How blockchain and automation can deliver better, safer public/private partnerships
On August 1, 2007, the I-35W Bridge collapsed in Minneapolis, killing 13 people and injuring 145 more. The bridge had been flagged as structurally deficient by U.S. Department of Transportation’s National Bridge Inventory database, but was not scheduled to be replaced until 2020.
In 2010 an Amtrak train in Philadelphia derailed in the Port Richmond neighborhood, killing eight riders, and injuring 200, 11 critically. The train was traveling 102 mph as it approached a curve with a 50 mph limit. Positive train control, a computerized speed-limiting system that was operational elsewhere on the Northeast Corridor, but whose activation at the wreck site had been delayed due to regulatory requirements, could have prevented the disaster.
In 2017, the American Society of Civil Engineers gave the United States a D+ on its Infrastructure Report Card, sighting a $2.0 trillion 10-year investment gap. Deteriorating infrastructure makes the U.S. less globally competitive, resilient and sustainable. Infrastructure disasters are deadly failures of the social contract, and they are becoming more frequent.
While traditional, federal and local funding lags behind need, technology can begin to close those gaps — such as high annual maintenance cost, dated, bureaucratic processes, or simply gaps in data and information.
How blockchain can automate city planning
Automation is now part of the civil planning process and needs to be harnessed to unlock more democratic and equitable distributions of goods, services and resources. Blockchain has the power to coordinate the many and varied inputs of urban analytics safely and securely.
A cryptographically distributed ledger, blockchain harnesses the power of the cloud, potentially encrypting and analyzing the data in real time to extract usable insights. Gone will be the days of failed power lines, overheated boiler systems and catastrophic shutdowns of critical infrastructure. Major metropolises will be more prepared to thwart or respond to wildfires, catastrophic gas line explosions or other potential mass casualty events. In addition, blockchain has the power to leverage public funding to help finance infrastructure systems like roads, wifi networks and affordable housing.
Berkeley looks to blockchain to fund public housing
In the case of the City of Berkeley, their initial ICO (initial community offering), which is planned to launch in May of 2018, will be used to fund affordable housing for the city’s growing homeless population. Berkeley City Council Member, Ben Bartlett, told Forbes, “This is not your typical ICO, but rather an initial community offering. We decided to explore new forms of finance in response to the cuts from DC and corporate tax cuts that took away our ability to fund affordable housing.” Thus, the City of Berkeley is turning to traditional forms of public financing by issuing bonds to finance affordable housing. When issuing bonds, traditional players like investment banks — JP Morgan Chase, Goldman Sachs and Credit Suiss — are involved to initiate the transaction, by handling all underwriting and issuance. Ratings firms like Moody’s provide a seal of credit approval to inform rates. The city can potentially avoid high transaction fees on issuance by using blockchain-enabled, cryptobacked micro bonds. This process could revolutionize public finance and step in where federal funds and traditional institutions fall short.
In New York City local regulations — as opposed to federal gaps — have been identified as a barrier to the development of affordable housing. In Mayor De Blasio’s Housing New York; A Five Borough, Ten Year Plan it states, “Some regulations have become outdated or have created impediments to new housing. We will re-examine parking requirements, zoning envelope constraints, and restrictions on the transferability of development rights, among other regulations. Similarly, regulations governing affordable housing programs will be re-examined to identify inefficiencies and to streamline the development review process.”
Cities are hubs for global markets, and local governments are responsible for delivering critical hard and soft infrastructure services such as water drainage, safe and accessible roads and quality affordable housing. Contrastingly, local governments experience market frictions which impede global competitiveness, when the necessary investments in infrastructure lag behind the market.
Cities face a milieu of technical, bureaucratic and financial hurdles that can stall public infrastructure, lead to public catastrophes and support increased inequality. Blockchain can fundamentally revolutionize how local governments restructure institutions and asset flows, creating cities that are safer, more equitable and more globally competitive.
