Upload
chrisjcook
View
1.323
Download
0
Tags:
Embed Size (px)
Citation preview
Introducing the Community Land Partnership
Chris Cook
29 June 2010
Asset-based Finance
There are two conventional ways of raising finance......
16/06/10 2
....Credit and Investment
16/06/10 3
Investment is either through a Limited Company....
16/06/10 4
....a 19th Century legal dinosaur
16/06/10 5
...or loans secured by legal claims eg mortgages
16/06/10 6
But there’s a new furry animal out there....
16/06/10 7
...the 21st Century Limited Liability Partnership (LLP)
16/06/10 8
An LLP is a corporate body with limited liability....
16/06/10 9
...and...errrr...that’s it!...
16/06/10 10
As far as the Tax Man is concerned it is a Partnership
16/06/10 11
It’s an “Open” Corporate where we can work with each other
16/06/10 12
... even without a written agreement
16/06/10 13
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
% %
£
16/06/10 15
“Equity Shares” - % age shares in revenues or production...
16/06/10 16
...or Units - redeemable in production
16/06/10 17
Example: “The Art of Flirting” – a film incorporated as an LLP
16/06/10 18
The actors received “nth’s” of the gross revenues...
16/06/10 19
...I got 5%...and the producer the rest...
16/06/10 20
...except that we needed lights, cameras, pizza, coffee......
16/06/10 21
Two Capital Partners invested £10k for 20% of revenues....
16/06/10 22
...if there are any
16/06/10 23
Art of Flirting LLP
Art of Flirting PartnershipArt of Flirting Partnership
Financial Capital(Investors)
Financial Capital(Investors)
ViewersViewers
Human Capital(Actors, Producer, Me)
CustodianCustodian
% %
£
16/06/10 24
Everyone was on the same side
16/06/10 25
Example: Albion Trust...a charity
16/06/10 26
..who provides affordable office space for social enterprises
16/06/10 27
...due to demand they bought a disused church next door
16/06/10 28
...and plan a £4m development
16/06/10 29
But if they borrow, the rents will be unaffordable
16/06/10 30
Solution? An Albion Partnership?
Albion PartnershipAlbion Partnership
InvestorsInvestors
TenantsTenants
Managers
CustodianCustodian
% %
£
16/06/10 31
Let’s see how a Community Partnership might work...
16/06/10 32
Conventional development is based on transactions – the “Four B’s”.....
16/06/10 33
Borrow, Buy, Build and B...er Off...
16/06/10 34
A Community Land Partnership
Community ProjectCommunity Project
InvestorsInvestors
OccupiersOccupiers
Managers
CustodianCustodian
% %
Rental
16/06/10 35
First, the land is transferred to a Custodian
LandLand CustodianCustodian
16/06/10 36
...and the Land Owners become Investors
LandLand
Land OwnerLand Owner
CustodianCustodian
Land Value
16/06/10 37
...the Council invests the value of planning permission (as well as land)...
LandLand
CouncilCouncil
CustodianCustodian
Value of Planning permission
16/06/10 38
...the Contractors invest at least their profit margin...
LandLand
ContractorsContractors
CustodianCustodian
Profit Margin
16/06/10 39
...and Risk-Takers provide £ to pay Contractors’ agreed costs...
LandLand
Risk-TakersRisk-Takers
CustodianCustodian
€
16/06/10 40
....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
16/06/10 41
When the development is occupied...
Community ProjectCommunity Project
InvestorsInvestors
OccupiersOccupiers
Managers
CustodianCustodian
% %
Rental
16/06/10 42
Investors may keep Units for their own pension...
16/06/10 43
...or sell them to Investors or Occupiers who wish to invest in their own homes
16/06/10 44
Occupiers maintaining the property themselves may receive “Sweat Equity”
16/06/10 45
For Investors it’s an index-linked, property-based investment...
16/06/10 46
Everyone has a stake in the outcome....
16/06/10 47
....with an interest in high quality, energy efficient housing ....
16/06/10 48
....because this lowers the cost of occupation over time ....
16/06/10 49
....which makes the Rental value higher and makes Equity Shares more valuable
16/06/10 50
So we go from a transaction model...
DeveloperDeveloperLand
OwnerProperty
BuyerProperty
Buyer
£ £
PropertyBuyer
PropertyBuyer
£
16/06/10 51
...to a service provider model where land stays in community ownership...
16/06/10 52
...and service providers provide services the community needs
16/06/10 53
Community partnerships are not a magic bullet
16/06/10 54
Conventional finance requires binding contracts....
16/06/10 55
....partnership finance requires consensual agreement...
16/06/10 56
...but there may be no magnetism..
16/06/10 57
Communities may find they have the wrong partner...
16/06/10 58
...and partners fall out...
16/06/10 59
...so things can still go Pear-shaped
16/06/10 60
A Community Partnership is not an Organisation...
16/06/10 61
...it does not own anything, do anything, employ anyone, or contract with anyone...
16/06/10 62
...it is simply a framework within which the stakeholders self organise ...
16/06/10 63
...with a mutual interest in developing land sustainably and affordably.
16/06/10 64
A new class of Community Equity created by the community for the community
16/06/10 65
Thank You
16/06/10 66