Berkeley, California to explore the launch of ICO funding for affordable housing and support services for the city’s growing homeless population.
The city of Berkeley could be the first in the U.S. to hold an ICO to fund its operations and reduce reliance on federal funding. The city is contemplating on selling tokens backed by municipal bonds, a type of security issued by the local government.
The tokens can then be used to pay for goods and services to providers hosted on Berkeley’s cryptocurrency ecosystem. Businesses can, in turn, accept payment in the city’s cryptocurrency or token.
Already, the strategy for the ICO is being worked upon following the formation of a committee. Berkeley City Council Member Ben Bartlett formed the board with Berkeley Mayor Jesse Arreguin, financial technology startup Neighborly, and the UC Berkeley Blockchain Lab. The committee will release details of the ICO this spring.
With the city facing a problem of growing homeless population, blockchain could help fund projects in housing and other support services. The project could help alleviate the shortage of affordable houses in the city, which leads to increased homelessness. It had about 1,000 homeless people last year, which was an increase 17% increase from 2015. Subsequently it was 43% increase from 2009.
“It’s enabling us to fulfill our duty as a government. However, we must provide for our people. It’s a violation of that duty to allow people to sleep in the streets”.
The city is also a sanctuary city, which makes it a haven for refugees and undocumented immigrants. And this does not go well with the Trump administration. Trump administration has threatened to cut federal funding for sanctuary cities and specifically targeted Berkeley in his tweets. The idea for the ICO was hatched after Trump signed the Republican tax bill into law at the end of December.
He told Business Insider,
“Berkeley is the center of the resistance, and for the resistance to work. Thus, it must have a coin”.
The current Trump administration tax reform could be punitive for the city according to the city leaders. Berkeley City Council Member Ben Bartlett said having own financing mechanism could help build resiliency in the current U.S. Trump administration.
For instance, some changes in the new tax law discourage private contractors to build affordable housing. The bill could reduce affordable rental housing by about 235,000 homes over the next ten years according to a consultant and public accounting firm Novogradac & Company.
It will not be very different from the traditional way of raising funds for cities save for the blockchain and tokenization. Local governments do raise money by issuing municipal bonds. The funds are in use to build schools, highways, and houses and the bondholders are paying with interest over time.