New Sim Proposal: Partial Privatization

Introduction

I mentioned in an earlier thread that I would post an alternative to the idea of selling bonds to raise money for the city. Actually, it's not so much of an alternative than it is a slightly modified version of that great idea. This should also be considered the first part of my entry in Eugene's contest to come up with a plan for the city. However, before I can start the city layout, I need to discuss the concept of funding the city, as it has a direct effect on the layout.


The Idea

What I'd like to do is run our new sim similar to how LL runs SL -- only better. I'd like to sell tracts of land to individuals who are then responsible for paying a monthly fee. Different from SL, our sim will have a predefined layout and building codes, with which owners will have to adhere (yet they'll have much freedom as well). To do this, I propose to zone the sim into either open space (empty land and water), common space (the medieval Bavarian center, casino, ski area), or private space (privately owned tracts of land). The initial purchase price and the monthly rent of the private land will cover the cost of the server and our monthly payments respectively.

Because these tracts are private, it is the responsibility of the owner of that land to generate revenue however they see fit (provided it meets the yet-to-be-defined guidelines). This alleviates pressure on the government to provide a mechanism to pay for the entire sim through public works. It's just like the greater SL in that it is up to the owner to decide if they want to just live on the land or make money off the land.

The private tracts will be priced such that its initial and monthly cost cover the private space, open space, and communal space plus a slight overhead. The owners' overhead and even their monthly payments themselves will shrink as the communal economy grows (rental of communal space, casino, sales of collaborative goods). It is conceivable that someday their monthly payments could vanish! Those who own land and pay rent will not have to pay a tax on their goods, can sell their own products, and the city will still provide the sales infrastructure (vendors and web site) to the owners.


The Benefit

The zoning of private, common, and open space allows us to have our cake and eat it too. We will have privatization and ownership which is more likely to attract active participants who will live in and support the city and we maintain our unique communal common space that we can rent out as previously planned.

The private space will have more lenient building requirements, allowing individuals to create their own structures within prim limits and guidelines as they see fit. The open-space prims will be used to support the dense build of our walled common space. We will be able to keep much of our original build (dense medieval Bavarian with modern), while allowing the build to evolve as suggested by Kathy.


The Math

Individuals who purchase land will be able to sell the land on approval of the SC or RA for whatever price they can receive on the open market. Initially though, the price for a tract of land (Ptract) will be the price of the server (Psim) plus one month's rent (Prent) divided by the the number of private tracts (N).

Ptract = (Psim + Prent)/N

For example, if we zone 62.5% (40,960 m^2) of the city for private use and 37.5% (24,576 m^2) for communal use that would allow us to sell twenty 2048 m^2 tracts. Each 2048 m^2 tract of land would cost

Ptract = (US$1000 + US$200) / 20 = US$60 for a 2048 m^2 plot

This is a land cost of 0.029 $/m^2 which is equivalent to the going auction rate for land in SL whose land cost is between 0.024 $/m^2 and 0.030 $/m^2.


The monthly fee (Pfee) on land would be one month's rent (Prent) divided by the number of private tracts (N), times a city service fee (fc) to cover PayPal overhead.

Pfee = fc * Prent / N

For example the monthly fee on a singe 2048 m^2 tract of land would be

Pfee = 1.025 * US$195 / 20 = US$10 per month for 2048 m^2

Despite covering all the land in the sim, the private 2048 m^2 tracts are equivalent in cost per square meter to land owned at the 8192 m^2 land-tier level. Thus those paying for 2048, 4096, or 8192 m^2 worth of private land are paying less than they would in SL for an equivalent tier.

We could even make a few special lots with preexisting structures within the walled city that are only 512 m^2 for US$15 for land and US$2.50 per month (half price compared to SL). It could be a great solution for those who want an inexpensive lot with a prefabricated structure in a beautiful setting. If the demand is high enough, we could even auction off the private tracts of land (with the suggested price as a minimum) on Cristiano's auction site.


The Link to Government

Individuals that hold land or sell goods will become members of the Artisanal Branch, as their payments, personal builds, and businesses are productive work which contributes to the city.

Transfer of land will be allowed provided that RA and AC approve of the new owner (more on this later). The new owner will have to accept all agreements and become an active member of the group (more on the contract later). No land speculation without productive contributions are allowed.


Conclusion

How's that for a different way of doing things? We get the benefit of the ordered communal space with the freedom of regulated private ownership. Whee!

What ideas and concerns do you have? Does this sound like a sustainable model? Note that this still doesn't solve the problem of having a single payer through PayPal. Are there any other ideas for handling the single owner and credit card dilemma?

~Ulrika~

Ulrika, I have nothing against your proposal, and actually I think that it would work much better than the current plan of renting homes/shops in crowded Neualtenburg (I'm still not totally against the idea of shops).

Perhaps the only comments I have right now are:

1) Any landholders, rentees or shop owners would be able to apply for Citizenship in Neualtenburg - ie. submit to the greater authority inside the city. If they either refuse to apply for Citizenship (or their appliance is rejected for some reason), they would have a special, Immigrant status - which would basically be about the same in terms of rights and duties, excepting for ellegibility to Government and voting rights. All this should be made very clear when the prospective buyer/rentee acquires her/his plot.

That means that there are no "outsiders" at the Guild - they are either Citizens or at least Immigrants.

Yes, I also know that the "status" of Citizenship has been hinted at in this forum but not formalized yet...

2) RA and AC will need to have a special committee for dealing with aesthethics and low-lag zones. Anzere is low-lag in terms of scripts (but not textures). As soon as we get a bunch of shops with trillions of scrips - or nice rivers/waterfalls, which also create lag like crazy - we'll have problems dealing with eventual merchants when we tell them that they have to remove their laggy thingies, dealing with each merchant on a fair base. Think about Midnight City/Galleria as an example of a large mall with very precise guidelines on what's allowed and what isn't.

3) I didn't understand your phrase "the private 2048 m^2 tracts are equivalent in cost per square meter to land owned at the 8192 m^2 land-tier level". Tier for a 2048 m^2 plot costs US$15.00/month. So, we would be offering just a 33.33% discount on the usual tier fees (from the perspective of someone who doesn't own any land, of course). Or am I not doing the maths properly?

In any case, I think that "land" is something with more intrinsic value in SL than "Government-issued bonds", so, in a way, I'd think we would get 20 paying "customers" more easily than with a bonds system. Of course, in a private sim, the notion of "land ownership" is tricky, in terms of SL mechanics - there would still need to be a big trust in the Neualtenburger Government. But that's more a problem of the buyers, we know we can trust the Government

This plan sounds very similar to what An_she is currently offering in several sims - the German/Dutch-speaking sim, for instance. In this case, she uses her own reputation as the basis for trust (and she also works as an arbitrer/moderator for dealing with conflicts between the residents of "her" sim). We also know that this system actually works well (or An_she wouldn't be in that line of business ). Unlike her own ventures, Neualtenburg has a different appeal - the democratically elected Government which regulates and mediates! So, my feeling is, we could probably "pull this off" easily, and eventually add more islands to create our own mini-continent, as the demand grows. I certainly view this idea with interest and optimism!

About the issue of "many avatars holding the treasury/sim ownership", I have deliberately stepped aside from the discussion for a while - RL work is the major reason for that, of course - because I still am not sure about my own views, to be able to defend them I'll do a short post in one of the other threads to try to explain where I currently stand...

The proposal is certainly an interesting idea. The big question appears to be what is meant by "ownership" of the land, and, in fact, it may be more appropriate to talk about people "renting" the land.

I feel most people have the idea of owning the land as in "ownership" as defined by the Linden procedures. If you own it, you have "edit land" permission, as well as the range of permissions available in "About land". Is there any way the "owner" of a private sim can grant those priviledges to the "owner" of land as defined in this proposal?

And, if (as I suspect) that's not possible, doesn't that severely modify the concept of owning the land? So much, perhaps, that to speak of ownership may be misleading?

Ulrika, perhaps you or others could comment on this issue; fill in more details?

Sudane

Yes. I know what you're saying. It feels like it's neither owning nor renting rather it's something in between. To help articulate what I'm proposing, I did some research online about the ownership of property. Thanks to Wikipedia and a few legal websites, I think I now understand and can explain.

What I'm suggesting is that we adopt grant deeds with a restrictive covenant (two links). A grant deed conveys ownership from the old owner to the new owner and includes a warranty that the old owner's claim to the property is valid. Restrictive covenants are transferable and unchanging conditions attached to the acceptance of a deed, to which a buyer must agree. Thus those owning land will truly own the land but they will be bound by the covenant in the grant deed.

Fascinating isn't it?

Thus, it would be up to the RA (and interested citizens who would like to help) to write a restrictive covenant for privatized land, to define the theme and building requirements. More than that though, it could serve to also bind them to our arbitration system, require voting, require the use of the city vendors, and so on. It can be used, in fact to contractually define citizenship (as a lease could for renters)! Wow.

~Ulrika~

Oh, oh. Homework to do

Thanks for the wonderful suggestion, Ulrika. I'm just afraid this will be one of many of my "working weekends", I cannot promise that I'll have enough free time to read all those links and comment them, in time for the usual RA meeting next Sunday...

No problem! All of us ebb and flow in SL.

I'll get it started with a new thread and we can all add to it like we did with the constitution in the forum as we have time. The RA can then vote on it either as a whole or item by item.

~Ulrika~

I've been thinking about the partial privatization idea and the more I think about it, the more I like it.

By issuing either a grant deed (owning) or lease (renting) with a covenant, it solves several problems that we currently have in the city. These problems are all solved by having control over access and assets of citizens within the city. Here's a list:


Law Enforcement

The question that is often asked in the General Forum is, how does a government enforce laws? With privately owned land that the group has control over, we will have the right to hold a hearing, issue a fine, and even terminate a lease or confiscate land if necessary. Because this land has real RL value, members will be motivated to work within the system to prevent the loss of their assets.


Banking

Because we can hold parcels of land as collateral, we will have the ability to loan to individuals money up to the appraised value of the land.


Citizenship

A few months ago there was a call to open our membership to the Neualtenburg group to all members of SL. We refused to do this because we were afraid that a group of antigovernment troublemakers would join the group and wreak havoc with our fledgling government. However, if we require members to pay for land to be an active citizen, either through ownership or rental, it places an upper limit on the amount of people who can join a sim and adds a disincentive for those who are not serious about the project.

It also helps ensure that group members will be engaged. We are less likely to attract members who sign up and then vanish, if they are making monthly payements. As a matter of fact, I recommend weeding out our group right now, requiring either land-tier contributions or monthly payments in L$ to stay in the group.


Ethical Business Practices

The RATE group was founded to promote ethical business practices in SL (they seem to be in hiatus right now). While they have created a charter, the question of how to enforce it comes up often (just like with government). Again, because we have control over access and assets of those in the group sim, we will be able to give teeth to charters such as RATE's. As a matter of fact, we could even include RATE's charter in our covenant.


I'm so interested in this new concept that I'm just itching to move to the second phase. I'm curious if we can get enough people interested in the to prepurchase all the land.

~Ulrika~

Please. Set aside this idea for now. It is a profound re-direction of the concept of Neualtenburg, at least as I understand it, as the project is defined in the constitution. Making land ownership, or regular monthly payments separate from the submitting of taxes on sales of goods, a member/not-member qualification does not logically follow from the clauses of the constitution and further excludes a class of people who's skills and energy might be sorely wanted for the project.

I will point out that at least one current member of the RA would be excluded from membership should these restrictive criteria be adopted. The individual in question has made clear that land ownership or monthly payments are not possible due to their RL situation. Rather, their contribution is and will be work, time, and enterprises which might pay a sales tax to the city. It would be very unfortunate to lose a person like this or others in their catagory.

Certainly the other bullet points in your post are interesting and will merit conversation. "Grant deeding/restrictive covenent" definitions of land transactions are RL concepts. They are certainly useful descriptions of what we wish to do here. But they don't address the SL issues. If an SL individual wishes to acquire Neualtenburg land under this arrangement, what exactly do we mean by saying that they will "own" the land? I cannot see a single feature of SL land ownership that they will have the benefit of. (i.e. "Edit Land" and options and permissions under "About Land". But I may have an incomplete grasp of what you propose.

Perhaps the defining of exactly what we offer to the potential "buyer" is exactly the task in front of us.

Sudane

Why set it aside? We should definitely explore every idea.

Right now we have a small group of people paying lots of RL money to support the city by land-tier payments. These land-tier payments are supposed be covered by tax on the sales of objects made by an even smaller group of individuals working their tails off. Will this system ever be solvent?

On top of it, we have many people in our group who are talented builders and make a lot of money selling their own items online -- yet they've never made anything for the city. We also have members of the RA who voted, were elected, yet never show up for meetings. Is this a sustainable society or a loose-knit group of individuals half-heartedly playing government?


While my suggestions are a departure from our previous system, I think they are much needed to increase revenue and participation. If it works for LL, it should work for us.

We might lose those members unless we can find a way to create service roles for individuals. For instance, I originally offered free room and board to the person that provided services in the church. Perhaps we could create a few well-defined jobs and give free rental units and possibly pay to those who perform those jobs?


Yup. It's a different kind of ownership than SL. We'll have to write up a grant deed and lease with a covenant before we offer land. I'll start that soon -- it's a good job for the SC.

~Ulrika~

I have some more ideas concerning this proposal that I thought I'd toss out there for discussion. I collected them into a couple of categories.


Citizenship

I feel that we should define citizenship in the next phase as one who contributes to the city either financially or with productivity. Specifically, one can become a citizen and maintain citizenship through:

1. The purchase of a private piece of land with monthly US$ PayPal payments (if we go that route).
   
2. The rental of units within the city center with monthly (or weekly) L$ payments.
   
3. Workers who perform duties for the city in exchange for free lodging and possibly payment.

Community

One of the things we should emphasize when advertising the second phase of our new project, is our unique community. We will foster a close community through:

1. Weekly town-hall meetings held by a different member of the government each time. These can be used to help answer questions about the government, voting, problems with the city and so on.
   
2. Monthly block parties (open to all of SL) thrown by a different citizen on their property if they're owners or in the city center if they're renters.
   
3. Bimonthly awarding of a best-build-in-sim trophy that gets passed from owner to owner. Members of the city will vote for the best build.

Participation

To improve participation and spread out the workload, I think we should provide financial incentives to productive citizens.

1. Renters can reduce their monthly rent by holding events in the city. Each day a renter holds one or more approved events which brings in at least 5 people who are not citizens, they get a day (or two) of base rent for free.
   
2. We post a list of projects (museum, castle, etc.) in the forum along with their difficulty and financial reward for completing that project to specification. The rewards can be monetary (no US$ rent for owners, no L$ rent for renters, or payments for workers). This will help us get big projects done that never seem to get completed. To pull this off, we might have to raise monthly fees to cover the cost.
   
3. Our workers who get free rent in the city will have clearly defined jobs that they're in charge of in the city, such as recruiting, PR, holding services, etc.

Features

In addition to our nifty government, we should also seek to create a list of benefits that are unique to our sim. We'll use these to help compete with some of the other, simpler projects.

1. Land owners that possess 4096 m^2 or more of land will receive a single structure inside the walled city. It may be used as a shop, a second home, or rental property. The structure will be built and controlled by the city -- they merely get occupancy. This will help fill up the interior of the city. (We have about 40 structures in the current city and this would give out at maximum 10).
   
2. All those leasing space or working for the city will be allowed to have a single private vendor in a shared sales area in the center of the city. Vendors in the city center have a sales tax.
   

Whatcha think?

~Ulrika~

This concept actually sounds like Anshe Chung's Friesland community project:
http://www.anshechung.com/index.php?fct=GO_FRIESLAND_DE

Friesland:

- Friesland is a German community where people own or rent land.
- It has some building restrictions.

Prices: 400 for 1028m2 a week. (rent) $4999 per 1028m2 and Tier fees. (own)

In biology this is what's known as parallel evolution. Two or more organisms not closely related independently acquire similar characteristics, while evolving in the same ecosystem. Because we share the same ecosystem (rules and financial requirements supplied by LL), it is inevitable that we have made similar adaptations to that ecosystem. Still, we are very different organisms.

We are a nonprofit collective organized from the bottom up with the goal of sharing power among all citizens by means of a true government, we are focused on collaborations and community, and selling land for us is secondary. Anshe on the other hand is working from the top down as the only source of power, creating themed regions as a method to rent and sell large tracts of land for a profit.

To complete my biological analogy, while a bird and a bat do have similar phenotypes, their genotypes are quite different.

(Anshe is the bat.)

~Ulrika~

I was considering your project. Now you convinced me that Anshe will be the better choice for me.

I'll try to hold one Town Hall meeting today at 2 PM PST. Let's see how many people appear...

I meant this to be part of the proposal, for when we actually have residents.

~Ulrika~

Oops! Read that too late, lol I thought it would be something inserted into an overall "marketing campaign" of Neualtenburg.

Well, anyway, there were 12 or 13 people attending. Not bad One even volunteered as builder...

Ha ha! That's wonderful! It appears that you have a natural ability to rally the masses. It looks like we elected a great PM!

~Ulrika~

In preparation for the next phase, I've put my home in Seefeld up for sale. After it sells, I'll transfer the chunk of Neualtenburg that I purchased in the adjacent sim back to myself and sell it to reduce our current tier commitments. I'll then tier down and invest the proceeds from land sales and monthly fees into our island sim.

~Ulrika~

I would like to suggest a hybrid bond issue and privatization model for our new sim. We should take the privatization model as far as we can (selling as much of the privatized land as possible) and raise the rest of the money (including uncovered monthly tier payments) with bond issues.

We might also need to sell land at a lower-than cost rate and make up for it with slightly higher rents, as currently the land goes for an equivalent L$12 per square meter -- about double what great land in SL costs. Then again our rent is lower than mainland for tiers at or under 8192 m^2 so it could be seen as a long-term investment. What do you think?


If the RA agrees this is the way to go (and the Gilde approves), we should poll current members to see who would be willing to purchase and support land to get an estimate of how many more members we'll need. At that point we can then look closer at how we're going to set the prices for land and rent to maximize the demand.

I'll be in for at least 6144 m^2 ($180 down and $30 per month) or 15% of the available land in the beginning.

~Ulrika~

I just had another wonderful idea. I think we should do the next iteration of the city in a different season with a less or no snow. Let's do Autumn! We could put in some gorgeous trees that are just starting to change.

It would be a great way to symbolize the change in the project.

~Ulrika~

Sounds like a great idea Ulrika ! Since most of SL doesn't know the Neualtenburg is moving to a new sim, i think there should be some kind of countdown clock in the main square. Also i was thinking, does Neualtenburg have a official flag? I was thinking of having the Neualtenburg coat of arms in the middle of the austrian flag. (just an idea) .

We do have a flag that Kendra created. I had hoped to create a few versions and then vote on which one folks like best but this is as far as we got. Perhaps I'll whip up another one tomorrow.

The flag has an image of Saint George slaying a dragon. I chose this image for many symbolic reasons, which I'll leave for another thread.

What's interesting is independently Kendra was placing this same image into her structures before I requested it.

~Ulrika~

Season iteration is great - on a private sim, you can change the ground textures, so we could have different textures for each season

However, I don't know how much LL charges for each texture "rotation"...