Lack of government funding for new affordable housing is a frequent story in the British press. It seems that it is also an American issue that Berkeley, California, plans to resolve by turning to the blockchain and crypto tokens as way of raising funds for its community and build new homes.
The city’s mayor Jesse Arreguin and other members of his team have partnered with San Francisco-based Fintech startup Neighborly to take forward a project that would split municipal bonds into micro-bonds that they would then sell as tokens. Instead of calling it an Initial Coin Offering, they are labelling it an Initial Community Offering.
A spokesperson from the mayor’s office told the press that they are enthusiastic about exploring new ways of financing housing construction after a reduction in federal funds put them in the position of being unable to fulfil the city’s moral and legal obligations to its citizens.
How will mini-bonds and tokens help the people of Berkeley? Essentially, breaking up the municipal bonds allows more people to invest, because they can be split into lower denominations. They also plan to transfer the buying and selling process to the blockchain, which will not only reduce transaction costs; it will also make the city’s finances completely transparent.
Ben Bartlett, one of the councillors involved in progressing the project added: “Because the tokens will be backed by an underlying bond, the Initial Community Offering is less risky than a typical ICO.” The city’s partner in the project, Neighborly, supports the view that this is a financially robust plan, with its CEO saying: “Berkeley is an extremely strong and fiscally disciplined borrower.”
The ICO will start rolling out in May 2018, and while the mator’s office hopes that eventually they will be able to fund affordable housing projects, they first goal is to buy an ambulance for one of the city’s fire stations. Bartlett said: “This municipal coin, this token, whatever you want to call it, it’s meant to…hopefully produce a really demonstrable new paradigm of shared prosperity.”
It seems Berkeley understands the true value of the blockchain and its potential to change the lives of communities.