2nd private island available, but needs discussion

Hello all,

Also unrelated to the elections, but more to the growth of Neualtenburg, I thought I should post this here for early discussion, and hopefully bring it later for the RA to discuss.

Since the end of December, I have been told by a group of people that owns a private sim that they will eventually abandon it. Now as you know, there is a small market for 2nd hand private sims. The advantage is that you pay only the "transfer fee" (US$100) and no upfront costs — LL is more than happy to get a recurrent monthly fee from a machine that doesn't need any setup except for changing the avatar owning the private island and the associated billing address.

With the recent talks around the new "zoned communities" in the mainland, there was brief informal talk if we shouldn't go back to the mainland in the near future. What we lacked when purchasing the private island was a means to enforce a deed and a covenant with the apropriate tools; what we "lost" with that was a tie to the mainland and the ability to make sales more fluid, thus slightly hampering growth (in my analysis). "Zoned communities" will provide group land with a covenant and tools to enforce it — just what we need!

On the other hand, after much discussion with the Lindens, it's now clear this won't come soon, and that the debate just started. Expect at the very least a 6 month delay for that (first, group tools will be improved; only much later will "zoned communities" be introduced).

So, the pro-expansionist factions really just have two options: wait for "zoned communities" to be implemented (at least half a year, although I would expect to wait much longer); or go the way of adding a new private island.

It just happens that I have access to a 2nd hand private island now. Meaning that the opportunity will be lost by February, 2. This means that this group is willing to allow transfer to Neualtenburg's Estate Owner for a negotiable amount of money, which, obviously, will be much lower than the full cost of a brand new sim.

The big disadvantage I see here is that we barely have 10-12 days to accept this offer. Mind you, even if we can't agree that fast, I expect that there will be others in the future — I've been asking around, but it seems that most land barons aren't in the 2nd hand private sim business, because it's so erratic.

To be honest, since I'm also an active member of that group owning that sim, I'll be able to influence them slightly to accept an offer by N'burg if it "ties up" with other proposals they might get. Sadly, though, the ultimate decision is not mine to make... I can only make an argument for N'burg, but not much more.

So I suggest that we publicly and openly discuss this idea a bit among ourselves. Is it too soon? How much should Neualtenburg offer? Should we disregard this offer and wait for a better one in the future?

I think it might be worthwhile to investigate it; the main sim is staying at a fairly steady occupation percentage, and most of the "unsold" plots are, to be honest, not the most desirable real estate to build on (but make dandy prim-land for them that have plots elsewhere).

Plus, it would be a major cost savings for Neualtenburg.

Downside: I don't think we actually have the money to make a sizable offer, which would mean we'd have to issue bonds. And while I am not personally opposed to such a thing in light of the unusual opportunity, one of the DPU planks is "pay off the current bonds before expanding".


If N-burg doesn't go for it though, I personally might... I know some folks interested in getting a private sim for some large projects.

It could be an excellent opportunity!

Things we should consider before making an offer:

1. The sim could be older, so it could be slower than a new sim.
   
2. Whatever we save in reduced cost, might be felt again in the delay to get the sim ready to sell. We have to agree on a theme, a layout, teraform it, zone it, and then sell it. Each month we delay would cost us US$200, potentially eroding any savings we saw on the purchase price.
   
3. Haste could lead to a less-than-optimal realization of the second sim. I would like the new sim to marketable and designed to be commerce-friendly as requested by many.
   
4. It could also kick-start our expansion efforts, sidestepping bureaucracy.
   
5. It could save us a lot of money.

Financially speaking, what do you think Sudane?

~Ulrika~

I believe we have enough cash on hand to end the loans that require repayment. Mine does not, as I plan to use it to pay for land fees.

~Ulrika~

How old is the sim, Gwyn? Which one is it? We could look it over.

It might also be interesting to preserve some of the original landscape and buildings on the sim and grow our city around them after the requisite land scaping.

~Ulrika~

I was considering that. Cash - payment - current expenses = what we could offer. The question is, is that enough, and that I can't answer.

I get it. If we're short we'd have to issue bonds then.

~Ulrika~

Carpe Diem!

On the other hand, haste makes waste.

First a question, and then my thoughts.

Gwyn has pointed out that LL will only charge US$100 to transfer the title of the sim from one avatar to another. But the sim is located at another "vitual/physical" location. Wouldn't moving that sim to the necessary "virtual/physical" location adjacent to neualtenburg incur expense?

On my opinion, I think I have expressed my reservations about adding a new sim at this time. Surely, saving x% of the upfront cost of a new sim is a very attractive enticement. But I would propose that that's really a minor consideration. After all, the one time $$ cost of even a full-priced new sim could be covered by the bonds that Ulrika has suggested, or by traditional loans if bonds are not available.

I am more concerned about what seems a smaller matter, the US$195x2/month expense. In another post its been pointed out that we seem to have stabilized at about 25 residents. Those 25 residents, occupying one sim, have paid revenues into the City Treasury which enabled us to finish the year with a healthy surplus. Those 25 residents' fees, however, leave us far short of the monthly expense for 2 sims.

Of course, the aim is to attract new residents to occupy the new sim. There is an implied understanding in that, it seems to me, that more residents have not come to NBurg because there's not enough room, or that somehow the remaining existing properties for sale are insufficient to attract new residents; a problem that a second sim would solve. Add the second sim, and the floodgates open.

I am dubious. Examining the Home Page of the website, I observe that the bulleted features of what makes Neualtenburg different and unique are Architecture, Culture and Politics. In our one sim, we have surely not exhausted the possibilities of these; in fact, we have hardly scratched the surface of what neualtenburg can be. I don't feel that the addition of a second sim is going to unlease a flodgate of new residents. And without new residents, we fail.

Even short of failure, I fear that we would lose goals which we share as valued targets to achieve. The plan, often repeated here, of paying residents for the services they provide, and have provided, is I feel incredibly important to implement. I have advocated this from almost my first meeting in Anzere, and it is an important component of of the proposals that I will publish here shortly. With little or no funds in the City Treasury, and a net worth for the City which will quickly fall again below zero, that plan goes out the window.

Indeed, most of the ideas and proposals that I will present will cost money. Paying people for their work has always been a position of every faction; it is in fact the underpining of every successful cooperative enterprise.

I'm sorry to be the cautious and conservative element in this discussion. But we must inject a realistic attitude towards money into a community project which is required to pay a very large amount of it every month to an "overlord". I will, of course, in my role as Treasurer, implement whatever is decided by our constituted bodies. But I feel that, at this time, a new sim is not a good idea.


Sudane

This also begs the 'return to the mainland vs. private island question'. I think Neualtenburg is quiet in part because it's cut off. Getting a second sim would make returning to the mainland almost impossible (what's the likelihood of finding two adjacent and correctly oriented sims that are affordable and available at the right time?) Conversely, moving back to the mainland (whenever that becomes an option) would hamper expansion.

I personally think the timetable is too tight, Sudane has mentioned the cost of moving the sim, and the tier concerns. By buying now, we have to carry that cost while we do P & Z for the sim. If we pay for a new sim, we can wait to incur those costs until we're ready to move in and sell plots. This requires more funding up front, but exposes us to less risk, as we can have purchase commitments in hand before executing the order with LL.

This is correct.

We have to pay for not just the purchase price but the land-use fees that we would incur while reaching break even. Assuming it takes six months to fill linearly to a full sim, the total money required for land-use fees would be approximately US$600. Thus, if we purchased the sim for US$800, we'd need to offer US$1400 in bonds (compared to US$2000 later). To me this isn't a big obstacle. We raised almost that with 1/10th the amount of residents we have now.

Remember too, that once the bonds are issued, the only drain on the city is the monthly bond payments which would be about US$20 per month. At the end of the six months, the bonds would be paid and the city revenue would be the same as now, with the potential of increasing by a factor of 2 or 3 (due to reduced public-land overhead) within the following months. Fundamentally, the reason why I'm pro-expansion is that we're very top heavy. Most folks living here are involved in the government, making it an expensive enterprise. By creating "suburbs" we lower the overhead and wind up with more people and more income to do what we need to do. This is how and why most small cities expand.

Do I think we can do it in a short time span? I don't think it would be wise to purchase anything by the end of January. However, I think we should make it our goal to purchase a new sim by the end of February. Perhaps these folks could wait around an extra month while we raise the money through bonds.

~Ulrika~

I'm a fan of the private island myself. Expansion is expensive and very difficult on the mainland not to mention the hideous builds we'll be up against. Do any of you recall that horrendous 100-m-tall multilevel prefab home store that was behind the bridge to the North? You had to set your view limit just right to get a good picture.

~Ulrika~

Sorry, could you explain this? US$20/month, times six months....?

The rest of your point, as far as numbers, makes sense, if you assume the same growth process as with the first sim. That's really what I question.

And I'm not sure I follow the "expensive enterprise" concept. In principle, yes! We should be paying for services rendered. But we're not. There are a number of residents who are involved in govenment (surely not "most", but they serve for free. Our Income/Expense report shows that our expenses are monthly fee, followed by a very small percentage for conversion fees, followed by essentially nothing...


Sudane

Just my thoughts:

- I like the idea of taking this opportunity to get a 2nd sim at a lesser cost.
- I've always thought our 2nd sim should follow the theme of Neualtenburg, so that would save having to come up with some theme idea right away.
- I have no head for math so I'm willing to bow out with my thoughts if others can say that this would be a horrible finacial move for Neualtenburg.

If we raise US$1200 in bonds, with a par value of US$1320 and a maturation date of 6 months, we'll be paying users their earnings on monthly coupon dates. Their earnings will be US$120 over six months or US$20 per month.

Assuming we sell land linearly over a six-month period to the break even point (50% occupancy), we'll have accrued US$650 in revenue from land sales (land costs 180%-200% retail) and US$450 in land-use fees for a total of US$1100. At that point we simply pay off the bonds and we're out of debt. If this sounds too aggressive, then we simply push out the bond maturity date. An inexpensive sim could really help us make ends meet for our first (and most difficult) stage of expansion.

As shown above, it is quite possible for us to support both endeavors simultaneously, as the new sim should not drain our current finances substantially.

~Ulrika~

I do not follow these numbers at all. Taking your assumption that in six months we reach break even, which I doubt is possible for the reasons outlined above, let's examine these figures based on the numbers we know (which means, based on decisions we have made for our current sim), laid out step by step...

Based on the master land chart for the current sim, we see that we have designated 44,432m2 out of the total as saleable land. This is our economic base. Further, based on the rates we have set up for monthly fee ($.0058/m2 for valley land, $.0077/m2 for city land), the land chart shows that our potential receipts for 100% of land sold is $286.

If we look at the Dec 31, 2005 Income/Expense Report, we see that living the way we are now, our expenses are:

$195 Monthly fee
$14 Paypal and other currency fees
$5 Other
----
$214 Total

Therefore, breakeven is 214/286, or 77%.

If, over the course of six months, we sell to break even, that means we will sell 77% of 44,432m2 of land. Our US$ rate is $.03, so that will yield $1026.

Since I don't have a current breakdown of Valley vs City land, and since a new sim would undoubtedly have a different ratio, I have used the ratio 75%/25% Valley vs City, since the two areas yield different fees per month.

So, based on linear sales, in the first month we will sell the following:

44,432 x .75 = 33,324m2 divided by six equals 5554m2 valley land
and
44,432 x .25 = 11,108m2 divided by six equals 1851m2 city land

The valley land will yield 5554m2 times $.0058 equals US$32.21
the City land will yield 1851m2 times $.0077 equals US$14.25

Adding them together, the first month yields fees of $46.46.

Obviously, the second month yields twice that... $92.92
Third: 139.38
Fourth: 185.84
Fifth: 232.30
Sixth: 278.76

Adding up the six months, we get receipts US$976 from land fees.
Adding this to the $1026 we got for land sales, we have a total of $2002 in receipts for the first six months of the year.

Going back to expenses, we've shown that the bare bones budget is $214/month. Add to this the $20 that is predicted for the bond fees, we have $234/month expenses, or $1404 expenses for the 6 months.

This leaves a surplus of about $600, either to pay back half of the bonds amount, or not.

I think if we're going to consider this very aggressive and optimistic strategy for expansion, we must have an accurate picture of what the risks are. If I was convinced that the assumptions underlying this scenario, namely that we will populate a new sim at the same rate we have the first sim, were likely; I feel that then this projection is not too terrible. (Although not as rosy as Ulrika has claimed).

However, I feel we are not dealing with the underlying issues, namely the economic basis of the Neualtenburg project. Having a clearer understanding of those issues is critical, and I feel thats where the discussion should be.


Sudane

Neualtenburg has a very high ratio of public (not for sale) to private (for sale) land. In the next sim, because we have much of the necessary infrastructure in N'burg already, we will have reduced overhead and thus a lower ratio required to reach break even (50% instead of 75%). That's why a second sim can actually help us -- it will lower the ratio of public to private land.

As for the numbers, we are free to set land-use fees, land prices, public-to-private land ratios, bond par values, bond maturity dates, and so on to any value. We have complete power to assemble a working financial plan that meets whatever criteria we define. If we're really worried, we can even create bonds that have a flexible maturity date, where we slide the repayment date back a month at a time up to three months. We're in complete control.

As a matter of fact, I think this is really quite trivial. The back-of-the-envelope example I gave showed within a reasonable margin of error that this is possible without draining the economy. Just like we went ahead with N'burg and filled it up, so too will we with a second and third and forth sim.

We need to stop putting up obstacles for our success.

~Ulrika~

Since I follow most Neualtenburg threads, and didn't see this question answered in this thread... yes.. if you wanted this new island (or used island, rather) moved to be next to the current island, that's an additional $150 on top of the $100 transfer fee.

One of the reasons I've hesitated joining the city was mentioned by Aliasi: "the "unsold" plots are, to be honest, not the most desirable real estate to build on".

I for one would love to see the city expand to two sims, and would most likely JUMP on the opportunity to be a part, as I've tired of mainland living and looking for change. So, Ulrika, I think you could fill up a second sim, and I'd be one of the first tenants.

Thanks for the info Aaron! Given that a new sim is US$1250, that means our maximum offer for a used island would be US$1000.

You know, I've never really looked at the remaining plots from that standpoint. I should see if there's something we could do to improve their quality. Perhaps the addition of a sim could help make some of the isolated corner slots more desirable. Hmm.

Whoa! That's good news. As I recall, you were one of the original members of the group. It would be great to have you back.

~Ulrika~

The above is a line from a Bermuda tourist lullaby ... and is true.

Taking a cue from the Crown Colony of Bermuda is an idea for your second sim ... make it business-friendly, low-key, low-rise. sunny and easy to get to. If you also offered some dispute resolution services for those businesses that base there, their customers and clients, you might attract a premium for the parcels from vendors, builders, architects and professionals. And a lovely yacht harbor, golf course or night club would be a plus.

I considered buying a parcel in Neualt, but decided againt it ... too dark and claustrophobic. Also, my old "brain" (PC) does not have the muscle to process all the prims and fog and stuff, especially in those narrow streets. Finally, it was so darn lonely ... never found any actual people there or activity, and nothing to buy that I could find.

Changing that in the "colony" of Neuealtenburg ("New-Neu"??) might attract resident investors more quickly than the marginal appeal of "Participate in a government" does.

This is a wonderful post. I think our next sim should be a departure from (although give a nod to) our current theme. It should be designed with low overhead, mass appeal, and commerce in mind.

~Ulrika~

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Mel

How long is it before Neualtenburg comes sailing down the ocean and lands next to Cosy Island?

Actually it is already very close to Cosy Island on the east side. Go upstairs at the lighthouse to the balcony, get out your long-glass and look straight in the direction of my house and ... yes, you will see Neualtenburg in the distance!

Mel