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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 ...
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 Capit...
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 per...
...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, Cont...
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
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Transcript of "Community land partnership june 2010"

  1. 1. Introducing the Community Land Partnership Chris Cook 29 June 2010 Asset-based Finance
  2. 2. There are two conventional ways of raising finance...... 16/06/10
  3. 3. ....Credit and Investment 16/06/10
  4. 4. Investment is either through a Limited Company.... 16/06/10
  5. 5. ....a 19 th Century legal dinosaur 16/06/10
  6. 6. ...or loans secured by legal claims eg mortgages 16/06/10
  7. 7. But there’s a new furry animal out there.... 16/06/10
  8. 8. ...the 21 st Century Limited Liability Partnership (LLP) 16/06/10
  9. 9. An LLP is a corporate body with limited liability.... 16/06/10
  10. 10. ...and...errrr...that’s it!... 16/06/10
  11. 11. As far as the Tax Man is concerned it is a Partnership 16/06/10
  12. 12. It’s an “Open” Corporate where we can work with each other 16/06/10
  13. 13. ... even without a written agreement 16/06/10
  14. 14. Hilton Deal 2002 Capital Partnership LLP 10 UK Hotels Gross Revenues Hilton Group Capital User Consortium LLP Capital Provider Bank Property Developer Hotel Specialist % % % % %
  15. 15. Capital Partnership Capital Partnership Investors Customers Custodian % % £ 16/06/10 Managers
  16. 16. “ Equity Shares” - % age shares in revenues or production... 16/06/10
  17. 17. ...or Units - redeemable in production 16/06/10
  18. 18. Example: “The Art of Flirting” – a film incorporated as an LLP 16/06/10
  19. 19. The actors received “nth’s” of the gross revenues... 16/06/10
  20. 20. ...I got 5%...and the producer the rest... 16/06/10
  21. 21. ...except that we needed lights, cameras, pizza, coffee...... 16/06/10
  22. 22. Two Capital Partners invested £10k for 20% of revenues.... 16/06/10
  23. 23. ...if there are any 16/06/10
  24. 24. Art of Flirting LLP Art of Flirting Partnership Financial Capital (Investors) Viewers Custodian % % £ 16/06/10 Human Capital (Actors, Producer, Me)
  25. 25. Everyone was on the same side 16/06/10
  26. 26. Example: Albion Trust...a charity 16/06/10
  27. 27. ..who provides affordable office space for social enterprises 16/06/10
  28. 28. ...due to demand they bought a disused church next door 16/06/10
  29. 29. ...and plan a £4m development 16/06/10
  30. 30. But if they borrow, the rents will be unaffordable 16/06/10
  31. 31. Solution? An Albion Partnership? Albion Partnership Investors Tenants Custodian % % £ 16/06/10 Managers
  32. 32. Let’s see how a Community Partnership might work... 16/06/10
  33. 33. Conventional development is based on transactions – the “Four B’s”..... 16/06/10
  34. 34. Borrow, Buy, Build and B...er Off... 16/06/10
  35. 35. A Community Land Partnership Community Project Investors Occupiers Custodian % % Rental 16/06/10 Managers
  36. 36. First, the land is transferred to a Custodian Land Custodian 16/06/10
  37. 37. ...and the Land Owners become Investors Land Land Owner Custodian Land Value 16/06/10
  38. 38. ...the Council invests the value of planning permission (as well as land)... Land Council Custodian Value of Planning permission 16/06/10
  39. 39. ...the Contractors invest at least their profit margin... Land Contractors Custodian Profit Margin 16/06/10
  40. 40. ...and Risk-Takers provide £ to pay Contractors’ agreed costs... Land Risk-Takers Custodian € 16/06/10
  41. 41. ....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
  42. 42. When the development is occupied... Community Project Investors Occupiers Custodian % % Rental 16/06/10 Managers
  43. 43. Investors may keep Units for their own pension... 16/06/10
  44. 44. ...or sell them to Investors or Occupiers who wish to invest in their own homes 16/06/10
  45. 45. Occupiers maintaining the property themselves may receive “Sweat Equity” 16/06/10
  46. 46. For Investors it’s an index-linked, property-based investment... 16/06/10
  47. 47. Everyone has a stake in the outcome.... 16/06/10
  48. 48. ....with an interest in high quality, energy efficient housing .... 16/06/10
  49. 49. ....because this lowers the cost of occupation over time .... 16/06/10
  50. 50. ....which makes the Rental value higher and makes Equity Shares more valuable 16/06/10
  51. 51. So we go from a transaction model... Developer Property Buyer £ £ Property Buyer £ 16/06/10 Land Owner
  52. 52. ...to a service provider model where land stays in community ownership... 16/06/10
  53. 53. ...and service providers provide services the community needs 16/06/10
  54. 54. Community partnerships are not a magic bullet 16/06/10
  55. 55. Conventional finance requires binding contracts.... 16/06/10
  56. 56. ....partnership finance requires consensual agreement... 16/06/10
  57. 57. ...but there may be no magnetism.. 16/06/10
  58. 58. Communities may find they have the wrong partner... 16/06/10
  59. 59. ...and partners fall out... 16/06/10
  60. 60. ...so things can still go Pear-shaped 16/06/10
  61. 61. A Community Partnership is not an Organisation ... 16/06/10
  62. 62. ...it does not own anything, do anything, employ anyone, or contract with anyone... 16/06/10
  63. 63. ...it is simply a framework within which the stakeholders self organise ... 16/06/10
  64. 64. ...with a mutual interest in developing land sustainably and affordably. 16/06/10
  65. 65. A new class of Community Equity created by the community for the community 16/06/10
  66. 66. Thank You 16/06/10
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