The City of Madison will offer mini-bonds to residents for the first time in a generation.
The bonds will raise money towards expanding the Olbrich Botanical Gardens.
The mini-bonds will be available for as small as $500 dollars for investors. Much smaller than the city’s usual $5,000 minimum for bonds.
The smaller mini-bonds will allow everyday city residents an opportunity to invest their money in the local community, and not just on Wall Street.
City of Madison Finance Director David Schmiedicke says it will also lower the barrier of entry for residents who want to invest but don’t typically have the large amounts of money to do so. “The idea is to, in effect, democratize access to capital, give more individual city residence more of an opportunity to make that investment in city projects.”
The city will offer more than 2 million dollars worth of the mini-bonds for seven days starting in October. But people who are interested should be ready on day one, October 3rd. Other cities who have issued mini-bonds saw a lot of interest. A few years ago, Denver’s mini-bonds sold out within a few hours.
If Madison residents show the same interest, Schmiedicke says the city might begin to repeat the practice. “I would say this is a first time with this technology. We want to see the level of interest with the community and we’ll gauge where to take it from there.”
According to Schmiedicke, Madison offered mini-bonds in the 1970’s, but did not repeat the practice because administrative costs were too expensive. Now technology has lowered those costs and the city is teaming up with the group Neighborly Securities to create the 2.1 million dollars worth of mini-bonds.
The money will be used to expand the Olbrich Botanical Gardens, adding a learning center and an energy efficient greenhouse.
Schmiedicke says the Olbrich expansion was a good opportunity to try out the mini-bonds in Madison. “It’s really a jewel of the city. I think it is something that the residents of the city can have an affinity for and understand what it is the dollars their investing are going towards in terms of improvements.”
The Oblrich expansion is jointly funded by the city and the Olbrich Botanical Society. Both the city and the society will provide $6 million for the project.