Paying for our new sim - call for loans!

[Aliasi Stonebender]

As I don't seem to have access to the executive announcements forum yet... here's the announcement!

The Neufreistadt Representative Assembly (RA) has authorized the purchase of a second sim and its establishment according to the design "Colonia Nova" as proposed by Moon Adamant and her team. The RA has designated a budget of US$2000 for this purpose.

Inspection of the financial reports of Neufreistadt ( http://www.tospitimou.com/Neualtenburg/BalanceSheet.pdf ) show that the City is in a position to direct US$500 of existing funds to this project. The RA has authorized the solicitation of the additional US$1500 as borrowings to enable the project to go forward.

This prospectus establishes the terms and conditions of this loan program.

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1) Starting on Monday September 25, 2006 and ending on Tuesday October 31, 2006, the City of Neufreistadt invites interested residents and non-residents to lend funds for the purpose of executing this project. Loans are invited in amounts of US$20, US$50 and US$100, although loans in other amounts will also be gladly accepted.

2) The City of Neufreistadt will pay 6% per year interest on any outstanding balance.

3) Loan principal and interest will remain in the account of Neufreistadt until April 1, 2007. At that time, as much of the loan principal and accumulated interest will be repaid to each lender as is possible, and in any account, no less that 50% of each lender's account balance (including principal and interest) will be repaid.

4) If funds remain unpaid after April 1, 2007, all remaining funds will be paid out no later than November 1, 2007. The City will endeavor to repay such outstanding funds as soon as it finds itself able to do so, but in any case, no later than November 1, 2007.

5) Funds intended for this loan program may be paid in either in US$ using the Paypal button on our website ( http://neufreistadt.info/id12.html ) or in L$ to Rudeen Edo directly. Please! It is *very important* that when making loans to the City for this program you send a note informing us of the fact of your payment. If at all possible, please send an email to [email protected]. Sudane will reply to each email upon the receipt of the described funds.

6) In addition to the email receipt, each loan will appear as a separate line item on the monthly financial report. Please be sure and inform Sudane in the email if you wish your name to be withheld from this public appearance. If you do so wish, she will assign an account number to your loan, and will provide you with that account number via reply email, so that you can track the appearance of your loan in the financial report. This account number is for your financial report tracking purpose only. Records kept by the Treasurer of your loan will be strictly by your avatar name.

7) Unless you specify otherwise, repayment of your loan will be made in the same currency in which it was received. Loans received by Rudeen will be repaid to the lender in L$. Loans received as payments to our Paypal account will be repaid to another Paypal account which you may designate, or to any other instrument which Paypal is capable of paying. It should be noted that the City's Paypal account has a debit card attached to it, so that anyone capable of receiving debit card payments can be paid that way. When you make loans to the City using Paypal, please specify in your initial email how those funds should be repaid.

In addition to their appearance in the financial reports, both the sum total of loans received so far and the names of lenders (unless requesting anonymity) shall be displayed in a public display on the Platz and in a thread on the forum.

[Ashcroft Burnham]

Do be very careful if you are offering loans in real-world money: in the UK, what you are doing may very well be a criminal offence (running a deposit-taking business without a licence and/or acting in violation of provisions of the [b:9mthnir4]Consumer Credit Act 1974[/b:9mthnir4] - financial regulation is not my area of expertise, so I could be wrong on the details). I do not know what the law on the matter is in the US, but I very much doubt that this sort of thing is unregulated.

I strongly advise that all financial relationships other than purchase/sale transactions for goods and services be conducted only in Linden dollars for this reason.

[Aliasi Stonebender]

[quote="Ashcroft Burnham":1tbt0fbh]Do be very careful if you are offering loans in real-world money: in the UK, what you are doing may very well be a criminal offence (running a deposit-taking business without a licence and/or acting in violation of provisions of the [b:1tbt0fbh]Consumer Credit Act 1974[/b:1tbt0fbh] - financial regulation is not my area of expertise, so I could be wrong on the details). I do not know what the law on the matter is in the US, but I very much doubt that this sort of thing is unregulated.

I strongly advise that all financial relationships other than purchase/sale transactions for goods and services be conducted only in Linden dollars for this reason.[/quote:1tbt0fbh]

It's not unregulated, but I believe - it's been awhile since my Business Law class - that loans of the size we'll be dealign with fall outside the scope of the applicable laws.

[Chicago Kipling]

Can people make one-time donations requiring no reimbursement? How might that happen?

[Aliasi Stonebender]

[quote="Chicago Kipling":34iqnaht]Can people make one-time donations requiring no reimbursement? How might that happen?[/quote:34iqnaht]

I'd say such is possible, and certainly, would be appreciated. Sudane, being the treasurer, is the person to ask the exact needs - since we'll still want to keep careful records and issue receipts. However, there's a certain psychological component to the loans. To take on these obligations and successfully pay them off proves how stable and reliable we are as an entity, and that will be even more valuable in the long run than a momentary influx of cash.

[Chicago Kipling]

I value that. I just have enough of a challenge doing my taxes without wondering if I have to pay on the small amount of interest it would generate. I'm sure many others will take you up on your offer.

[Sudane Erato]

[quote="Aliasi Stonebender":s4xsi2dn]However, there's a certain psychological component to the loans. To take on these obligations and successfully pay them off proves how stable and reliable we are as an entity, and that will be even more valuable in the long run than a momentary influx of cash.[/quote:s4xsi2dn]
Back in the very ancient days of Neufreistadt (just about exactly 2 years ago), when the only economy really was selling Bavarian mugs, there existed here a culture of what I felt was "one-ups-manship" donations. People posted an idea for some activity, with a reward, and then tossed in the $$ for the reward. The mood was one in which the big donators were really the "leaders" of the community... their ideas had more weight by virtue of their substantial prize donations.

Perhaps I gained an over-reactive attitude towards that environment. But early on I began to argue that the City should move away from flashy gifts, ever dependent on the emotional state of the giver, towards more business-like "services provided for for compensation" style. Of course, my efforts came back to bite me. Where in the beginning everyone was falling over themselves to donate this and that, we recently faced the situation where one of the founders threatened legal action should they not be compensated for what had been "donated" by them.

I am surely a person who deeply appreciates the gesture of donating to a cause that one feels strongly about. I feel, however, that looking towards the future, the best course for the City is a firm commitment to a business-like relationship in all its dealings, in which the interests of all parties of any transaction are defined by the benefits achieved by each as concretely as possible.

On a practical side, surely the "interest" you would earn on a six month loan of US$50 at 6% interest/year is of utterly no concern to the Internal Revenue Service (or its equivalents). On the other hand, if you are determined on a donation, I might suggest that equally as important to the future of NFS as its expansion to a second sim is the growth and prosperity of its cultural institutions. The MoCA is *surely* in need of donations for its extremely important program. And, someday I hope, some residents will form an advocacy group for the church, where I'm sure donations will be gratefully received.

Sudane.....

[Ashcroft Burnham]

I do agree with Sudane: after all, what real government ever accepted donations?

However, we should note that taking people's loans in real-world money gives us real-world liabilities to pay, whereas taking loans in Linden Dollars gives us liability in our own, internal court system.

[Sudane Erato]

[quote="Ashcroft Burnham":2k4oyszv]However, we should note that taking people's loans in real-world money gives us real-world liabilities to pay, whereas taking loans in Linden Dollars gives us liability in our own, internal court system.[/quote:2k4oyszv]
Hmmmm... interesting distinction.

I'm not very capable of participating in the legal and constitutional issues shaping up in our City. But this topic hits very close to home for me.

Ash, if I, on a visit to Japan with you, borrow money from you denominated in pounds sterling, does that make that transaction subject only to the law of England? Alternatively, should we engage in the same transaction in yen, does that make that transaction subject only to the law of Japan?

I strongly suspect that neither the location of the transaction nor the currency in which it is transacted have much bearing on the legal system it is subject to. Unless, perhaps, a contract agreed to by both parties accompanied that transaction, which specified the legal jurisdiction within which disputes would be adjudicated.

I think my point is that borrowings, in no matter which currency or in what jurisdiction, incur an obligation to repay which is based in common sense, mutual trust and confidence in the borrower to repay. The sooner we accomodate ourselves to the fact that our borrowings, indeed, all our transactions, are RL transactions, incurring RL responsibilities, the sooner we establish ourselves as the foundation of order and systematic procedure that we wish to be.

Now, this is not to comment on the practicality of any particular dispute resolution. It's undoubtedly true that a lender providing funds to us in US$ directly may have more success recovering funds than one providing those same funds in L$. But that misses the point, I feel. Underlying our solicitation, in my opinion, is the fundamental commitment to repay according to the terms proposed. No matter which currency is transacted. Let us assume that this transaction is subject to the most rigorous obligations which may be applied.

Sudane.....

[Ashcroft Burnham]

[quote="Sudane Erato":plw4p84k]Ash, if I, on a visit to Japan with you, borrow money from you denominated in pounds sterling, does that make that transaction subject only to the law of England? Alternatively, should we engage in the same transaction in yen, does that make that transaction subject only to the law of Japan?

I strongly suspect that neither the location of the transaction nor the currency in which it is transacted have much bearing on the legal system it is subject to. Unless, perhaps, a contract agreed to by both parties accompanied that transaction, which specified the legal jurisdiction within which disputes would be adjudicated.[/quote:plw4p84k]

That is not quite the point: the point is that real-world courts are likely to be very reluctant to consider transactions made in a virtual currency inside a computer game to be binding and enforcable in the same way as transactions made in a real-world currency. Real world courts are likely to consider that transactions entered into in our in-world currency are entered into without intent to create legal relations. That is rather less likely to be so with transactions entered into in real currency.

[Sudane Erato]

[quote="Ashcroft Burnham":1iy3wrux] That is not quite the point: the point is that real-world courts are likely to be very reluctant to consider transactions made in a virtual currency inside a computer game to be binding and enforcable in the same way as transactions made in a real-world currency. Real world courts are likely to consider that transactions entered into in our in-world currency are entered into without intent to create legal relations. That is rather less likely to be so with transactions entered into in real currency.[/quote:1iy3wrux]
Ash, yes, I'm sure this is true. Thus my point....

[quote:1iy3wrux]Now, this is not to comment on the practicality of any particular dispute resolution. It's undoubtedly true that a lender providing funds to us in US$ directly may have more success recovering funds than one providing those same funds in L$. But that misses the point, I feel. Underlying our solicitation, in my opinion, is the fundamental commitment to repay according to the terms proposed. No matter which currency is transacted. Let us assume that this transaction is subject to the most rigorous obligations which may be applied. [/quote:1iy3wrux]

[Ranma Tardis]

[quote="Ashcroft Burnham":3iwf8diz]Do be very careful if you are offering loans in real-world money: in the UK, what you are doing may very well be a criminal offence (running a deposit-taking business without a licence and/or acting in violation of provisions of the [b:3iwf8diz]Consumer Credit Act 1974[/b:3iwf8diz] - financial regulation is not my area of expertise, so I could be wrong on the details). I do not know what the law on the matter is in the US, but I very much doubt that this sort of thing is unregulated.

I strongly advise that all financial relationships other than purchase/sale transactions for goods and services be conducted only in Linden dollars for this reason.[/quote:3iwf8diz]

I don’t see how UK could get involved in this. Linden Labs is located in the United States and the money is American Dollars. The loan is to be used for expanding what for most people is a hobby and not a job. Also the person borrowing it is in America as well.
I don’t see the American Government getting involved as well for multiple reasons.
To sum this up, due to the nature of the loans and the fact it is not some get rich quick scheme, I see no problems with the law.
Even though am not a fan of this new sim will pledge $20 American toward this project. I support my fellow citizens. I will even report the 60 cents interest on my 2007 tax return I don’t want to defraud the government of their 9 cents in taxes *grin*

[Ashcroft Burnham]

[quote="Ranma Tardis":38h16pc8]I don’t see how UK could get involved in this. Linden Labs is located in the United States and the money is American Dollars.[/quote:38h16pc8]

The point was not so much specific to UK law (I was using that as an example, since it is the system with which I am most familliar), but that there would likely be problems under English (UK) law, and therefore similar sorts of restrictions are likely to apply elsewhere, although, as I expressly stated, the position may or may not be the same in the US.

Also, it does not matter where Linden Labs is located or which real-world currency that things are transacted in: what counts is the jurisdiction in which the [i:38h16pc8]people[/i:38h16pc8] conducting the transaction live. Linden Labs would not be a party to any such loan transactions, so the choice of law clause in the Linden Labs Terms of Service would be inapplicable.

[quote:38h16pc8]The loan is to be used for expanding what for most people is a hobby and not a job. Also the person borrowing it is in America as well.[/quote:38h16pc8]

Remember, we do not really know exactly where people are in the real world.

[quote:38h16pc8]I don’t see the American Government getting involved as well for multiple reasons.
To sum this up, due to the nature of the loans and the fact it is not some get rich quick scheme, I see no problems with the law.[/quote:38h16pc8]

At least in the UK (and this could easily be true in other jurisdictions: have you researched specifically this point as it applies to US law?), as far as either of the two points that I mentioned are concerned (running an unlicenced deposit-taking business, or the provisions of the [b:38h16pc8]Consumer Credit Act 1974[/b:38h16pc8]) it matters not what the purpose of the enterprise is, but whether it comes within the strict definition of consumer credit or deposit taking set out by statute.

[quote:38h16pc8]Even though am not a fan of this new sim will pledge $20 American toward this project. I support my fellow citizens. I will even report the 60 cents interest on my 2007 tax return I don’t want to defraud the government of their 9 cents in taxes *grin*[/quote:38h16pc8]

Quite. I'm sure that they could do a lot with those nine cents. A non-trivial fraction of a civil servant's pencil, for instance.

[Chicago Kipling]

I have no desire to cause anyone discomfort over the matter. Though I'm sure my offering will be paltry by the standards of others, I'll direct my funds elsewhere as requested.

In the future I think we may find a system of anonymous donations will benefit the community, but I'll defer to your minds on that for the time being. At the very least, take it as a compliment that you, the elected and appointed officials, are trusted by the people of the city.

[Dianne]

I kind of agree with Chicago here. I don't like the idea of one-upsmanship with donations, but surely if people want to give money we should neither disallow it nor make it hard for them to do so.

A long time ago (and for another purpose), there used to be a donations thingie in the fountain. I suggest that like most fountains in most town squares, it should be set up so that people can toss pennies or some such equivalent into it. If the donations were anonymous, there is no bragging involved.

How about a script that churns out some kind of chinese fortune cookie like saying in chat for every linden that is tossed in? (Perhaps with an appropriate sound effect of a penny dropping into a pond)

If every casual visitor to the town square that we get was curious enough to drop in a linden, like the pennies in a real fountain it would certainly add up over time.