Part 1: A Market Ready for Change
Ever wonder how San Francisco paid for an enormous and awe-inspiring project like the Golden Gate Bridge? Or how your city funds infrastructure such as parks and schools that you rely on? These projects are made possible by issuing municipal bonds. Public agencies borrow money from investors and later pay it back with interest while using the proceeds to pay for public works projects.
Currently, the process of issuing municipal bonds can be expensive and complex. In 2015, California municipalities spent over $630 million on costs to issue bonds. Some of this money could be used to save many school music programs or build more affordable housing. That’s why Neighborly is striving to make it easier, faster and cheaper for cities to issue bonds. More on that in a moment.
Would you like to invest in a project in your community? Unfortunately, most municipal bonds are issued in denominations of $5,000, leaving some investors unable to participate. According to the Brooking Institute, only 0.9% of Americans own municipal bonds, and this is heavily concentrated among the wealthiest Americans. The top 1 percent of households own almost half of all the municipal bonds held by individuals, a Brandeis / MIT study showed.
Regulators are concerned, too. SEC Commissioner Luis Aguilar described the municipal bond market as “excessively opaque, illiquid, and decentralized.”
We’d like to change that.
That’s why we’ve developed a platform that enables cities to issue bonds in smaller denominations and for investors like you to easily make investments online. Through our platform you will be able to invest directly in the areas where you live, work, study, and play.
Starting today we’re putting together the first cohort of cities to use the Neighborly platform and unlock the future of public finance. For this first group of innovators, we are waiving all fees. We’re calling it the Neighborly Bonds Challenge. Is your city ready to take the Challenge?
Part 2: The Challenge
Want to install a new microgrid for your community? Want upgrades to your local schools? We’re calling on all forward-thinking citizens to speak with their representatives and innovative bond issuers to submit their proposals for bond proposals to finance socially impactful community projects. We’ll select 5 projects to finance through our platform and waive all bond issuance fees for the winners. Issuers planning to sell bonds between the fourth quarter of 2016 and the fourth quarter of 2017 can apply to the Challenge.
Part 3: Get Involved
What matters to you? What projects should your city undertake? Get your city involved by contacting your mayor’s office about the issues that matter to you. No city can complete a project without the support of the city council. To make the biggest impact in your city, contact your mayor’s office to let them know about the issues that matter to you. Share ideas for projects you’d like in your community using #neighborlybonds.