Target set and what to be used for?
£100K initial target to secure the bank loan and go ahead, with £600K needed to finance the whole project without any additional loan finance. Overall project cost of around £930K.
Strontian had a population of 429 at the time of the 2011 census. There were 36 children of primary school age in the community, with 14 of pre-school age. The area is struggling to retain young adults and this task would be made harder with the current primary school building not being fit for purpose. The school is an important source of local jobs - Strontian Primary School currently employs 9 full and part time staff, mainly from the local community. With the new school we hope to secure these jobs.
The initial activity is to oversee the primary school construction project, based on a community owned school building designed on the footprint of four affordable housing units. This will deliver a legacy for the community. The community organisation will manage the development, construction, leasing and possible future conversion of the building. The land for the building has been purchased from Trustees, and freed of restrictive covenants. Throughout the development of the project two elements of community provision essential to the community’s sustainability and growth have been highlighted as areas of significant need: A primary school fit for the 21st century, and affordable housing both for key workers, and to attract new, and retain existing, families who struggle to find affordable secure homes.
Model rules chosen?
We used the Cooperative UK community finance model rules with amendments to satisfy eligibility criteria for the Scottish Land Fund i.e. majority of members must be from the local area and a majority of elected Directors must also be drawn from this local membership.
Support received from CSS?
Email and telephone support. Microgrant and consultancy support relating to the share offer documents and launch.
Any other loans/funders in the mix?
Close to £5K from local fundraising efforts.
Scottish Land Fund £50,825 for purchase of the land and Sunart Common Good Fund £24K (generated by the community owned Sunart Community Renewables hydro project (SCR))
Highland Council have also agreed a contribution of £190K towards fit out and equipping the school building.
Foundation Scotland £30K.
A loan with Triodos Bank has been agreed for any shortfall.
As member investors are also owners and managers of the asset/business, this presents challenges for remote areas with low population like ours. We introduced a 2 tier membership structure with Group A members being those who ordinarily reside in our area (defined by postcodes in our rules) and Group B members being those who do not. At all times at least 51% of the members need to be in Group A. 55% of our 71 member shareholders are from Group A.
Group A residents had a minimum investment of £150 and Group B members a minimum investment of £300 (£50 per share).
This share offer is our second as a community, having raised over £700K through community shares for a community owned microhydro scheme (SCR). There were 3 big differences between this and the SCR share offer that made this one more challenging: we did not qualify for any tax reliefs for investors through HMRC; FITs guaranteed SCR a 20 year income and so they were able to offer a higher rate of interest, whereas the Strontian school project income stream is only guaranteed for 10 years, resulting in a slightly lower interest rate to investors; understanding the financial model for this project was more difficult for potential investors (even though this is exactly how a PFI school building investment works).
These projects are very intensive of unpaid volunteer Directors’ time, and this is still on-going. Much of the funding on offer comes with a lot of strings attached.
The community-owned building will initially be a community owned school building, built on the footprint of affordable housing units. The new primary school building will be leased to the Highland Council (HC) for a minimum of 10 years, and thereafter for as long as agreed between the community and HC. The building will then be converted into affordable housing units or other community use dictated by the needs of the community at the time.
This model solves the problem of our school being too small and in need of major repairs and the local authority not having the funds to do the work.
We wanted to show that PFI is not the only way to get public assets built. This is a win:win for us and for the local authority.
Brief timeline of plans/what you hope to achieve over the next 5years.
Highland Council has indicated that they will sign a lease to house Strontian Primary School in the building for 15 years, with a review point at 10 years. The school could potentially continue to be housed in the building after that time. However, as it is possible that the Council might progress alternative proposals to house the primary school after 2027, the building will be designed so that it can easily be converted into four affordable housing units.
If you are interested in supporting the project please contact us via the website.