Washington state puts $29 million toward loans for communities most impacted by 'war on drugs'

A Washington state program meant to address the disparate impacts of the “war on drugs” has given $29 million to 12 homeownership and loan programs for Black, Indigenous, and Latino communities.

A slice of that funding has gone to community development financing institutions and other programs that provide low-interest loans for things like a second mortgage to renovate a home, or a loan for a small business or to buy a used car.

The effort is only one part of the state Department of Commerce’s $200 million dollar Community Reinvestment Project to help address the legacy of punitive state and federal policy for low-level drug offenses.

The war on drugs, launched by the Nixon administration in 1971, “disproportionately harmed the health and well-being of Black, Latino, and Indigenous families and communities in Washington,” according to a 2023 state report. That includes negative impacts to finding financial stability, via low-interest loans to start businesses or buy property.

Tamra Marlowe De Nova runs the Chehalis Tribal Loan Fund in Grays Harbor County, which will receive $1 million under the state’s Community Reinvestment Plan. Marlowe De Nova said that money will be used to bolster how many small business and car loans her organization can provide, as well as fund internships and financial literacy programs.

“We match that education and that empowerment with access to lending that's fair, that is not predatory, and is also underwritten in a way that recognizes racial injustices and misunderstandings in the general banking world,” she said.

At least 70% of the people served by the Chehalis Tribal Loan Fund are Native American, and the tribe has many artisans and craftspeople who don’t participate in the same kind of economy that a nine-to-five worker does, Marlowe De Nova said.

The Chehalis Tribal Loan Fund doesn’t have the capacity to offer mortgages to future homeowners yet, but that’s in the plans, she added.

Homesight on the other hand does. It’s a statewide homeownership capital accelerator program that connects people to mortgage programs, including ones that address the impacts of racist housing covenants. It also teaches applicants how to pay for a house and stay on top of mortgage payments.

“Our homeowners are very successful with their mortgages because they're armed with knowledge about how the program works, how their mortgages work, ”said Darryl Smith, executive director of Homesight.

The program will receive $2.85 million from the Community Reinvestment Plan to expand mortgage programs for people making up to 120% of the area median income, depending on where they live in the state.

“Middle class folks, essentially,” Smith said, adding that even people making 120% of the area median income in this region often don’t have enough home-buying power.

Previously they were only serving people making 80% of the area median income. He added that he expects that money to translate into helping 8 to 10 people in getting a loan to buy a house.

“The impacts are big. I'm not prepared to say if it is enough to fix the harm that was done ...but overall, we certainly need to let the community know that there are opportunities out there for them in a variety of different ways,” he said.

That’s also a concern for Jesse Miller, founder of the Harriet Tubman Foundation for Safe Passage, who was contracted by the Department of Commerce to draft the initial plan for the Community Reinvestment Project.

“The system will work, but you have to participate,” she said. “If you don't know [how to participate], it makes it hard.”

She said her intention for the original plan was to take a ground-up approach.

So far, the Community Reinvestment Project has released 14 different programs giving grants to dozens of nonprofits, including for workforce development, with more to come. The funding for all of these programs will end in the middle of next year.

“While we’re excited to make this investment in healing and strengthening communities, we also recognize that this will not definitively address the impacts of the war on drugs,” a spokesperson for the state Department of Commerce said in an email statement.

“We will work with our grantees to monitor the impact of these investments and learn how we can continue to serve our communities even better. Promoting homeownership and building assets is a critical step to decreasing housing disparities and outcomes of the war on drugs,” the statement continues.