Community land partnership june 2010

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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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