Keith Community Partnership

Community Asset Partnerships Simply does it Chris Cook Keith 29 June 2011

Financing - development of new assets Short/medium term, high risk 16/06/10

Funding - use of completed assets Long term, low risk 16/06/10

Conventional funding 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

Two conflicting claims over the same assets 16/06/10

But there’s a new creature 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

Over 70,000 LLPs are now in pervasive use for purposes never intended... 09/03/10

...even in the Public Sector, where Glasgow has five municipal LLPs 09/03/10

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 Custodian Investors Users % % £ 16/06/10 Managers

Equity Shares - % age shares in revenues or production... 16/06/10

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

But we needed lights, cameras, pizza, coffee 16/06/10

Two Capital Partners invested £ for 20% of revenues 16/06/10

If there are any 16/06/10

Art of Flirting LLP Custodian Financial Capital (Investors) Viewers % % £ 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

They provide affordable office space for social enterprises 16/06/10

Due to demand they bought a disused church next door 16/06/10

...and planned a £4m development 16/06/10

But if they borrow, the rents will be unaffordable 16/06/10

Solution - an Albion Partnership? Custodian Investors Tenants % % £ 16/06/10 Managers

Conventional Development Finance Borrow, Buy, Build and B...er Off 16/06/10

Developer as middleman: a transaction chain Developer Property Buyer £ £ Property Buyer £ 16/06/10 Land Owner

Community Land Partnership 16/06/10

Land held by or transferred to a Custodian Land Custodian 16/06/10

Land Owner becomes an Investor Custodian Land Owner Land Value 16/06/10

Council invests the value of planning permission Community Council Value of Planning permission 16/06/10

Contractors invest at least the profit margin Custodian Contractors Profit Margin 16/06/10

Risk-Takers provide £ to pay Contractors’ agreed costs Community Risk-Takers £ 16/06/10

Developer invests 'Intellectual Capital' of concept and services Community Investors Land-owner, Council, Contractors, Risk Takers Developer Community plus help Value Value 16/06/10

Result – 'Co-ownership' of a Rental Pool Custodian Investors Occupiers % % Rental 16/06/10 Managers

Units – undated credits redeemable in payment for property occupation 16/06/10

Units are sold to Investors at a discount to the rental value 16/06/10

eg a £1.00 Rental Unit sold for 80p gives a 25% return 16/06/10

But the rate of the return depends on whether the property yet exists.... 16/06/10

...if so, whether rent is being paid.... 16/06/10

...and how many Units have been issued 16/06/10

Investors may keep Units eg for pension or for care 16/06/10

...or sell them to Investors or Occupiers 16/06/10

Occupiers maintaining the property themselves may receive 'Sweat Equity' 16/06/10

Everyone has a stake in the outcome.... 16/06/10

....with an interest in high quality, and energy efficiency.... 16/06/10

....because both lower the cost of occupation over time .... 16/06/10

....which makes the Rental value higher and makes Units 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 is owned by a custodian or steward 16/06/10

A loan to the land – not to the owner 16/06/10

Community Energy Partnership

Energy Pool – Mega Watts Custodian Investor Community Energy Energy Energy Manager

Manager receives %age of production

Supplier may invest equipment & materials: must invest agreed % profit

Investors provide development finance by purchasing Units at a discount

Outcome: turbine funded by selling part of Energy Pool of future production 05/04/10

An Energy Loan to the turbine – not the Community

Nega Watts - energy savings - cheapest energy of all 09/03/10

Energy loans – to the property, not the owner 09/03/10

Repaid out of energy saved 09/03/10

Sell 100 Units of 1 Mega Watt Hour @ £50/MWh Result: £5k interest-free energy loan 09/03/10

Or sell 10,000 Units of 10 Kilo Watt Hours @ 50p per Unit 09/03/10

Reduced energy bill paid to power supplier for energy consumed 09/03/10

Energy loan repaid through buying Units from the Pool at the market price 09/03/10

Energy Pool is a new approach to direct investment in energy financing and funding

“ If you want to keep a cow healthy, you don’t regulate what comes out of it……”

“…… you regulate what goes in….”

Energy pooling enables a Carbon currency based upon the intrinsic value of energy…

..rather than a market in value-less Units of CO2 emissions, imposed by governments …

Problems: taxation, regulation 16/06/10

Solution: a Company Limited by Guarantee as Custodian..... 16/06/10

.....and a little imagination 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

Sometimes partners fall out 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 agreement enabling communities to self organise 16/06/10

There may be a shortage of Money 16/06/10

But there's plenty of money's worth : land, energy and intellect 16/06/10

We lack only the mutual agreement to deploy these resources 16/06/10

It's not Rocket Science 16/06/10

Thank You 16/06/10

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Keith Community Partnership

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