Oregon’s Affordable Loan Program to Replace Failed Septic Systems

 

As many as 45,000 of the over 450,000 septic systems used to manage wastewater in Oregon fail each year. At an average cost of over $25,000, a failed septic system can plunge the average family into a financial crisis, threatening their home, property, and health.

 

Recognizing this crisis, for years Oregon Senator Arnie Roblan (D-Coos Bay) tried to develop a program that would help families find a way to replace these failed systems. Approaches offered by advocates usually emphasized a great deal of government involvement and high costs. At one point, an Oregon state agency estimated it would cost the state close to a million dollars each year, just to develop and maintain a program. Fiscal hawks opposed approaches like these, and for nearly a decade the problem was left unsolved.

 

In 2016, working for the non-profit Lender Craft3, we developed a program designed to provide homeowners access to flexible, low-cost, long-term loans to replace failed septic systems. We organized a diverse coalition of farmers, ranchers, counties, realtors, environmentalists, and housing advocates to support the program. The final product – SB1563, passed with nearly unanimous votes in both the House and Senate, creating a pilot project designed to test the program concept to determine whether or not Oregonians would benefit from its service. Craft3 increased the $250,000 in funds made available through the legislation by adding an additional $600,000, and by the end of 2016 is was helping Oregonians from across the state access affordable, flexible loans to help them replace their failed septic systems.

 

In 2018, we expanded the coalition to over 15 different organizations, and secured an additional $1.7 million dollars in program funds. In 2019, we passed legislation which allowed Craft3 to borrow funds from the State’s clean water revolving loan fund. During the 2021 legislative session, our coalition grew to over 20 members; working together we secured a total of $17.5 million dollars to restart the clean water revolving loan fund (which had run out of funds in 2020), and provide support to families in need of assistance to improve, repair, or replace their septic systems.

 

Before the program was suspended in 2020, the septic system replacement program served over 160 families living in 85 cities and 27 counties across Oregon. Loans totaling over $4 million dollars have been made. One out of four families served by this program fall below 80% of the area mean income – so the program is serving the people that need it the most. Projects already installed treat 208 million gallons of wastewater each year. Every dollar awarded by the State has been used to make loans – Craft3 covers program coverage through other funding sources. And, as each loan is paid off, the funds are used again and again to make new loans, over time creating a self-sustaining revolving loan fund.