Developing a budget for Neualtenburg

For those who can bear to look at the numbers, I'm offering here a kind of outline structure and notes for what might be eventually a balanced budget for Neualtenburg. As you'll see, its very unbalanced now. But much information is needed, and many members have a good deal more info than me about the economic details of SL economy. I'm confident that a joint effort can provide a strong budget that can move Neualt ahead.

Please. This doc presents both ideas in the form of assumptions as well as numbers which are wild estimates. Please help with guesses, other opinions, and any information which your experience can provide.

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Toward a Neualtenburg Budget
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REVENUES

5 potential sources of revenue have been identified so far
1) Sales Tax
2) Vendor Space Rent
3) Residential Space Rent
4) City Enteprises (i.e. a casino)
5) Citizen Tax


1) Sales Tax. Clearly sales tax is a potential source of revenue, since Neualtenburg Projekt (NP) will have land, and on land a resident can sell things. However, projecting revenue amounts from sales tax is almost impossible based on historical experience. Sales experience from October 15, 2004 through January 31, 2005 was approx 28,335 L$, or 7100/month (counting Oct as a full month). This resulted in a revenue for NP of 710 / month. Many factors make this figure not useful for sales tax projection.

It is conceivable that sales tax revenues of 5000/mo might be realized by a thriving NP. On-going average, with the ups and downs of the SL economy, might be 3000/mo.


2) Vendor Space Rent. Some may object that vendors will already contribute to the NP economy through sales tax revenues, and that therefore space rent is not fair. I would simply point out that it is almost universally customary for vendors to pay both.

I do not have an estimate of square meters of vendor space. That, as well as an analysis of the location of each spot (i.e. whether it is in the public square or down a side street), would be needed to come up with an estimate of potential rental revenues from stores.


3) Residential space rent. Based on figures provided by Ulrika at the 2nd RA meeting on January 30, there are five divisions of the city where rental space is located. The five locations have a combined square meters of 6200 m2, and they are structured into 35 buildings. This suggests an average size of 177 m2 for each rental house. Figures suggested for monthly rental range from 250-400/month; for budgeting I suggest a figure of 300/month, or 70/week. (This uses the formula of 4.33 weeks/month; 52weeks/12months=4.33 weeks/month).

If all rental units were rented, this would mean revenues of 10,500/month. A more conservative 50% occupancy rate figures on 5000/month.


4) City Enteprises (i.e.casino) We need suggestions for a variety of city enterprises. We also need someone to volunteer what the figures for revenue and expense of a typical casino might be. Casinos, tringo, dance halls; all might be primary revenues sources for a new NP.


5) Citizen Tax. Citizen tax will probably develop as a tool for defining participation in the NP enterprise. It might take the form of a $ tax, and it might also take the form of value of services provided to the city. Citizens efforts will be needed for all forms of work. Therefore, at this stage the potential $ revenue of citizen tax would be very hard to estimate.



EXPENSES

NP is faced with 2 primary expense items
1) Monthly rent (or tier fees) to the Lindens
2) Repayment of Debt.


1) The monthly rent for 1 sim to the Lindens is currently US$195. At the current exchange rate of approx L$200 to the US$, this comes to L$39,000/ month.

2) The NP needs to confront the obligations which it's incurred to a number of individuals. These are residents who: (1) have contributed tier and other cash amounts for the sustenance of NP to this day, and (2) will contribute the purchase price of the sim which we plan to buy, however that strategy plays out.

These contributions are, by rights, really loans, which the contributors may, if they wish, declare to be gifts. But in many cases they will not be able to do this, nor should they be expected to, since these contributions have gone to the benefit of the entire city.

The budget must have some provision for handling its debt, even if, like the "enlightened" US government, this is done as "debt maintenance", which means ever increasing amounts of interest. Money is value, and fairness suggests that those who have contributed it should be compensated for their investment.

For initial budgeting estimates, we can use only the purchase of the sim for debt calculation. The sim will cost about US$1000, which will have to be contributed by individuals. If that amount is repaid by the city over a two-year term with 6 percent interest, the annual repayment would be something under US$560/year, US$47/month, or L$9400/month.


So, the grand totals, for this very over-simplified and incomplete budget structure for the Neualtenburg Projekt, in Lindens.

REVENUES per Month

1) Sales Tax 3000
2) Vendor Space Rent ?
3) Residential Space Rent 5000
4) City Enterprises ?
5) Citizens Tax ?
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Total revenues 8000

EXPENSES per Month

1) Tier Fees or equiv 39,000
2) Debt/Interest Payments 9,400
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Total expenses 48,400

Shortfall 40,400


Obviously, much needs to be done on the budget to make it balance. But this is a start. Please contribute information, opinions, etc.

Sudane

Good work Sudane,

One idea, at the moment the city occupies less than half a sim. With a full sim, we could possibly look at a 'village' in the plains below. It should be possible to double the amount of rental properties. That would give you 10,000 from rentals instead of 5.

Is the income from traffic worth mentioning?

What are you basing the rate of 6% on? And is that 6% per year or 6% over two years?

Building up new areas is a whole discussion area, I suspect. I' m sure there are many issues involved. But that's exactly the kind of discussion we need, because the point is well taken. Making more m2 into income generating areas might be very important.

If I'm not mistaken, the casino idea, which Ulrika has proposed in a bill, would fall into the catagory of devoting more m2 to income generating. She has suggested that it go on the other side of the bridge.

I know little about the calculations on traffic, and I understand its a "black art". (I.e. known only to a few, and that imperfectly.) If someone can contribute insight, we could add it to the budget, no matter how small.

The 6% per year is about what I happen to be paying now on a rather low-interest RL loan. I just use it as an example.

Like all the other data.

Catfart, thank you for the quick feedback.

Sudane

I understand that traffic pays very little - its real benefit is in find.

We need to think lots about creating things that make revenue - or at least attact people. This part of the project has been neglected so far.

We need to think about vending - can people sell who are not in the guild? Does everything have to be approved by the guild?

So far this seems to be a bottle neck - people join the Projekt looking to make stuff and then nothing happens.

We need to build a community centre or some other place to hold events.

I'm uncomfortable about a residents tax in top of rent and sales taxes for the obvious reasons. They are regressive, flat taxes and don't take into account ability to pay.

Sorting out renting, and building a casino and other money generating spaces seems to be a priority.

Roberta,

Part of the problem with making things for retail is the current restriction that they must be in the themeof the City and its snowy surroundings.

There were a couple of suggestions for revenue gerneating "things", Illl see if I can find them. I think Lance Lefay was going to create a snowball fight attraction.

Do retail items have to be approved by the guild, no I dont think so. The idea was that an apprentices first piece should be a collaberation with an journeyman (To try and enncourage team creations), and a meister would have to agree that it was of sufficient quality to sell and that after that they were free to create anything the wanted, subject to the theme limitations.

I also believe that the idea was for all building/scripting etc that the city required would be first offered to the guild (hint to the RA). Only if the guild could not fill the request would it be offered elsewhere. Of course we would want paying for any work.

Excellent work, Sudane! Nothing like a few numbers to make us think a little about what we're proposing to do...

Like Roberta, I also don't like "double taxes" or rather "double contributions". I'd say that people that contribute already by renting areas, doing effective work, or (currently) donating tier, would be not required to pay any taxes. However, a much fairer system would be the reverse - everybody in Neualtenburg would pay some sort of tax, but get paid by their work done for the Government. How exactly this should happen is not clear to me, because we currently have such an unbalanced budget...

Ideal situation:

- L$ generated from salex tax, rentals and city enterprises (casino) would generate around L$50,000/month
- The City would pay the citizens working for them a salary or per-service (ex. pay everybody who helped to build and script the city, pay everybody hosting events, pay for people organizing things, etc.)
- Citizens would be able to pay their taxes from the income generated by working for Neualtenburg and still make a profit

We're far from that "ideal situation" yet.

Sudane,


My view is that if you want any chance of providing a balanced budget, then we (You and I) must campaign for more rental properties, possibly even trying for a 200% increase over current rental space.

I think the RA must find someone to set up the rental properties as soon as possible. Residential properties seems to me to be the income generator that is closest to actually producing the income. If someone was in charge, it could even be done manually with a few records until an automated system is in place.

I think the village has n number of other advantages besides revenue. It will be another attraction, and a reason for people to join the group(To help with the build). The plan of the village is work that could be allocated to someone. If it is someone who currently has nothing to contribute, then doing the work is their"Tax", if they are contributing in someway then the City should pay them for their work.

I like Gwyn's idea of everyone being taxed, but that those that do work, or contribute in someother way, for the City are then payed back for their efforts. Or given tax breaks.

Can you get(Make up) some estimates for how much we could get from vendor rental space?


Can we charge more for renting a shop than a reidential property? A whole shop, not just renting vendor space. The buildings around the square would seem to be ideal.

My view is that we are going to have to remove the restriction on only selling snow/Neualtenburg releated items.

If we need cash immediately, I'm willing to donate. Contact me in game and I will tell you the limits.

Cartfart,

Yes!

Actually, Ulrika in her post yesterday made some great suggestions regarding expanding the scope of Neualtenburg. Not only that we might have more properties to rent, but that other themes might be added to increase the attractiveness of Neualt as a place to live and work.

I've expanded Ulrika's bill proposing that we start renting out residential property right away. That's the existing property.

Creating new rental property is something we'll certainly want to do. I'm not sure we can build into more areas in Anzere, cause I don't understand the land use arrangement with the Lindens. I presume that we don't have all of Anzere to build on.

So, that means that once we've lined up the new sim for Neualt, we'll have to be ready immediately to get buildings up and rented. Maybe even have people already interested in renting.

The serious issue which I feel this brings up is the issue of citizenship. A strong case has been made in other posts for requiring group membership of all residents renting in Neualt. If we hold to that, then the job of defining the benefits and obligations of membership becomes very urgent.

Ulrika has proposed another bill to the RA regarding recruiting new members, which I've also expanded, to include this very issue of defining the benefits and obligations. Maybe the RA can pass that quickly.

Now, regarding your proposals about commercial property and selling things. Emotionally, I'm in complete agreement with you. But you've brought up a whole bunch of different issues.

First, yes, commercial property would usually rent for more than residential property, cause the whole idea of commercial property is to make $$ off it. What can we charge for it? Well, that depends. Depends on how much a vendor can expect to make from the property. Probably, the best idea would be to do very short term leases at a very low price. Since we would be collecting sales tax from the sales happening there, we could learn what the property was bringing in. Then we could write new leases with that information.

I honestly don't know the number of shops available, and their relative locations, which, of course, also determines the price. For the residental numbers I used in the first post in this thread, I used numbers which Ulrika provided at a recent RA meeting.

Perhaps, the best thing would be to update the Neualtenburg map, identify the residential and the commercial properties, and then set preliminary prices so they can get filled.

As Ulrika also pointed out in her yesterday post, we need some event to generate interest. Hard to sell stuff when no one's around. Let's get a few venders lined up to set up in the shops, and then lets organize a series of parties to attract people to the place. That might kick off some activity.

And as far as restrictions on what can be sold, I also agree. At this point, I think a better discussion would be about what, if anything, we feel CAN't be sold.

We're dealing here with what are probably among the most ancient concerns of human economic culture. How to locate yourself so people see what you've got, like what they see, and want it enough to hand out cash for it.

We should be able to learn from their experience.

Sudane

if we decide to do the casino that alone will cover the payment for a sim every month.

The 39000 estimate is low . At market prices it will cost us 50k lindens a month to pay for the sim cost.

A small casino brings in 2k profit a day give or take so the casino idea could cover our expences

Talen,

I didnt realise that a casino would pull in so much!

And thanks to all who have proposed that I take on the role of Head Meister/Master/Big Nob while Kendra is in Luuuuuurv.

I stand corrected. I stupidly used the exchange rates in the other direction. Buying Lindens instead of selling them. L$50,000/mon would be the current expense amount for a private sim.

Thanks for the correction.

Sudane

Casinos are very profitable yet fair...all my machines have a 90% payout but when people are winning they spend more and when they lose they spend even more to get back what they already lost....the games are always in the houses favor over time....and the more time someone spends in a casino the more they spend money


Another idea as far as the rentals and shops are concerned.

We should invite several high profile merchants to set up shop for free and not tax them...the fact is where they are they draw people and they draw other merchants because those merchants want to be surrounded by quality product that will bring in customers.

As far as house rentals ...why pay someone 50% of the profit to rent housing when we can get a rental cube for free that gives the creator 10%the cube contains all the information on terms and rent.

Talen, thanks much for the details. Of course, they lead to questions.

Casino:
You mentioned a one RA meeting that the casino required a cash balance to cover transactions. I maintaining the cash balance the only "expense" of operating the casino. Everything else is automated? Or do you outlay for other things to attract more people?

Trying to assemble the details of the bill for the RA to pass, is it safe to say that, to establish a casino, we need:

1) A builder of the building, and the cash outlay for machines, unless you or another can provide these.

2) Either Uma Bauhaus, or a specially dedicated alt, to contain the transactions against which the machines take $ out and put $ in.

And that's it? Am I missing anything? Would it be a manageable project for you, or someone you might suggest, to set this up?

Attracting Vendors:
I feel its a great idea to invite the few high-profile vendors, in order to attract others who wish to be in that atmosphere. Its certainly in keeping with that "ancient basis of culture" I mentioned previously. But, we need a system, so that all parties feel they are treated fairly. If the high profile (and therefore probably high profit) venders benefit from tax free and rent free situation, the other venders on whom we are counting for city income will feel unfairly used.

Any ideas for such a system?

Residential rentals:
Automated rental cube. Can you direct us to a source for that so we can study how to fit it into the Neualt environment? Certainly sounds like a good idea to me. I presume its an object with scripted permissions. I'd like to buy one and see how we can modify it.

Sudane

the casino owner should carry a cash balance of 10-20k at all times depending on possible winnigs. I usually keep 20k on me and have never dropped below it ...I take everything earned over and above the 20k and drop it on my bank alt. Other than maintaing this balance the casino runs itself although using a money ball and some strategic advertising helps with traffic.



I can build the building ...I actually have an idea for a gothic type casino which would fit in well with the city...as for machines...yes there is an initial outlay because they are mostly no transfer . but since the city will have only one casino there is no need to buy more expensive copyable versions we can buy no copy versions for as little as 300 lindens and some games are less but give the creator a small percentage.

At least 10k will be needed to purchase what is needed and when new games come out the casino can use some of the profit to keep up with what people want.


I can set all of this up no problem...we'll just need to figure out who will be handling the money .


The other vendors shouldn't know because its not their business but even if they did know they have to appreciate that by doing this we are guaranteeing them higher traffic wich relates directly to their sales. This tactic has been used since the beginning of cities and is still used today .


Moonshine Herbst makes and sells very good rental cubes. The commission ones are extremely cheap and take a small percentage of each rent. or the commision free one gives us all the money but costs 3k ( copyable) they are modifiable to any texture we want to use and the notecard tells the place of rental , how many prims they can use, the rental period length and cost and any rules we place on the merchant. I have a copy I can show you how it works.

I'm free all weekend so if you want to get together and discuss anything just IM me.

Talen:

On the casino, I have sent to Gwyn to see if we can schedule a quick approval vote on the casino, so as to take advantage of your free time this weekend. I will IM you with the specific times I'm around. I'd like very much to meet up on this and get it moving.

On the high profile venders, I'd like to think a bit more about this, and discuss some of the issues "around the table". I'm hoping that Catfart and I can be a working group representing both the Guild and the RA so that we can form some precise bills on this and get this going as well.

The info about the rentable cube is great. Let's definitely discuss this when I can meet you. I think that the issue is being able to acquire the "technology" (the scripts) and apply them to the architectural forms and spaces which are consistent with the Neualt concept. It sounds like from what you say that this should be doable.

Catfart, you around too?

Sudane

Oops Sudane, my apologies, I have expressed very similar ideas to your on another post before reading this one I didn't intend to copy your ideas!! It seems that at least we have some of them in common...


No, there is not much space in Neualtenburg to set up more residential areas (we can only build one about 1/2 of the sim), unless we increase the density of the city - i.e., narrower streets etc. Ulrika suggested that on the first RA meeting...


There was also a suggestion by Ulrika to "roll out" each Viertel by itself. I would like to reserve the houses around the Marktplatz for commercial shops, if we can agree on that (it'll be hard!). If we can't get an agreement on the commercial area, these will be the last homes to be rented.


I still feel that "citizens" are all that are involved in Neualtenburg - either in building, in scripting, in hosting events, in discussing the city, in alternative projects related to the city but not necessarily in-world - and, of course, in renting space.

So I agree - let's start up a "Bill of Rights" thread (again).


I'd propose:

- a standard weekly fee for, say, L$ 100 for the rental of the shops (very short-term and quite in line with what most people pay on commercial malls)
- usage of official vendors only (because of taxing)
- façades of shops cannot be changed except for putting up the shop's name or so; more changes needs a request to the City Government
- the interior of the shop may be redecorated as the shopowner wants, but too laggy scripts will be monitored and eventually forbidden

The biggest issue here is allowing people to sell anything instead of only themed items. We need a definitive vote on that (since it contradicts the "spirit" of the Neualtenburg Projekt)...


There are none right now, so it's up to us to decide

Repeating myself - I'd just reserve the buildings around the Marktplatz for that purpose. If we need a larger commercial area, hmm, well, we'll have to think about that...


Yes!


My idea would be "no restrictions" on the objects sold, just on their presentation (low-lag decorations). I remember a particular country in RL up in the snowy mountains with quaint architecture which sell steel, weapons, clocks and chocolates Yes, I'm talking about Switzerland which was, between 1950 and 1990, one of the richest countries on Earth I wouldn't mind if Neualtenburg would attract some highly specialized items which are surprising for some people. This only means that I have no definitive idea on the "restrictions".

However, I feel we should "cheat" a bit and let some of the best creators who already have a reputation in-world have their "branches" in Neualtenburg just to get a starting point - so as to "show something" to the prospective merchants wanting to rent space. Among Ulrika, Kendra and Cristiano, I think we would have a large number of very high-quality stuff to "show off" for starters"!

for rental of commercial space you normally pay per prim. paying $100L/week wouldn't make sense unless we know how many prims we are allowed.

prices tend to range from $1L/prim for the cheapest up to 4 or 5 for the most expensive, high traffic club areas.

With the tax we'd have to charge less per prim than the avarage - and we ned to know how many prims the official vendor is and how many you could fit into a shop.

The official vendor is 9 prims.