Transition between streams

In case it is not clear how the proportion of each stream changes over time, the following sections describe how the model moves “forwards” (a greater percentage accruing towards the CS stream), or “backwards” (towards the BM stream).

Towards the Community Stewardship (CS) stream

The ratio of assets held in community stewardship rather than transitional equity increases in the following ways:

1. If any of the properties are re-valued and are found to have a higher valuation than they originally had when transitional equity or mortgage debt was created. This additional value is entirely added to the CS stream asset total.
2. If anyone decides to gift assets, including any of their transitional equity balance, to the collective (and it is accepted as a gift). When equity is accumulated through monthly contributions, and the collective does not have the equity accumulation percentage set to 100%. For example, the recommended number is 80%, meaning that 20 cents in every dollar of principal will go to the CS stream
3. When an individual holding equity under the TS stream dies, their equity all reverts to the CS stream.
4. When the collective’s bank loans are fully paid off, the component to the TE stream that would previously have been used to pay off loans is now used to buy back transitional equity instead, transferring it to the CS stream Through the application of the negative interest rate on Transitional Equity

Towards the Bank Mortgage (BM) stream

While this model is intended to go “forward”, it is possible in the early years for it to seemingly “go backwards” if additional assets (new properties or property improvements) are purchased through a collective decision to take on more debt (whether from individuals or banks).

As such, the ratio of TE asset holding can increase in the following ways:

1. A new property is purchased, and either a new loan is taken out, or an offer to members is made to contribute money in return for transitional equity (typically issued for the entire amount contributed)
2. A decision is made by the group to perform improvements or changes to a property which cost more than the commensurate raise in property value. This is somewhat likely in the case of retrofits designed to improve ecological sustainability or community utility.