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Community land partnership june 2010
 

Community land partnership june 2010

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    Community land partnership june 2010 Community land partnership june 2010 Presentation Transcript

    • Introducing the Community Land Partnership Chris Cook 29 June 2010 Asset-based Finance
    • There are two conventional ways of raising finance...... 16/06/10
    • ....Credit and Investment 16/06/10
    • Investment is either through a Limited Company.... 16/06/10
    • ....a 19 th Century legal dinosaur 16/06/10
    • ...or loans secured by legal claims eg mortgages 16/06/10
    • But there’s a new furry animal out there.... 16/06/10
    • ...the 21 st Century Limited Liability Partnership (LLP) 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
    • ...or Units - redeemable in 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
    • Two Capital Partners invested £10k 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
    • ..who provides affordable office space for social enterprises 16/06/10
    • ...due to demand they bought a disused church next door 16/06/10
    • ...and plan a £4m development 16/06/10
    • But if they borrow, the rents will be unaffordable 16/06/10
    • Solution? An Albion Partnership? Albion Partnership Investors Tenants Custodian % % £ 16/06/10 Managers
    • Let’s see how a Community Partnership might work... 16/06/10
    • Conventional development is based on transactions – the “Four B’s”..... 16/06/10
    • Borrow, Buy, Build and B...er Off... 16/06/10
    • A Community Land Partnership Community Project Investors Occupiers Custodian % % Rental 16/06/10 Managers
    • First, the land is transferred to a Custodian Land Custodian 16/06/10
    • ...and the Land Owners become Investors Land Land Owner Custodian Land Value 16/06/10
    • ...the Council invests the value of planning permission (as well as land)... Land Council Custodian Value of Planning permission 16/06/10
    • ...the Contractors invest at least their profit margin... Land Contractors Custodian Profit Margin 16/06/10
    • ...and Risk-Takers provide £ to pay Contractors’ agreed costs... Land Risk-Takers Custodian € 16/06/10
    • ....while the Developer invests “Intellectual Capital” of concept and services... Land Investors Land-owner, Council, Contractors, Risk Takers Developer Community plus help Custodian Value Value 16/06/10
    • When the development is occupied... Community Project Investors Occupiers Custodian % % Rental 16/06/10 Managers
    • Investors may keep Units for their own pension... 16/06/10
    • ...or sell them to Investors or Occupiers who wish to invest in their own homes 16/06/10
    • Occupiers maintaining the property themselves may receive “Sweat Equity” 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 makes the Rental value higher and makes Equity Shares more valuable 16/06/10
    • So we go from a transaction model... Developer Property Buyer £ £ Property Buyer £ 16/06/10 Land Owner
    • ...to a service provider model where land stays in community ownership... 16/06/10
    • ...and service providers provide services the community needs 16/06/10
    • Community partnerships are not a magic bullet 16/06/10
    • Conventional finance requires binding contracts.... 16/06/10
    • ....partnership finance requires consensual agreement... 16/06/10
    • ...but there may be no magnetism.. 16/06/10
    • Communities may find they have the wrong partner... 16/06/10
    • ...and partners fall out... 16/06/10
    • ...so things can still go Pear-shaped 16/06/10
    • A Community 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 a 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 Community Equity created by the community for the community 16/06/10
    • Thank You 16/06/10