As financial woes trouble one of America’s pioneering Liberal cities, could blockchain provide an alternative cryptocurrency that could help improve the cities funding of key resources – most notably housing and key services? Berkley’s local government leaders are exploring the potential of an ICO, backed by a local government bond, to help raise necessary funds to help re-build low-cost housing in Berkley whilst improving inequality and social fairness.
Ever since the “Free Speech Movement” protests, which became a central cause célèbre for liberalism in the United States, reverberated throughout the University of California, Berkley campus and the associated City, free speech has been strongly allied with this Californian Liberal hinterland.
The City’s long and illustrious history surrounding the liberal causes has attracted great support and condemnation – non-more vocal than the US President, Donal Trump. Berkley is America’s first “Sanctuary City”. The anti-migrant crackdown by the US President’s administration has put Berkley in the Commander-in-Chief’s crosshairs!
Sanctuary Cities are city districts that allow immigrants, especially illegal immigrants, access to the cities resources so they can play an active, safe and fulfilling part within that city. The purpose of which is to end illegal immigrant abuses. The municipal policy is to limit the full scope of federal government collaboration on immigration issues in order to protect immigrant families from breakup or deportation.
President Trump’s plans to remove funding for sanctuary cities along with wider budget cuts has created a problem within Berkley – one that is centrally linked to housing. If Trump does pull funding from the University of Berkley and other Berkley organizations, the City could lose nearly half a billion dollars in funding. Terry Hartle, Senior VP for the American Council on Education stated:
“There is currently no federal law that would allow the federal government to deny funding to an institution of higher education because they prohibited someone from speaking on campus,”
However, as Bloomberg noted, Trump, singularly as President, cannot cut Berkeley’s funding as it would require Congressional oversight and legislation. However, there are structural problems within the city. The cryptocurrency ICO announcement is a fluid response to the crisis of affordable housing.
Berkeley has structural policy problems that have helped to nurture the current crisis within its own housing stock. Proposition 13, which was passed in 1978, “locked-in” value for long-term tenants. This created a problem whereby homeowners could be ‘asset’ millionaires but unable to sell. The tax implications aside, there is generally a lack of affordable development.
Berkeley’s locale to San Francisco’s tech community – notably Google and other tech giants – has helped to increase value. California has long had an above average house price market. However, the income generated from tech in the 90s and 00s created a structural housing shortage. The inability to build low-income homes, due to developers focusing on servicing the wealthier section of the market has compounded the wider issue. This housing development issue is compounded by an affordability crisis. These two competing pressures are the problematic foundations of the recent ICO affordability solution announcement.
Councillor Ben Bartlett, the Council’s senior strategist for this project, has stated: “It’s actually enabling us to fulfil our duty as a government. Our duty is to provide for our people. It’s a violation of that duty to allow people to sleep in the streets.”
The move would see Berkeley raise much-needed capital to invest in low-income developments and other key projects through the sale of digital tokens – cryptocurrency-based assets. The plans are still embryonic. It is not known whether the project is mined or pre-mined. There is also uncertainty around the exchange-based and wallet-based deployment of the currency in terms of digital transactions and security.
Whilst the project is in the developmental stage, councilors in Berkeley have partnered with the City Mayor, Jesse Arreguin, along with a tech startup called Neighborly – with software engineering support from Berkeley’s UC Blockchain Laboratory – to develop the technology and platform. The goal is to offer an “Initial Community Offering” that would promote transactions within the local area. This blockchain-based municipal borrowing format would revolutionize local funding in the US and beyond.
The proposed scheme requires democratic oversight by councilors and as such fundamental approval by the majority. The proposed scheme could start becoming a reality by mid-May 2018 when the council meet to discuss the project further. As Trump’s attacks become more public, as the affordability constraints become more real, as more people fall beneath the city’s support nets in Berkeley, and as homelessness rises; this could be the right funding model for societal change.
The scheme allows for Berkley to build on blockchain to provide its citizenry with homes fit for human habitation, that are affordable and accessible, based on a bespoke Berkeley UC/City bond scheme, that could create a low-to-middle income economic boost in the area. Only time will tell if this scheme becomes a reality. However, the idea of an “Initial Community Offer” might be a difficult concept to counter in the face of growing socio-economic inequality.
Featured image of Berkeley city hall from Wikimedia.