View from Caterpillar Hill
Sometimes we take on challenging loans – because the projects they support are innovative or intriguing, or because conventional lenders are wary of financing them – and usually we (and our borrowers) are rewarded. But they don’t always work out as planned, so we strive to be flexible enough to come up with a satisfactory alternative outcome.
When we made a loan to The Caterpillar Hill Initiative, a community of artists and conservationists who came together to protect a spectacular natural landmark on the Blue Hill peninsula in Maine, it was with the expectation that they would develop a nonprofit arts and community space on the site. Our loan was used for the down payment on the land acquisition and for startup costs for programming operations that were intended to rally interest in the project and fuel a capital campaign to raise the additional money they needed to complete the purchase and construct a building.
However, CHI’s goals proved too ambitious and the fundraising and organizational tasks too challenging in a scenic but lightly populated and economically marginal region.
Fortunately, we had established relationships with local conservation organizations Maine Coast Heritage Trust and Blue Hill Heritage Trust as part of our due diligence on the loan request. Caterpillar Hill abuts existing conservation land and a land trust partnership had always been part of the project’s strategic plan.
When the original borrower’s struggles put the loan in jeopardy, we worked with a local attorney and a joint mortgage holder, who had provided additional financing, to offer the conservation organizations the opportunity to repay our loans and acquire the property rather than enter into a difficult and uncertain foreclosure process.
Although neither we nor our borrower achieved our primary objectives, thanks to the safeguards we put in place when making the loan we did manage to both recover the funds we had loaned and preserve the land.