The document discusses funding regeneration through a system called Capital Partnership that uses prepay credits. It proposes that Capital Partnership is a new approach that can finance development and fund long-term use of assets through creating rental pools. Rental pools would establish affordable long-term rents and sell prepay credits returnable for rent, raising funds for development while providing income for investors. This system could help address 21st century problems by allowing different generations to directly invest in and benefit from assets like housing through exchange of rental credits, care, and intergenerational transfers of value.

1. Funding Regeneration in an Age of Austerity
Back to the Future?
Chris Cook
Manchester
23rd January 2014

2. “21st Century problems cannot be solved
with 20th Century solutions”

3. Resilience
Resilience - the enduring power of a body or bodies for
transformation, renewal and recovery through the flux of
interactions and flow of events
Resource Resilience – Natural Grid
Financial Resilience – Open Capital

4. Financial Resilience – Open Capital
Prepay – credit returnable in payment for value
Protocol – consensual interactive 'two way' agreement

5. Prepay
Tax

6. Tax Prepay
Tax Prepay – credit returnable in payment of taxes
Tax Return – 'stock' part of tally stick returned to Treasury
Rate of Return - rate over time at which stock is returnable
for cancellation
eg Prepay £8 for £10 tax - £2 profit 25% pa rate of return
- not fixed - depends on existence & quantity of flow

7. Rental Prepay Credits
Credit returnable in payment for £1.00 of Rent
10,000 Credits sold for £8,000 give a 25%
absolute return (£2k profit / £8k investment)
If Rent is £10k pa Rate of Return is 25% pa
If Rent is £5k pa Rate of Return is 12.5% pa
If Rent is £2k pa Rate of Return is 5% pa etc etc

8. Protocol - Capital Partnership
Occupiers
Occupiers
Rental
Custodian
Custodian
Prepay
Investors
Investors
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%
Managers
8

9. A Capital Partnership is not an Organisation
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10. It does not own anything, do anything,
employ anyone, or contract with anyone
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11. It is simply a framework agreement within
which the stakeholders self organise
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12. Conventional property development is a
transaction model: developer as middleman
Land
Owner
£
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Property
Property
Buyer
Buyer
Developer
Developer
£
Property
Property
Buyer
Buyer
£
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13. Borrow, Buy, Build and B...er Off...
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14. Financed by Equity (ownership) and
Debt (from credit institutions)
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15. Capital Partnership offers a new
approach to financing and funding
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16. Financing - for short/medium term, high
risk development of new assets
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17. Funding - for long term, low risk use of
newly complete or existing assets
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18. Financing : Land held by/transferred to a
Custodian
Land
Land
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Custodian
Custodian
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19. Land Owners become Investors
Land
Land
Custodian
Custodian
Land
Value
Land Owners
Land Owners
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20. Councils invest the value of planning
permission
Land
Land
Value
Custodian
Custodian
of Planning permission
Councils
Councils
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21. Contractors invest at least the profit margin
Land
Land
Custodian
Custodian
Profit
Margin
Contractors
Contractors
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22. Risk-Takers provide £ to pay
Contractors’ agreed costs
Land
Land
Custodian
Custodian
£
Risk-Takers
Risk-Takers
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23. Developers invest 'Intellectual Capital' of
concept and services
Land
Land
Value
Investors
Investors
Land-owners, Councils,
Land-owners, Councils,
Contractors, Risk Takers
Contractors, Risk Takers
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Custodian
Custodian
Value
Developers
Developers
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24. Capital Partnership creates a Rental Pool
Occupiers
Occupiers
Rental
Custodian
Custodian
Prepay
Investors
Investors
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%
Managers
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25. Rental Pools enable a simple but radical new
funding option through Prepay
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26. Rental Credits – returnable in payment for
property occupation
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27. Funding - Equity Release by creating Rental
Pools from portfolios of completed houses
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28. Existing owner becomes the Custodian
Houses
Custodian
Custodian

29. Affordable index-linked rental is set
Occupiers
Rental
Houses
Custodian
Custodian

30. Proportional Share allocated to Manager
Occupiers
Rental
Houses
Custodian
Custodian
%
Manager

31. Balance of Rentals to Investors
Occupiers
Rental
Custodian
%
Investors
%
Managers

32. Prepay Credits returnable in payment for
rentals are created and sold to investors
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33. Example – Pool of 1,000 houses has
affordable rents of £4m pa
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34. After (say) 25% for maintenance etc
£3m pa is available for funding costs
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35. Debt: £3m pa will fund <£40m debt over
20 years at 5% compound interest
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36. Prepay
20 Years' rent = 60m x £1.00 credits:
@ 50p raises £30m: Rate of Return = 100%/20
yrs = 5%pa
@ 66.6p raises £40m: RR = 50%/20yrs = 2.5%pa
25 Years' rent = 75m x £1.00 credits:
@ 50p raises £37.5m: Rate of Return = 100%/25
yrs = 4%pa
@ 66.6p raises £50m: RR = 50%/25yrs = 2%pa

37. Rental Credits – value proposition for
Investors not dissimilar to a REIT
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38. Except that, crucially, Rental Credits are
returnable in payment for rent
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39. Rental Credits – as rental levels rise or
fall rate of return increases or falls
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40. A Rental Pool will have a 'common bond' –
geographic or otherwise
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41. Occupiers are natural buyers and acquire
rental credits by paying rent in advance
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42. Occupiers who care for their property may
receive 'Sweat Equity' rental credits
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43. 21st Century Problem
Retiring Generation
-'long' of Property and 'short' of Care for themselves and
their property
- poor returns on deposits (loans to banks)
Working Generation – burdened with bank property debt
Young Generation – long of Care but short of Property

44. 21st Century Resolution
Retiring Generation
- exchange rental credits for care
- invests directly 'Peer to Asset' in rental credits
Working Generation – direct investment in rental credits
replaces bank property debt
Young Generation – care exchanged for rental credits

45. 21st Century problems cannot be solved with 20th
century solutions.........

46. …....21st century solutions pre-date modern finance

47. Thank You
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