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b'The way we finance our cities has a huge impact on what gets built, when, and where. So if you\\u2019re inclined to think the municipal bond market is the most boring subject we could tackle on the Strong Towns Podcast, think again\\u2014because we have a truly eye-opening discussion for you today, on a topic with profound implications for anyone who cares about city building.\\nChuck talks with Jase Wilson, the founder and CEO of Neighborly, a startup which seeks to democratize public finance by making it possible for regular individuals to invest in municipal bonds\\u2014which fund projects from transportation infrastructure to sewers to broadband to parks to schools\\u2014and thereby directly contribute to funding community needs in places they are personally invested in.\\nIn doing this, Wilson says, he is really trying to return public finance to its roots. The municipal bond market, which is massive to the tune of $3.8 trillion outstanding, is more absurd and dysfunctional than most people realize. Historically, cities would sell bonds in the form of physical certificates, and you could invest directly. If your town wanted to build a new school, you could buy the bonds and become an investor in that project, in the same way you can buy a share of stock in an individual corporation. In fact, many early American towns grew on the basis of this kind of investment.\\nToday, however, 80 cents of every dollar borrowed by a US community for a public project goes through one of 10 banks in New York. The process is byzantine and generally prevents individual buyers from directly investing in a community they care about\\u2014you have to go through a brokerage house. There are a huge number of middlemen in the system, and it\\u2019s often not clear who\\u2019s paying them. While innovations in private finance have dramatically reduced transaction costs and made investing more accessible to the average Joe (through e-trading, for example), these innovations haven\\u2019t reached the muni bond market.\\nChuck observes that this results in perverse incentives for local infrastructure projects. Big banks work at big scales. Funding packages are individually put together, and often cities face a dramatic \\u201cup-sell\\u201d during that process\\u2014so you might be told that a park is too modest a project, but why don\\u2019t you also build a new high school, and also consider expanding your sewer system, and so forth\\u2026 bundling projects and inflating the cost until the bond offering becomes attractive to a large institutional investor. This is one way that municipal governments face intense pressure to go into deeper debt than is prudent.\\nThe market also rewards the tried-and-true over the new, Wilson points out. Innovative projects are less likely to obtain funding, because a small number of risk-averse players are responsible for structuring these deals.\\n\\u201cThe finance is not going to say, do the $300 million new thing,\\u201d he explains. \\u201cIt\\u2019s going to say do the $1.5 billion thing that we\\u2019ve done a few other times and that we can get behind, and that, critically, keeps central the mechanisms of control\\u2026. We think that public finance invisibly guides the nature and the scale of the things that we do in our communities in a lot of ways that are not good for either the communities or the investors.\\u201d\\nNeighborly seeks to disrupt this status quo by empowering individual investors to fund municipal projects. You can look at available investments by geography, or by type of project, and you can get in the game at a scale that makes sense. Should it take off, this kind of crowdfunding has the potential to revolutionize local public finance in a good way: by facilitating incremental, innovative, and right-sized projects for cities\\u2019 real, observed needs. And both Chuck and Jase are supremely excited.\\nCheck out the full episode to hear their excitement and more insights about what ails municipal finance.'