Old Town Partnership 08 04 09
-
Upload
chrisjcook -
Category
Economy & Finance
-
view
821 -
download
1
Transcript of Old Town Partnership 08 04 09
An Old Town Partnership?
Chris Cook
8 April 2009
People-centred Development
There are two ways of raising finance......
14/04/23 2
....Credit and Investment
14/04/23 3
There’s no shortage of credit -money can be printed ‘til the cows come home..
14/04/23 4
We have a shortage of the credit-worthy...
14/04/23 5
Perhaps we should cut taxes on people and tax privilege instead?
14/04/23 6
...and invest massively in public assets.. to get the economy moving
14/04/23 7
Investment is either through a Limited Company....
14/04/23 8
....a 19th Century legal dinosaur
14/04/23 9
...or loans secured by legal claims eg mortgages
14/04/23 10
But there’s a new furry animal out there....
14/04/23 11
...the 21st Century Limited Liability Partnership (LLP)
14/04/23 12
An LLP is a corporate body with limited liability....
14/04/23 13
...and...errrr...that’s it!...
14/04/23 14
As far as the Tax Man is concerned it is a Partnership
14/04/23 15
It’s an “Open” Corporate where we can work with each other
14/04/23 16
... even without a written agreement
14/04/23 17
Hilton Deal 2002
Capital Partnership LLP10 UK Hotels
Gross Revenues
Hilton GroupCapital User
Consortium LLP Capital Provider
BankProperty
DeveloperHotel
Specialist
% %
%%%
Capital Partnership
Capital PartnershipCapital Partnership
InvestorsInvestors
CustomersCustomers
Managers
CustodianCustodian
% %
£
14/04/23 19
“Equity Shares” - % age shares in revenues or production...
14/04/23 20
...or Units - redeemable in production
14/04/23 21
Example: “The Art of Flirting” – a film incorporated as an LLP
14/04/23 22
The actors received “nth’s” of the gross revenues...
14/04/23 23
...I got 5%...and the producer the rest...
14/04/23 24
...except that we needed lights, cameras, pizza, coffee......
14/04/23 25
Two Capital Partners invested £10k for 20% of revenues....
14/04/23 26
...if there are any
14/04/23 27
Art of Flirting LLP
Art of Flirting PartnershipArt of Flirting Partnership
Financial Capital(Investors)
Financial Capital(Investors)
ViewersViewers
Human Capital(Actors, Producer, Me)
CustodianCustodian
% %
£
14/04/23 28
Everyone was on the same side
14/04/23 29
Example: Albion Trust...a charity
14/04/23 30
..who provides affordable office space for social enterprises
14/04/23 31
...due to demand they bought a disused church next door
14/04/23 32
...and plan a £4m development
14/04/23 33
But if they borrow, the rents will be unaffordable
14/04/23 34
Solution? An Albion Partnership?
Albion PartnershipAlbion Partnership
InvestorsInvestors
TenantsTenants
Managers
CustodianCustodian
% %
£
14/04/23 35
Let’s see how a Community Partnership might work...
14/04/23 36
Conventional development is based on transactions – the “Four B’s”.....
14/04/23 37
Borrow, Buy, Build and B...er Off...
14/04/23 38
A Community Land Partnership
Community ProjectCommunity Project
InvestorsInvestors
OccupiersOccupiers
Managers
CustodianCustodian
% %
Rental
14/04/23 39
First, the land is transferred to a Custodian
LandLand CustodianCustodian
14/04/23 40
...and the Land Owners become Investors
LandLand
Land OwnerLand Owner
CustodianCustodian
Land Value
14/04/23 41
...the Council invests the value of planning permission (as well as land)...
LandLand
CouncilCouncil
CustodianCustodian
Value of Planning permission
14/04/23 42
...the Contractors invest at least their profit margin...
LandLand
ContractorsContractors
CustodianCustodian
Profit Margin
14/04/23 43
...and Risk-Takers provide £ to pay Contractors’ agreed costs...
LandLand
Risk-TakersRisk-Takers
CustodianCustodian
€
14/04/23 44
....while the Developer invests “Intellectual Capital” of concept and services...
LandLand
InvestorsLand-owner, Council,
Contractors, Risk Takers
InvestorsLand-owner, Council,
Contractors, Risk Takers
DeveloperCommunity plus help
DeveloperCommunity plus help
CustodianCustodian
Value Value
14/04/23 45
When the development is occupied...
Community ProjectCommunity Project
InvestorsInvestors
OccupiersOccupiers
Managers
CustodianCustodian
% %
Rental
14/04/23 46
Investors may keep Units for their own pension...
14/04/23 47
...or sell them to Investors or Occupiers who wish to invest in their own homes
14/04/23 48
Occupiers maintaining the property themselves may receive “Sweat Equity”
14/04/23 49
For Investors it’s an index-linked, property-based investment...
14/04/23 50
Everyone has a stake in the outcome....
14/04/23 51
....with an interest in high quality, energy efficient housing ....
14/04/23 52
....because this lowers the cost of occupation over time ....
14/04/23 53
....which makes the Rental value higher and makes Equity Shares more valuable
14/04/23 54
So we go from a transaction model...
DeveloperDeveloperLand
OwnerProperty
BuyerProperty
Buyer
£ £
PropertyBuyer
PropertyBuyer
£
14/04/23 55
...to a service provider model where land stays in community ownership...
14/04/23 56
...and service providers provide services the community needs
14/04/23 57
Community partnerships are not a magic bullet
14/04/23 58
Conventional finance requires binding contracts....
14/04/23 59
....partnership finance requires consensual agreement...
14/04/23 60
...but there may be no magnetism..
14/04/23 61
Communities may find they have the wrong partner...
14/04/23 62
...and partners fall out...
14/04/23 63
...so things can still go Pear-shaped
14/04/23 64
A Community Partnership is not an Organisation...
14/04/23 65
...it does not own anything, do anything, employ anyone, or contract with anyone...
14/04/23 66
...it is simply a framework within which the stakeholders self organise ...
14/04/23 67
...with a mutual interest in developing land sustainably and affordably.
14/04/23 68
A new class of Edinburgh Equity created by the community for the community
14/04/23 69
Thank You
14/04/23 70