The document proposes creating a "Green Central Belt" development zone along canals in central Scotland, managed by a Green Central Belt Company. The company would use innovative financing like "prepay rental credits" to fund affordable, energy efficient housing in a sustainable way. Investors could invest in both short-term development and long-term affordable housing. Councils would set standards. The outcome would be regeneration along the canals through locally-controlled, low-carbon development and new financing options.

1. The Green Central Belt
A Proposal
Chris Cook
Linlithgow 14th September 2015

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

3. Resilience
Fragility of global financial system exposed in October 2008
UCL Institute for Security & Resilience Studies research
- What works internationally? What used to work, historically?
- Linlithgow action-based research with Nordic Enterprise Trust
Central government is creating a vacuum which may be filled
bottom up by mobilising community resources:
Land/Location – majority of economic value has historically
come from land development & use
Capital - material resources (eg buildings & equipment) &
immaterial resources (eg energy & IP)
Human – Care, Intellect ('Smart'), energy (manpower)

4. Resource Resilience
Since 1980 Denmark's GDP rose 78%
Energy use has been stable
Carbon fuel use has declined
How did Denmark achieve this?

5. Resource Resilience
Least Carbon Fuel Cost principle
- not 'least Danish Krone cost' (or least $, € or £ cost)
- minimum carbon fuel input for a given output of
electricity, heat or power
- investment in renewables, heat, transport, energy
efficiency

6. Linlithgow Natural Grid
Aim: Energy Independence (and hence energy scurity
& resilience) for Linlithgow
Operating Principle: Least Carbon Fuel Cost
Rationale: the more expensive carbon fuel becomes,
the more £ profit there is in saving it
James Watt approach: sharing carbon fuel savings

9. 'Natural Grid' name coined for North South Canal

10. Green Central Belt – Millennium Link Canals

11. Linear Docklands....or Linear Eden?
People don't want to live next door to the M99, to HS2
or to Runway Three......
….but they pay handsomely to live by the River Thames
US intercontinental rail & London Metropolitan Line both
funded through development along right of way
£2bn public investment in Jubilee Line extension gave a
£17bn windfall profit to property owners on the route
Capturing % of increased land rental value & future use
value will fund the investment
How may this land value increase be captured?

12. Development Corporations
Corporations set up to develop new towns eg
(Livingston) or regeneration (London Docklands)
Investment, development & planning powers allocated
to the corporation for duration of development
Most recent was West Northamptonshire Development
Corporation (WNDC) which ceased operation in 2014
“According to Professor Parkinson, the rest of UK can learn from this
approach: “We’ve found that development corporations are most
effective when they’re locally controlled and focused on
regeneration. Alternative types of vehicle are better equipped to
deliver major housing settlements. WNDC is a clear example of what
can be achieved with the right focus and leadership”.

13. “From the onset, WNDC recognised that headline projects like Avon Nunn Mills and St
Peter’s Waterside wouldn’t regenerate the River Nene on their own. It needed to become a
thriving community resource again.”
“Whereas most towns treasure and celebrate their waterways, Northampton’s
waterside had long been a forgotten and neglected asset.”

14. Green Central Belt Company
Company Limited by Guarantee
- Stakeholders (not mutually exclusive)
– Councils, Land-owners, Occupiers, Investors,
Developer/Managers
- Tenure
– Contractual use: no lease/licence, tenancy,
sale
- Governance
– Nondominium – stakeholders have agreed
veto rights, not dominant rights
- Innovative Financing & Funding necessary

15. Financing - for short/medium term, high
risk development of new assets
16/06/10 15

16. Funding - for long term, low risk use of
newly complete or existing assets
16/06/10 16

17. Development as a Service - Capital Partnership
Green Central
Belt Company
Green Central
Belt Company
ContractorsContractors
Development
Investors
Development
Investors
Professional
Developers
% %
Financing
16/06/10 17

18. A Capital Partnership is not an Organisation
16/06/10 18

19. It does not own anything, do anything,
employ anyone, or contract with anyone
16/06/10 19

20. It is simply a framework agreement within
which the stakeholders self organise
16/06/10 20

21. Conventional property development is a
transaction model: developer as middleman
DeveloperDeveloper
Land
Owner
Property
Buyer
Property
Buyer
£ £
Property
Buyer
Property
Buyer
£
16/06/10 21

22. Buy, Borrow, Build and B...er Off...
16/06/10 22

23. Financed by Equity (ownership) and
Debt (from credit institutions aka banks)
16/06/10 23

24. Capital Partnership offers a new
approach to financing
16/06/10 24

25. Land-owners may sell land to GCB.....
Green Central
Belt Company
Green Central
Belt Company
Land
Owners
Land
Owners
16/06/10 25

26. ...or may invest the value of the land
Green Central
Belt Company
Green Central
Belt Company
Land Owner
Investors
Land Owner
Investors
Land
Owners
Land
Owners
Land
Value
16/06/10 26

27. Councils invest value of planning gain
Green Central
Belt Company
Green Central
Belt Company
Council
Investors
Council
Investors
Land
Owners
Land
Owners
Value of Planning permission
16/06/10 27

28. Contractors invest at least the profit margin
Green Central
Belt Company
Green Central
Belt Company
Contractor
Investors
Contractor
Investors
Land
Owners
Land
Owners
Profit
Margin
16/06/10 28

29. Risk-Takers invest £ to cover agreed costs
Green Central
Belt Company
Green Central
Belt Company
Risk-Taker
£ Investors
Risk-Taker
£ Investors
Land
Owners
Land
Owners
£
16/06/10 29

30. Developers invest 'Intellectual Capital' of
concept and services
Green Central
Belt Company
Green Central
Belt Company
Investors
Land-owners, Councils,
Contractors, Risk Takers
Investors
Land-owners, Councils,
Contractors, Risk Takers
DevelopersDevelopers
Land
Owners
Land
Owners
Value Value
16/06/10 30

31. Affordable Homes are built & occupied
Green Central
Belt Company
Green Central
Belt Company
InvestorsInvestors
OccupiersOccupiers
Managers
Prepay %
Rental
16/06/10 31

32. Re-financing
Long term funding investment repays development finance
Financiers have the option to reinvest development profit
as funders eg for their pensions

33. Prepay - simple but radical funding instrument
16/06/10 33

34. Prepay Rental Credits – returnable in
payment for property occupation
16/06/10 34

35. Prepay
Tax

36. 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

37. 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

38. Genuinely affordable rental is set
Green Central
Belt Company
Occupiers
Rental

39. Proportional Share allocated to Management
Green Central
Belt Company
Occupiers
Manager
%
Rental

40. Balance of Rentals available to Investors
Green Central
Belt Company
Investors
Occupiers
Managers
% %
Rental

41. Prepay Credits returnable in payment for
rentals are created and sold to investors
16/06/10 41

42. Example – Pool of 1,000 homes has
affordable rents of £4m pa
16/06/10 42

43. After 25% for maintenance, depreciation
£3m pa is available for funding
16/06/10 43

44. Debt: £3m pa will fund <£40m debt over
20 years at 5% compound interest
16/06/10 44

45. Prepay Rental Credits
1/ £3m pa funds £75m investment over 50 yrs as follows:
- Sell 150m £1.00 credits at 50p
- 3m credits returned per year for 50 years at constant rent
- £75m profit over 50 years = 1.5% rate of return pa
2/ £3m funds £40m investment over 33 yrs as follows:
- Sell 100m credits at 40p
- 3m credits returned pa for 33.3 years
- £60m profit over 33.3 years = 1.8% rate of return pa
Note – no compound interest, but if rents increase so does
rate of return

46. Rental Credits – value proposition for
Investors not dissimilar to a REIT
16/06/10 46

47. Except that, crucially, Rental Credits are
returnable in payment for rent
16/06/10 47

48. Rental Credits – as rental levels rise or
fall rate of return increases or falls
16/06/10 48

49. Occupiers are natural buyers and acquire
rental credits by paying rent in advance
16/06/10 49

50. Occupiers who care for their property may
receive 'Sweat Equity' rental credits
16/06/10 50

51. Summary – Green Central Belt
Eco development zone centred on Central Belt canals
Development permitted subject to membership of
Green Central Belt Company as follows:
- least carbon fuel cost development
- high standards of design
- co-ownership Nondominium tenure
- investment available from development financiers &
long term funders
- Councils exercise supervisory planning power/quality
control/standard setting

52. Outcome – Green Central Belt
Regeneration of post-industrial land along route
Affordable, high quality, energy efficient homes
New asset classes for local investors
- medium risk/term development investment
- low risk, long term investment in affordable homes
New policy options available
- care credits for land use credits
- local dividends
- land loans replace mortgages
Sustainable development-as-a-service

53. 21st
Century problems cannot be solved with 20th
century solutions.........

54. …....21st
century solutions pre-date modern finance