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Ballater Partnership November 2010

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    Ballater Partnership November 2010 Ballater Partnership November 2010 Presentation Transcript

    • A Ballater Land Partnership Chris Cook 2 November 2010 Sustainable Development through Co-ownership
    • Two conventional ways of financing productive assets: Credit and Investment 16/06/10
    • Investment is typically shares in Limited Companies or units in Trusts 16/06/10
    • Legal Dinosaurs 16/06/10
    • Credit consists of bank loans secured by legal claims eg mortgages 16/06/10
    • Two conflicting financial claims over the same productive assets 16/06/10
    • 21 st Century problems cannot be solved with 20 th century solutions 16/06/10
    • In 2001 the 21 st Century Limited Liability Partnership (LLP) came to the rescue 16/06/10
    • An LLP is a corporate body with limited liability.... 16/06/10
    • ...and...errrr...that’s it! 16/06/10
    • As far as the Tax Man is concerned it is a Partnership 16/06/10
    • It’s an Open Corporate where we can work with each other 16/06/10
    • . .. even without a written agreement 16/06/10
    • Hilton Deal 2002 Capital Partnership LLP 10 UK Hotels Gross Revenues Hilton Group Capital User Consortium LLP Capital Provider Bank Property Developer Hotel Specialist % % % % %
    • Capital Partnership Capital Partnership Investors Customers Custodian % % £ 16/06/10 Managers
    • Equity Shares - % age shares in revenues or production 16/06/10
    • Units - redeemable in payment for rental or production 16/06/10
    • Example: 'The Art of Flirting' – a film incorporated as an LLP 16/06/10
    • The actors received 'nth’s' of the gross revenues 16/06/10
    • I got 5%...and the producer the rest 16/06/10
    • Except that we needed lights, cameras, pizza, coffee 16/06/10
    • Capital Partners invested £ for 20% of revenues 16/06/10
    • If there are any .... 16/06/10
    • Art of Flirting LLP Art of Flirting Partnership Financial Capital (Investors) Viewers Custodian % % £ 16/06/10 Human Capital (Actors, Producer, Me)
    • Everyone was on the same side 16/06/10
    • Example: Albion Trust...a charity 16/06/10
    • ..which provides affordable office space for social enterprises and charities 16/06/10
    • . ..due to demand they bought a disused church next door 16/06/10
    • ...and plan a £4m development 16/06/10
    • Intractable problem! If they borrow, the rents will be unaffordable 16/06/10
    • Solution...an Albion Partnership? Albion Partnership Investors Occupiers Custodian % % £ 16/06/10 Managers
    • How might a Ballater Land Partnership work? 16/06/10
    • Conventional development is transaction-based: Buy, Borrow, Build, and B....r Off 16/06/10
    • Ballater Land Partnership Rental Pool Investor Occupier Custodian % % Rental 16/06/10 Manager
    • Land remains with, or is transferred to, a Custodian Land Custodian 16/06/10
    • Land Owner invests the value of the land Land Land Owner Custodian Land Value 16/06/10
    • Council invests the value of planning permission Land Council Custodian Value of Planning permission 16/06/10
    • Contractors agree costs and invest at least their profit margin Land Contractors Custodian Profit Margin 16/06/10
    • Self builders may invest 'sweat equity' - subject to valuation & quality control Land Self Builders Custodian Sweat Equity 16/06/10
    • Risk-Taker Capital Partners invest £ to pay remaining financing costs Land Risk-Takers Custodian £ 16/06/10
    • Developer invests 'Intellectual Capital' of concept and services Land Investor Land-owner, Council, Contractors, Risk Takers Developer Community plus help Custodian Value Value 16/06/10
    • Result: Co-ownership of a Rental Pool Custodian Investor Occupier % % Rental 16/06/10 Manager
    • An affordable index-linked Capital Rental is set 16/06/10
    • Units redeemable in payment for rentals are issued from the Rental Pool 16/06/10
    • Investors may keep Units eg for their pension 16/06/10
    • Or sell Units to Investors or to Occupiers who wish to invest in their own homes 16/06/10
    • Occupiers maintaining the property themselves receive 'Sweat Equity' Units 16/06/10
    • For Investors it’s an index-linked, property-based investment 16/06/10
    • Everyone has a stake in the outcome.... 16/06/10
    • ....with an interest in high quality, energy efficient housing .... 16/06/10
    • ....because this lowers the cost of occupation over time .... 16/06/10
    • ....which increases the rental value and therefore the value of Units 16/06/10
    • So we go from the '4 B's' transaction model.. Developer Property Buyer £ £ Property Buyer £ 16/06/10 Land Owner
    • ...to a partnership-based co-ownership model 16/06/10
    • Ballater Land Partnership is not an Organisation 16/06/10
    • It does not own anything, do anything, employ anyone, or contract with anyone 16/06/10
    • It is simply an LLP framework within which the stakeholders self organise 16/06/10
    • ...with a mutual interest in developing land sustainably and affordably. 16/06/10
    • A new class of Ballater Equity created by the community for the community 16/06/10
    • Thank You 16/06/10