A Seed in the City

1. A Seed in the City Project for a new ecology of urban living Sprotte & Associates Paris, May 2008

2. A new ecology of urban living • Is it possible to reconcile the urban and the ecological to achieve an outstanding quality of life? If so, it requires either considerable imagination or wealth. Our quest has been to imagine, without being wealthy, a means to live in a spacious, eco-designed, indoor/outdoor loft, right in the heart of the City of Light. • The secret to such a project is to reinvent of the concept of neighbour. In other words, it requires a group of families or individuals working together within a common framework, accepting to relinquish a small portion of individual liberty in order to achieve greater benefits for all. • The better quality of life that we desire is a better ecology of living, a holistic approach including harmonious interior architecture, relations with our neighbours, and the immediate surroundings of our home.

3. The project’s business model • The business model is designed to meet the following needs : • Provide a level of investment equivalent to what would be required if each associate had to purchase individual, conventional urban housing • Insure capacity of associates make mortage payments • Generate additional revenues that will reduce each associate’s debt burden • Optimize taxes by deducting mortage interest and other collective infrastructure investments • How it works • Initial investment : • Acquire larger, non-residential, surface area in order to decrease the price per m2 • Renovate at a lower than market cost using network of specialists (ideally, one of the associates should be an architect). • Benefit from government or municipal subsidies and tax breaks to compensate energy-efficient investments • Revenues • Generate regular revenues via the rental of a common room. Potential activities for this common room (approximately 50m2), as well as the management of these activities, are described as a separate and distinct project.

4. The project’s legal framework • The legal framework is designed to meet the following needs : • Make it possible for several associates to co-invest in real estate • Protect the interests of each associate against unexpected events; in particular, allow each associate to retract his association without endangering the continuity of the real estate company. • Anticipate potential ownership transfers and set the terms of these transfers. • How it works : • The SCI (Société Civile Immobilière) is the framework provided by French law for the acquisition of real estate by a group of persons. • The legal framework for an ordinary SCI is predefined by model contracts. The model contract will be adjusted and completed as necessary to meet the specific requirements of the partners. • The contract will specifiy, among others things : : • Terms for changes in equity and the breakdown equity shares between partners • The liability of associates toward third parties • Company management • Cession and transmission of company shares • The associates living in the condominiums are also tenants of the SCI, to which they pay rent.

5. Main actors in the project • La Société Civile Immobilière (SCI) • Real estate company formed by the partners to own and operate the property. • Associates (or partners) of the SCI • Resident associates invest in the real estate and are also tenants of the SCI • Financial associates invest in the real estate but reside elsewhere. • Tenants (locataires) • Associate tenants own shares in the SCI and pay rent to the SCI based on the cost per m2 they occupy. • Non-associate tenants have no ownership. They may be long term or short term (per week). • If a resident associate should move away for a limited or unlimited period, he/she can maintain his associate status provided that a replacement tenant is found. • Three to five associates and/or tenants would be ideal, depending on surface area. The current project is based on a scenario of three resident associate, one financial associate, and one non-associate tenant. • The Club (L’Association) • Manages the social and cultural activities held in the common room (see other project), • Pays rent to the SCI for use of the common room

6. Ownership and operation of the property Loan of 50 to 75% of the funds required. Tax on any income (after deduction of interest expenses) Bank SCI Owner and operator Debt reimbursement Fiscal authority Financial associates Additional capital Theoretical equity breakdown for 3 resident associate couples and one financial associate. Rental income Resident associates Benefit from housing of which they are also partial owners. Rent payment to offset the SCI’s mortgage payments The SCI receives rental income for the common room Organisations (Meetings, etc,…) • Tenants • Individual housing units of 60 to 100m2 • Rental costs calculated for each unit, adjusted each year • based on the revenues from rental of the common room • Costs of common areas and resources are allocated tenants • equally or on a per use basis where applicable • Club (Association) • Organizes social and cultural activities • in common room Invididuals (Weddings, etc) 86% Tenant A Tentant B Tentant C 21% 22% 24% Common areas : large room 50m2, guest room, garage, cellar Common resources : renewable energy, washer/dryer, fibre optic cabling, misc subscriptions Membership fees or ticket sales 19% Members / Guests

7. Ownership and operating breakdown

8. Ecology of urban living • The ecological urban dwelling both : • Maximizes the physical and pyschological wellbeing of its inhabitants • Minimizes negative impact on the environment through the use renewable energy and the use of eco-efficient construction materials and techniques.