who can’t get real business loans.

Mr. James Harris, Carrboro’s ED director, foresaw no problem in issuing Ms. Schlatter a loan of $70,000 from town coffers. He even foresaw no problem with Ms. Schlatter only putting up $25,000 in assets. (Try getting that debt-to-collateral ratio in the real business world.) The term was six years. The interest rate was 3%.

Mr. Harris never saw any problem with the increased competition Ms. Schlatter openly admitted existed with the opening of the Rare Earth Bead store. Ms. Schlatter had been turned down by Wells Fargo, Wachovia, and even the Self Help Credit Union in Durham. That’s par for the course for Mr. Harris' clientele.

The Official Warning – Danger, Economic Folly Ahead
At least one party saw red flags ahead with regards to The Original Ornament loan. The UNC group that advises on the revolving loan applications (UNC-SBTDC) noted that Ms. Schlatter was using the $70,000 to buy inventory, more beads.

Moreover, that was the collateral for the loan, just beads and retail cases. There was no real estate collateral offered.

Finally, Ms. Schlatter was said to be personally unavailable to offer collateral because she had significant debt (credit card and long term) related to the business.

Mr. Harris needn't worry. He'll be paid regardless. He's a municipal employee.

The Economic Storm Blows In
Earlier this month (August 2009) Ms. Schlatter could no longer weather the economic storm. She turned in her keys and shuttered her doors.

According to Carr Mill Mall manager, Nathan Milian, “She turned in her keys and indicated she was filing bankruptcy, although we have not been notified as such. Apparently, one of her lenders called her line of credit and she couldn’t pay it off and that was the straw that broke the camel’s back. Beyond that, I do not know anything else.”

When asked it Carrboro would get its money back, Mr. Harris said, “We have to wait and see.” (See Carrboro Citizen Revolver Story.)

The Missing Collateral
Ms. Schlatter is the owner of a house in Hillsborough, the county seat. Her residence at 114 Tuscarora Drive has an assessed value of $162,180. It’s not part of the revolving loan collateral. Mr. Harris didn’t require it.

There’s no official explanation as to why Ms. Schlatter's house isn’t serving as collateral for the Carrboro revolving loan of $70,000 to Original Ornament.

No word on whether or not Mr. Harris will take a bead on funding another bead store if it comes to town.

No word on how the Boa will swallow Carrboro’s newest treasure, a pile of glass beads worth tens of thousands of lost ED dollars.

People vote not only with a ballot, but also with their bucks. A Carrboro apartment owner (Tar Heel Companies of North Carolina or “THC”) has just voted to remove its capital from Carrboro's municipal jurisdiction after being villified by the town elected officials.

The “good news”? By selling out, about 255 affordable housing units are being created in Carrboro by the Boa's latest innovative affordable housing policy, unequal enforcement of property rights. Town government distaste for non-pal property owners can be combined with their taste for affordable housing for people of the right diversity.

Last July, the Pulp told the Abbey Court story, an apartment complex of about several hundred units located off NC 54 in Carrboro on Jones Ferry Road. Boa members very publicly intervened with the ability of THC to control who parks in their privately owned apartment complex.

Near to Abbey Court is a makeshift day worker pickup location. The complex is also near a bus stop and has been used as an unofficial park-and-ride lot. The Abbey Court manager has been facing problems with cars in the complex that don’t belong to renters. In response, the manager has made the mistake of enforcing parking rules that included requiring official parking stickers issued by the complex and enforcing the parking rules by towing away offending vehicles.

In most towns in North Carolina, such enforcement would be no cause for government intervention. But Carrboro isn’t like most towns. When a car owner facing his car being towed in Carrboro endangers a child by stuffing them into the hooked up car, neither Mayor Chilton (who was present) nor the police intervene for the safety of the child.

In response to this incident, the Boa met in a highly unusual summer recess meeting on 31 July 2008. After much breast beating over the apartment complex owner’s exercise of control over a situation ignored by town officials, the chaotic state of parking at Abbey Court, the Boa was constrained by home rule limitations on their authority to passing an ordinance limiting towing fees to $50 in Carrboro. The ordinance also limited retrieval fees to $100 and $20 a day for storage.

On 4 August 2008, the carnage at Abbey Court continued with renters continuing to endanger towing truck operators who are complying with the law. Mr. Jesus Sanchez Basurto, 25, claimed he didn’t realize that a tow truck driver had put a boot on his car. He got into his car and tried to drive it away from the tow truck before it could hook up his car. When the car wouldn't move, Mr. Basurto opened his car door to see why the vehicle wasn't moving. He left the car in reverse. It lurched backward and ran up on the curb. Somehow he was pulled under his own car, and the car ran over his foot. The towing truck operator did nothing beyond having already put on the boot.

THC got the message loud and clear. Don’t expect to have the right to maintain control over your apartment complex without the Boa strangling that right.

THC has responded by deciding to remove its investment from Carrboro. It's test marketing six Abbey Court two bedroom, one bath condominiums at prices ranging from $54,500 to $59,500 (“as is”) or remodeled units for $79,500. (See Chapel Hill Herald Abbey Court Sale Story.)

Showing Carrboro town government’s concern for THC, Mr. James Harris, Carrboro's ED guru, said ”I'm just hoping they will follow through”.

No word on the next apartment complex owner the Boa will chase out of town, creating more affordable housing.

No word on reaction from Mr. Robert Dowling on the creation of affordable housing units in southern Orange County that he doesn't control.

No word on whether or not Abbey Court will be renamed “Carrborini Green”.

In a continuing series of incremental moves designed to shelter the end goal, the town of Carrboro edges closer to a de facto citizen’s “right to shelter” from their government. On 9 September 2008, the Boa adopted changing the town affordable housing policy to permit homeowners to seek emergency repair grants (not loans), from the town of Carrboro.

The first step in a right to shelter was the declaration of an affordable housing crisis. The Boa declared that the inability of “lower income” people to live near Carrboro median income residents was said to be creating an imbalanced society that hurt the town, not financially, but psychologically. For Boa purposes, someone making 80% of the median income is “lower income”, even if that person's income is ascendant, e.g., they are beginning their career path and will make more than medan income during the term of their occupancy, or they are trustafarians living off trust incomes without really having to work, or they have made life choices temporarily reducing a two income family status to a one income family status.

The second step in a right to shelter was the adoption of a zoning requirement (now 17%) for developers to provide for a percentage of smaller size housing in a development, the smaller housing being equated to less expensive housing for lower income residents.

The third step in a right to shelter was the funding of yet another tax exempt (read non-profit) non-governmental organization in southern Orange, the Orange Community Housing and Land Trust (OCHLT), to assist “lower income” (less than 80% of the median Orange County income) residents in finding housing.

The fourth step in a right to shelter was the funding of OCHLT to buy housing and to rehabilitate into managed lower income housing, the right to own the property being retained ultimately by OCHLT.

The fifth step in a right to shelter was the funding of OCHLT to oversee developer-built affordable housing.

The sixth step in a right to shelter was the adoption of a PILO (payment in lieu of) financial structure for developers whereby the developer could give money to the town instead of building lower income housing mixed in with higher income housing. Effectively the raison de etre of an affordable housing crisis had evaporated (the need to mix socio-economic classes), leaving only the solution to a different crisis (the need to create a right to municipally governed shelter).

The seventh step in a right to shelter was funneling of PILO moneys to OCHLT to buy yet more housing.

The current eighth step in a right to shelter is the granting of giveaways to lower income residents for housing repairs.

Under a cobbled together process that the Boa dare not have introduced in one fell swoop, government money funds an organization that can put people into housing they can’t afford to maintain, and then picks up the housing maintenance costs as well. As reported by the Daily Tar Heel, OCHLT executive director and 25% annual pay increase recipient, Robert Dowling, “What Carrboro is doing is recognizing that there is a need amongst low income people for funding to help make their homes habitable. With affordable housing, it’s not unusual for homes that are sold to lower-income people to fall into disrepair over time, because to maintain a home is expensive. It’s easier to get someone into a home … than it is to allow them to be successful in being a homeowner and maintaining the home.”

Under the adopted “process”, a resident simply asks the crack Carrboro Economic and Community Development department for a home maintenance grant, saying what the money will be used for and why they should get it. In the words of the ED head, Mr. James Harris, “We know about these situations but sometimes we just can’t do anything about it. All properties are priorities to somebody.”

Ultimately, the Boa will decide to whom to give money, apparently on a “case-by-are-they-my-voting-friends-case” basis, as there are no guidelines or objective criteria for determining who should get how much money.

No word on why the Boa didn’t offer low interest FEMA type loans for housing emergencies as opposed to outright giveaways that promote not maintaining one's home.

In yet another display of palocracy (see Phictionary) at work, the Carrboro Boa is about to spend town money on rent for another coffee bar cum playpen cum office hangout.

Freelance web designer and Chapel Hill resident, Brian Russell, is in the process of applying for a Carrboro town revolving loan. Mr. Russell is husband to media darling, former Chapel Hill Planning Board member, Orange Politics blog censor, “dances with bricks” anarchist, Mayor Chilton backer, wannabe affordable housing bourgeoisie rentier, trustafarian disciple, and now real estate advertiser political analyst, Ruby Sinriech. He wants Carrboro to pay for the rent and furnishings for a “shared workplace for freelancers and other creative types”.

Carrboro’s crack ED guru, James Harris, is dying to lend him the money, public money for creating a private franchise empire. Mr. Harris, busy ignoring the closing of the Track & Field business (see Hot Orange Anemic Carrboro ED Story) spends his time getting this important not-yet-even-an–applied–loan story into the local media.

Mr. Russell sees no reason why the town shouldn’t enrich Carrboro historic business district landlords further, anticipating the new digs being built at 300 Main and Roberson Square.

No word on why Mr. Russell doesn’t get a real office, like most for-profit businesses, assuming Mr. Russell doesn't file for tax-exempt status for his business.

No word on why Mr. Russell can’t meet other creative types in the existing coffee bars in Carrboro.

No word on why Mr. Harris hasn’t contacted a well-capitalized business that already operates a network of coffee bars with internet access, “Starbucks”.

See Carrboro Citizen Anemic Carrboro ED Story.