The document discusses limited liability partnerships (LLPs) as an alternative to traditional financing structures for development projects. It provides examples of how LLPs have been used to fund a film and a charity's property development. The document proposes a community land partnership model where the local community retains ownership of the land and various stakeholders invest in and benefit from the development through different equity shares and rental agreements.

1. An Old Town Partnership? People-centred Development Chris Cook 8 April 2009

2. There are two ways of raising finance...... 09/06/09

3. ....Credit and Investment 09/06/09

4. There’s no shortage of credit -money can be printed ‘til the cows come home.. 09/06/09

5. We have a shortage of the credit-worthy ... 09/06/09

6. Perhaps we should cut taxes on people and tax privilege instead? 09/06/09

7. ...and invest massively in public assets.. to get the economy moving 09/06/09

8. Investment is either through a Limited Company.... 09/06/09

9. ....a 19 th Century legal dinosaur 09/06/09

10. ...or loans secured by legal claims eg mortgages 09/06/09

11. But there’s a new furry animal out there.... 09/06/09

12. ...the 21 st Century Limited Liability Partnership (LLP) 09/06/09

13. An LLP is a corporate body with limited liability.... 09/06/09

14. ...and...errrr...that’s it!... 09/06/09

15. As far as the Tax Man is concerned it is a Partnership 09/06/09

16. It’s an “Open” Corporate where we can work with each other 09/06/09

17. ... even without a written agreement 09/06/09

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

19. Capital Partnership Capital Partnership Investors Customers Custodian % % £ 09/06/09 Managers

20. “ Equity Shares” - % age shares in revenues or production... 09/06/09

21. ...or Units - redeemable in production 09/06/09

22. Example: “The Art of Flirting” – a film incorporated as an LLP 09/06/09

23. The actors received “nth’s” of the gross revenues... 09/06/09

24. ...I got 5%...and the producer the rest... 09/06/09

25. ...except that we needed lights, cameras, pizza, coffee...... 09/06/09

26. Two Capital Partners invested £10k for 20% of revenues.... 09/06/09

27. ...if there are any 09/06/09

28. Art of Flirting LLP Art of Flirting Partnership Financial Capital (Investors) Viewers Custodian % % £ 09/06/09 Human Capital (Actors, Producer, Me)

29. Everyone was on the same side 09/06/09

30. Example: Albion Trust...a charity 09/06/09

31. ..who provides affordable office space for social enterprises 09/06/09

32. ...due to demand they bought a disused church next door 09/06/09

33. ...and plan a £4m development 09/06/09

34. But if they borrow, the rents will be unaffordable 09/06/09

35. Solution? An Albion Partnership? Albion Partnership Investors Tenants Custodian % % £ 09/06/09 Managers

36. Let’s see how a Community Partnership might work... 09/06/09

37. Conventional development is based on transactions – the “Four B’s”..... 09/06/09

38. Borrow, Buy, Build and B...er Off... 09/06/09

39. A Community Land Partnership Community Project Investors Occupiers Custodian % % Rental 09/06/09 Managers

40. First, the land is transferred to a Custodian Land Custodian 09/06/09

41. ...and the Land Owners become Investors Land Land Owner Custodian Land Value 09/06/09

42. ...the Council invests the value of planning permission (as well as land)... Land Council Custodian Value of Planning permission 09/06/09

43. ...the Contractors invest at least their profit margin... Land Contractors Custodian Profit Margin 09/06/09

44. ...and Risk-Takers provide £ to pay Contractors’ agreed costs... Land Risk-Takers Custodian € 09/06/09

45. ....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 09/06/09

46. When the development is occupied... Community Project Investors Occupiers Custodian % % Rental 09/06/09 Managers

47. Investors may keep Units for their own pension... 09/06/09

48. ...or sell them to Investors or Occupiers who wish to invest in their own homes 09/06/09

49. Occupiers maintaining the property themselves may receive “Sweat Equity” 09/06/09

50. For Investors it’s an index-linked, property-based investment... 09/06/09

51. Everyone has a stake in the outcome.... 09/06/09

52. ....with an interest in high quality, energy efficient housing .... 09/06/09

53. ....because this lowers the cost of occupation over time .... 09/06/09

54. ....which makes the Rental value higher and makes Equity Shares more valuable 09/06/09

55. So we go from a transaction model... Developer Property Buyer £ £ Property Buyer £ 09/06/09 Land Owner

56. ...to a service provider model where land stays in community ownership... 09/06/09

57. ...and service providers provide services the community needs 09/06/09

58. Community partnerships are not a magic bullet 09/06/09

59. Conventional finance requires binding contracts.... 09/06/09

60. ....partnership finance requires consensual agreement... 09/06/09

61. ...but there may be no magnetism.. 09/06/09

62. Communities may find they have the wrong partner... 09/06/09

63. ...and partners fall out... 09/06/09

64. ...so things can still go Pear-shaped 09/06/09

65. A Community Partnership is not an Organisation ... 09/06/09

66. ...it does not own anything, do anything, employ anyone, or contract with anyone... 09/06/09

67. ...it is simply a framework within which the stakeholders self organise ... 09/06/09

68. ...with a mutual interest in developing land sustainably and affordably. 09/06/09

69. A new class of Edinburgh Equity created by the community for the community 09/06/09

70. Thank You 09/06/09