“We knew we needed to find a way to fund these things. “We have over a thousand homeless people in Berkeley and expect that to grow by a factor of five,” says Bartlett.
In addition, big banks raised interest rates on loans to local governments in the wake of the tax cuts. With lower corporate tax rates, corporations have less incentive to buy low income housing tax credits, a key source of affordable housing funding. The idea grew out of concern over the impact corporate tax cuts (not to mention threats to cut funding to sanctuary cities) would have on their ability to address their affordable housing and homelessness crises. As with any municipal bond, investors who get in on the offering will earn a small return on their investment over time as the city pays them back with interest. Coin owners will potentially be able to spend the cryptocurrency at some Berkeley businesses. The money raised will pay for things such as affordable housing, homeless shelters, ambulances, street trees, even a community theater. Led by Berkeley Mayor Jesse Arreguín and City Councilmember Ben Bartlett, the city is partnering with University of California Berkeley’s Blockchain Lab and finance technology company Neighborly to create a “tokenized municipal bond offering.” The offering will allow individuals to buy Berkeley’s cryptocurrency to fund city-issued municipal bonds.
The idea is to leverage the blockchain - the technology that makes bitcoin and other cryptocurrencies possible - to spur private, crowdfunded investment in affordable housing and other local projects. In an effort to reduce their reliance on federal and state funding, the City of Berkeley is turning to a surprising source: cryptocurrency.
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