Permaculture Holding, the Collective

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Land Collective
Proposed framework/constitution/secondary rules
Version 3 from discussions at meeting of Friday 24th june 2011

It is the intention of the Co-op to use its legal structure to raise loans and possibly a new mortgage to enable us to purchase land and possibly buildings to enable the development of an agro-forestry, permaculture holding.

This holding will be owned by Permanent Housing Limited and it will be rented to the Land Collective, who together will take on responsibility for managing the plot. The collective will be responsible to pay all costs emanating from the ownership and development of the land.

We will raise the resources for this development through a mixture of loanstock investment (at 3%) interest and ‘sweat equity’ of work done to establish the project. Sweat Equity is to be redeemed in the first two years of the project’s development.

There are currently 10 proposed members of this group, with the possibility remaining of 2 more joining.

We are developing a framework of rules as to how we intend to manage the collective, the summary below is as developed so far.

Meetings
The collective will be managed by regular meetings.
Meetings will have an agenda of proposals submitted for consideration in advance of the meeting.

Minutes will be kept by a pre appointed Minute taker and the meeting will be managed by a pre appointed chair. If a member cannot attend meeting apologies should be sent – minutes must be read and agreed and decisions made are to be binding after a period.

Meetings to have a chair, a proposer and a minute keeper, different people to perform the different roles at different meetings

Different kinds of input/ membership

All members of the Collective will be required to invest £10,000 capital (at up to 3% interest) or to pledge £10,000 worth of Sweat Equity
We are also open to cash investors, who are not required to attend management meeting, and will receive up to 3% interest on their investment. (this may be reviewed in the event of bank base rates rising)
Sweat equity investors do not receive interest.. and Sweat Equity capital may be offered for sale at face value after the 2 year of development is completed. The Collective or Co-op is not obliged to purchase sweat equity capital from a departing member.
It is also possible for full members to buy their share with a mixture of cash and sweat

people involved in projects: eg permaculture students
volunteers/wwoofers

Sweat equity
Is defined as work done for the collective according to a job list of necessary work as set out by the collective. It may be necessary to convene development management group.

A detailed log of all hours worked kept – Lesley to collate?
Sweat equity should be worked at piece rate rather than hourly/day rate

Sweated equity credits: members will build up some sweat equity credit – at some point this maybe be redeemed as cash dividend when the collective’s cash position will support this – this may be a useful tool to help to minimise tax liability – there must be fair recognition for work.
It is essential that there is clear recognition about what is sweated equity and what isn’t – eg managing wwoofers could be sweated equity role – must be work required and specified by the general meeting of the collective.

People’s different abilities and available time must be recognised in some way
figure for fair hourly rate to be fixed – different rates for different skills?
sweated equity is an important input of time and skills
balance to be struck between members’ personal interests and group’s interests

Interest & dividends
Interest to be paid to cash investors from start of project though some investors might waive interest for an initial start-up period -
investors may choose a rate of interest up to 0.5% less than the current bank rate.

The Collective will pay an annual dividend to its members is equal proportion,,in the event of the collective trading at a surplus. Permanent Housing Co-operatve will also receive a dividend equal to that of other collective members.

Relationship between The Collective to Permanent Housing
Permanent Housing is an established vehicle with legal standing and equity base for buying property and has a long term vision to promote permaculture projects
investors put money into PH
PH buys land
GC rents land from PH
GC is a tenant of PH and so is also a member of PH. GC has an equal say in its affairs with other PH members
Land holding cannot be sold by Permanent Housing without the Collective’s consent, unless teh Collective can be deemed to have been financially negligent in managing its financial liabilities.
- Loan stock holders cannot force sale in order to withdraw their loanstock, as for the coop, but the Collective will be expected to repay loanstock to the best of its ability.
GC to rent land from PH at cost for initial two year set-up phase then to pay a dividend to the co-op equal to that on an individual Collective partner.

Loanstock investors risk
In event of defaulting on loan, bank would force sale of land, bank would have first call on proceeds.

Cash investors, who are not members of the Collective would have next call -

Member investors are paid subsequent to that from remaining funds, in equal proportion.
Sweat Equity investors would only receive cash payment at dissolution if sufficient funds are available.

Permanent Housing risk
in event of GC defaulting on loan, ultimately bank could force sale of any other PH assets – PH acting as security for the land investment should be noted as commitment to project

System for leaving group and drawing investment
A: cash investor wants to leave collective – as cash position and finding other investors permits, PHC will pay back such investors’ initial sums, any increase in capital value of project will not be taken into consideration
B: sweated equity holder wants to leave collective – the holder’s input could be repaid as cash if the collective’s position allowed this, or if a new cash investor joined the group

Building work & quality control
** priority to get infrastructure and resources functional so income can be generated **
quality of work on buildings etc must be of a standard acceptable to building control -
volunteers and wwoofers welcome on project as long as they have useful skills of acceptable standard – job description to be drawn up and possible trial period?

Ideas for generating income
forest garden nursery – mid level plants
hosting permaculture courses
catering
therapy retreats when facilities are ready
host for Education Otherwise, Dux groups etc
greenwood furniture
picture framing
mushrooms
charcoal and biochar
cider can sell up to 1200 litres without a licence?
something for kids on land?
general point: how hard should assets be worked? different aims beyond covering basic costs?

Business rates
should be able to consider collective as one business for rates purposes -
external accounts can show one figure for “rents”, internal book can keep record of individual members’ rent payments

Priorty
priority to get infrastructure and resources functional so income can be generated

other points to consider
FARM? possibility of buying another small piece of land to make up land to farm size?
autumn cash flow
grazing in winter? is £60 per month throughout year
need to buy straw bales for building now ??
straw bale buildings – insurance position?
firewood for members form land?

coops in general and how they work
basic details of coop structure to be made easily available

Definitions
Collective = informal association of people with whatever rules etc they choose/need. the Collective will effectively be the management group for the land holding.
Coop = existing legally established framework

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