Isle of Wight Regeneration Scheme
As we are currently planning the start of a new regeneration programme, we would like to take the opportunity to consider and if appropriate, develop a framework for utilising crowdfunding within the development programme to complement our planned use of public and private capital. The use of crowdfunding would fit with our goal of including local residents in the development process while also maximising the local economic benefit of the regeneration programme. We would like to explore concepts such as the Isle of Wight ISA.
Recognising that crowdfunding can open up new models for development through the introduction of capital that comes from investors interested in the social output, not simply the financial output, of infrastructure development, we will also consider whether crowdfunding offers the potential for new delivery models. In the context of the Regeneration Programme, the study will consider the pros and cons of establishing a Community ISA, a tax efficient means of investing across a portfolio of projects that meet the investor’s preferences.
The project will enable the Isle of Wight Council to assess whether crowdfunding is suitable and beneficial to its regeneration programme. If crowdfunding is found to be applicable, then the project will produce guidance on the application of crowdfunding to different project categories, how to procure crowdfunding in different project categories and consideration of investment packages and governance arrangements to maximise the benefit for the investor. The intention is that, equipped with the above, all of the projects developed as part of the regeneration programme will consider crowdfunding as a contribution to community benefit.
Dudley Kingswinford Health-hub Project
Dudley CCG have developed a Health Infrastructure Strategy plan which calls for the development of health hubs with primary care, operating at scale, co-located with other community and out-patient services, replacing the current model of dispersed primary care and centralised acute care. One such area identified for a hub scheme is Kingswinford to improve the delivery of services throughout the region. The new building will serve as a hub for the local community, hosting four GP Practices with a combined list of 35,000 patients as well as a wide range of community and outpatient services. This project is recommended as part of the CCG’s Strategy and forms a core part of this strategy, providing a template for other facilities in the locality.
The grant will be used to explore what and where the Kingswinford project, including its financial model, needs to be changed or adapted to accommodate investment by local residents and the general public. Since the themes and challenges can be expected to repeat across different projects, the aim is to help identify a new model which incorporates them and can be deployed for future projects.
With the benefit of the analysis, the plan is then to include crowdfunding for some portion of capital required for the Kingswinford project and to help put the theory into practice with the benefit of the associated learning to take forward to the next example.
The development of the financial model will establish the affordability of the project against the stated affordability cap by the CCG. The model will include sensitivity analysis of the cost of debt.
NHS Dudley Infracare LIFT has engaged Archus to build the financial model and will expand its engagement, working with the input of Abundance Investment, to develop a proposed capital structure to fund the healthcare project.
The primary care infrastructure across Kingswinford faces challenges as some of the buildings need significant investment to address current standards and meet future need. At present, they do not support multi-disciplinary team working and negatively contribute to a poor patient experience. The NHS 5 year forward view calls for larger facilities that bring together multiple services to work together to deliver better health outcomes.
The Kingswinford scheme delivers the following benefits.
- Future service viability to meet demand from increased population levels during the life of the facility;
- The facility will provide high quality services making the most efficient use of existing resources to reduce inequalities in health;
- The Hub will provide a collaborative approach to the delivery of services, across many organisations, to improve health outcomes;
- The Hub will result in services being delivered in a safe and sustainable manner; and
- The Hub will deliver services closer to the community and support the delivery of services within a patient’s home.
Bristol City Council – Non-domestic energy efficiency
The project aims to explore the use of crowdfunding to finance work in our non-domestic energy efficiency work streams, which will reduce the energy costs for building users through a spend-to-save repayment mechanism and return an interest to the investor.
Bristol City Council aims to understand the opportunities arising from a council-operated crowdfunding platform to attract investments from the residents of Bristol and if these could form a successful capital generating exercise, with a specific focus on the city’s community buildings.
The pilot outcomes will provide research data that will determine the viability of using crowdfunding to undertake projects of this type for the benefit of the people of Bristol. The pilot will also provide intelligence on the any potential challenges and additional opportunities that this approach presents.
Crowdfunding has the potential to unlock energy savings in community buildings across the city. Bristol has a target to become carbon neutral by 2050, and every community, group and business needs to get involved to make this happen. Not only does crowdfunding provide the opportunity to raise finance for these projects, but it also has the potential to increase awareness of energy saving and sustainability more generally. There are roughly 200,000 adults in Bristol City alone. Based on HMRC’s data, 49% of UK adults have an ISA with an average holding of c£20,000. This means there is c£2bn held in Bristol citizens’ ISAs, a proportion of which could be redirected away from traditional investments in global companies and investment funds and put to work supporting the low carbon, inclusive growth of Bristol.
A crowdfunding initiative would enable the council to offer this service across the city and free up other funding streams to benefit different sectors. As an initiative this allows investors social or personal motivations to be rewarded with an expected return on their investment within five years while the infrastructure enjoys the immediate benefits of efficient systems and later the cost savings resulting from the measures. Many of these community buildings are particularly energy inefficient and suffer generally from a lack of funding. This means that they are unable to make vital changes to the fabric of the building and pay the price with the high energy bills they have to pay. By facilitating these energy efficiency works via crowdfunding, these community organisations will have more available funding to engage in their core activities, continuing to enhance our communities.
Royal Devon and Exeter Care Village
The overall aim of this project is to provide safer, better quality services for patients suffering from suspected dementia or delirium, at a cost that represents better value for money to the taxpayer.
The Trust wishes to work collaboratively with its city partners and use some of its land to help to create an innovative solution for the home needs of some of the people it serves. It hopes to use this scheme to demonstrate new ways of supporting people at home and help them to stay well or when needed, to access the right local services quickly.
Crowdfunding is more likely to be attractive to local people where there is a passionate interest in the public service under development. In other words, the greater the role of the local healthcare Trust in the scheme, and the closer the service satisfies important local needs, the increased likelihood of material funds being generated.
If this is the case then the role of social funding is to replace some of the initial subordinated debt required to de-risk the scheme. This is important because it can have a positive affect on the corporate finance structure and ultimately the cost of funds.
The Trust envisages the following impact:
- Healthier people at home through a more effective in hospital and discharge experience;
- Faster access to information to help support out of hospital care;
- Improved resilience and confidence for elderly people living at home;
- Showcasing technologies that can lead to changes in retirement housing design and policy;
- Improved taxpayer value for money;
- An increase in local collaborative working between public-public sector and public-private sector leading to shared learning and innovative new solutions;
- An emerging new source of investment funds for some services and facilities
Leeds City Council – Rooftop Solar project
Leeds City Council (LCC) has ambitious plans to decarbonise the city’s infrastructure, while simultaneously making the city a centre for green innovation. LCC has established the Leeds Climate Commission to amongst other things, map the city and identify low carbon projects which can be developed as part of a strategic plan to transform the city’s environmental impact. We are working with local Universities and other city stakeholders through the commission to commercialise the estimated annual £277 million of profitable low carbon projects. This pipeline is estimated to create 4,200 extra years of employment whilst also cutting carbon emissions by 22.7% on business as usual estimates.
To test and create a visible example of crowdfunding within Leeds we have identified a roof top solar project on buildings across the LCC estate. The roof top solar systems will be used to supply electricity to the Council via long term PPAs. The initial analysis of the project indicates by installing solar panels we can source electricity at a discount to what we are currently paying while also creating an exciting test case for crowdfunding.
The Leeds City Region has also recently been established a £3.817m unit to progress identified projects to the point they are investable – this is funded by a European grant and local growth fund money. The Council envisages that the resulting projects will be funded through a mix of public and private capital. However, LCC would like to explore replacing traditional private capital with money sourced from local people via crowdfunding.
The Council is focused on ensuring the economic benefits of this are captured locally and that the residents of Leeds participate in the transformation. Crowdfunding has the potential to help deliver on both of these goals, while also offering a platform to communicate the Council’s low carbon ambitions, hopefully stimulating broader citizen and business engagement.
This project has the potential to add the innovative finance option of crowdfunding to the suite of infrastructure funding options available in the city. The advent of digital technology is enabling people to support projects that they ‘believe in’ through simple funding administration. Community based low carbon energy projects are not prevalent in Leeds and the Council hopes that this project may provide some of the enabling infrastructure to allow communities to pursue projects in innovative ways that have previously not been available to them. Crowdfunding is an exciting addition to the range of financing options that can be deployed, particularly where securing local community buy-in to a project will be an important measure of success.