1. Partnership Finance Chris Cook Lockerbie 5 October 2010

2. There are two conventional ways of raising finance: credit and investment 16/06/10

3. Investment is either through a Limited Company 16/06/10

4. A 19 th Century legal dinosaur 16/06/10

5. Or loans secured by legal claims eg mortgages 16/06/10

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

7. But there’s a new creature out there 16/06/10

8. The 21 st Century Limited Liability Partnership (LLP) 16/06/10

9. An LLP is a corporate body with limited liability 16/06/10

10. ...and...errrr...that’s it! 16/06/10

11. As far as the Tax Man is concerned it is a Partnership 16/06/10

12. It’s an 'Open' Corporate where we can work with each other 16/06/10

13. Even without a written agreement 16/06/10

14. LLPs are now in pervasive use for purposes never intended... 09/03/10

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

16. Hilton Deal 2002 Capital Partnership LLP 10 UK Hotels Gross Revenues Hilton Group Capital User Consortium LLP Capital Provider Bank Property Developer Hotel Specialist % % % % %

17. Capital Partnership Custodian Investors Users % % £ 16/06/10 Managers

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

19. Units - redeemable in production 16/06/10

20. Example: “The Art of Flirting” – a film incorporated as an LLP 16/06/10

21. The actors received “nth’s” of the gross revenues 16/06/10

22. I got 5%...and the producer the rest 16/06/10

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

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

25. If there are any 16/06/10

26. Art of Flirting LLP Custodian Financial Capital (Investors) Viewers % % £ 16/06/10 Human Capital (Actors, Producer, Me)

27. Everyone was on the same side 16/06/10

28. Example: Albion Trust...a charity 16/06/10

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

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

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

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

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

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

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

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

37. Community Partnership – a new approach to financing and funding 16/06/10

38. Financing ...short term, high risk development finance for new assets 16/06/10

39. Funding ...long term, low risk finance for newly completed or existing assets 16/06/10

40. Development Financing Land held by/transferred to a Custodian Land Custodian 16/06/10

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

42. Council invests the value of planning permission Land Council Custodian Value of Planning permission 16/06/10

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

44. Risk-Takers provide £ to pay Contractors’ agreed costs Land Risk-Takers Custodian £ 16/06/10

45. 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

46. Result – Community Land Partnership Custodian Investors Occupiers % % Rental 16/06/10 Managers

47. Investors may keep Units for their own pension... 16/06/10

48. ...or sell them to Investors or Occupiers who wish to invest in their own homes 16/06/10

49. Occupiers maintaining the property themselves may receive “Sweat Equity” 16/06/10

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

51. ....with an interest in high quality, energy efficient housing .... 16/06/10

52. ....because this lowers the cost of occupation over time .... 16/06/10

53. ....which makes the Rental value higher and makes Units more valuable 16/06/10

54. So we go from a transaction model... Developer Property Buyer £ £ Property Buyer £ 16/06/10 Land Owner

55. ...to a service provider model where land is owned by a custodian or steward 16/06/10

56. Community partnerships are not a magic bullet 16/06/10

57. Conventional finance requires binding contracts 16/06/10

58. Partnership finance requires consensual agreement 16/06/10

59. But there may be no magnetism 16/06/10

60. Communities may find they have the wrong partner 16/06/10

61. Sometimes partners fall out 16/06/10

62. A Community Partnership is not an Organisation 16/06/10

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

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

65. ...with a mutual interest in developing land sustainably and affordably. 16/06/10

66. Rental Pool creates new options for funding and tenure 16/06/10

67. Co-ownership – of Investor and Occupier 16/06/10

68. Unitisation – simple but radical funding 16/06/10

69. Energy Pool: Community Mega Watts

70. Energy Pool Custodian Investor Community Energy Energy Energy Manager

71. Manager receives %age of production

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

73. Investors provide development Capital by purchasing redeemable Units

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

75. Nega Watt e nergy savings - the cheapest energy of all – may be simply financed… 09/03/10

76. … energy loans in KwH may be repaid via utility bills out of energy saved 09/03/10

77. £5k interest-free energy loan = 100 Units of 1 Mega Watt Hour sold @ £50/MWh 09/03/10

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

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

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

81. Energy Pool offers a new approach to energy financing

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

83. “…… you regulate what goes in….”

84. An Energy Pool enables a Carbon currency based upon the intrinsic value of energy…

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

86. Thank You 16/06/10