The scale of community led development has, to date, been limited. This is likely to be because of a combination of factors. There is a challenge for all stakeholders to conceive that the development they want (whatever it is) can be achieved, and there is the perceived risk as well as an aversion to risk more generally. However, community led development appears to have the potential to work particularly well at scale, with community organisations in the perfect position to enable mixed development and viability it brings as a way of making the most of the increased opportunity to meet local need.
Communities as developers
It is apparent that very few community organisations that are bringing forward development view themselves as ‘developers’. Rather they are interested in the outcomes of the development; the affordable housing, the community facility (and services), the employment space (and business support provided and jobs created). This is as would be expected; their aim is to meet specific needs within the community rather than simply developing buildings, and generating a financial return through bricks and mortars, and selling or leasing space to others.
Meeting the needs of a community is also related to the common means of financing community development. The mix of social and financial return is a distinguishing feature of community led development, and one that sets it apart from the business models of commercial developers. However, as a consequence of not seeing themselves as a developer it is unsurprising that most community based organisations would commonly view a large-scale development (either all residential or mixed development) as too much of a risk for them to be involved with.
In practical terms, however, the process to be followed, and the steps to be taken, to bring any development forward should be the same irrespective of size and scale. Put simply, every development requires an assessment of the feasibility and viability, a planning consent and business modelling and business planning, alongside which robust project management and good governance are required.
A quick look at the barriers and challenges reveals that most are the same for any form of development (single asset or large scale mixed development). Access to land, cost of pre-development work, and access to technical expertise are all factors which have a limiting effect on community led development.
From single asset to large scale mixed development
If the nature of the work required to bring forward any development, and the barriers and challenges are the same irrespective of size or scale, what experience indicates is that the volume of work required is not. Whilst single asset based development is a challenge for most community based organisations, large scale mixed development is another ball game again.
Scale and size require additional work, it’s no more or less difficult than single asset development there is just more of it. Bringing forward large scale development requires more briefings; the number of disciplines involved in the technical team required to support the feasibility, viability and business planning work is often greater which mean more meetings and more output; there is a need for more liaison with a greater range of statutory partners; and the nature of the engagement in all respects is deeper; in short there is just more work involved.
If you don’t see yourself as a developer, and you don’t have the experience or its limited, then it’s easy to see why most community based organisations don’t seek to bring forward large scale mixed developments. It is too much, all at once.
So why would a community business undertake a mixed development?
If its accepted that the barriers and challenges remain the same and the volume of work will be higher is there a greater benefit in relation to the cost and time input to make the development happen? Assuming that the project ‘stacks up financially’, then its highly likely that there will be an increased viability with mixed development that comes forward from a community organisation. It may even be the case that whilst the risks of developing a single asset versus multiple asset development remain the same, the rewards of multiple asset development are such that it should be considered wherever it possible can!
Mixed development appears to provide a way by which community based organisations (and specifically community businesses) could meet multiple needs of their communities whilst at the same time developing a multiple asset base which increases the viability of each individual asset.
Practically mixed development could involve the development of housing, employment space, community facilities and where possible energy production/distribution facilities and growing space (for food). The exact mix of development will however depend on the specific communities and the specific location.
As the mix of assets is held within the community it locks in the returns and in so doing helps to improve viability and financial sustainability. Indeed, it is highly likely that there is a reduced risk to developing and managing multiple assets than there is in developing individual assets.
Managing assets, and further increasing viability
Whilst there are clearly challenges with community based organisations bringing forward and completing large scale mixed developments there do appear to be a number of reasons for exploring it. These relate in the main to the way the development is managed once it is built.
The business model of most community based organisations is one that generally involves a long-term relationship with the buildings that are built and with those using them. Community based organisation ‘stay in the development’ for longer, and commonly the aim is that this is in perpetuity. They are responding to need in their community and as such usually have an on-going, if evolving, role in meeting the needs and co-creating the solutions required in their community.
Practically whilst immediate financial returns may not be a great as would be achieved in the private sector, it is likely that the returns achieved through a community led mixed development are subject to less variation and can be achieved over longer periods of time. This is because they arise from better longer term management and maintenance of assets. The community are committed to the long-term well-being of their community and are invested in it for the long term. Ultimately, this should help reduce the risk of securing long term investment.
Practically the aim is to ensure that the space developed is well used and full as much of the time as is possible, and the aim is to generate financial returns that are enough to sustain the buildings built over the long term. Most investors are likely to be looking for the same consistency, stability or a degree of predictability around activity as this translates to a return on long term investment.
Beyond the cost of building the assets, the way in which profit and surpluses are dealt with as part of the business model means that they are not distributed to shareholders. Surpluses can therefore be locked in to supporting the viability of the business model whilst at the same time not being created to the detriment of the end users.
Diversifying activity, proactive locally organised subsidies
The mixed nature of the multiple asset base provides an opportunity to generate a number of different revenue income streams (related to housing, business space, community space, energy and food), which would not arise if only one specific asset is developed and managed. Moreover, there is an opportunity to use the surpluses generated through the management of one specific asset in the mix on another that does not generate as much. In this way all elements of the development are more likely to be sustainable.
It is also highly likely that the level of surpluses generated will be higher than those achieved through single asset development. Practically this will mean that there is greater recirculating of funds in to the community, so as to either support services and activities that are under threat or develop new activity that cannot be otherwise funded.
Diversity of service delivery though a common and collative ownership of assets at a community level
Large scale mixed multiple asset development by community based organisations (and specifically community businesses), with the assets held and managed by the community for the community is also likely to lead to a wider range of benefits and outcomes within the community. Indeed, it is not impossible to imagine that this could lead to communities engaging is discussions about what they can deliver for themselves and what they cannot. It could even lead to engaged discussions about devolution at the local level.
This is not to say that all the activities and services delivered through the space provided by these assets are delivered by the same organisation that owns them but rather that there does appear to be a logic in considering moving to a model of common and collectively ownership of assets at a community level and across a community is well worth exploring, as it could support cross subsidy on a whole different scale.
Large scale mixed multiple asset development and management is not a route as yet widely explored by community based organisations. However, the opportunities for long term viability and sustainability and the likely impacts and benefits that would result (and are likely to be multiplied many times more than those that arise from a single asset) appear to be worth exploring.