CIP-17: Bring real estate on chain

Hi Everyone,

I am one of the advocates of focusing down on our City Vision and taking what I believe to be the next steps in doing so.

We have brought land on chain in WY.

Now I propose we bring real estate on chain.

Please see the attached two documents.

Document 1: Real Estate Complex Proposal

Document 2: Funding mechanism proposal - Security Token Raise

Thanks for reading,

Best,

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AWSOME!Seems the project is on the highway…let’s go!

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excited about this direction - pinged the folks at republic who offered to help us set up something like this

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Until the issues raised in CIP-16 are resolved, both proposals put the Citizens into further legal and financial risk and even if said issues are resolved, the Citizen tokens need to be recognized as securities in order to benefit from either of these. These issues make the proposal a non-starter, unfortunately.

This is incorrect actually.

This proposal takes Citizen NFTs completely out of the equation. Raising money through a separate security token representing the property.

It is true that the operating agreement needs to be clearly stipulated and that Citizens are posed no legal risk but that can be done in tandem with this proposal.

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See my further explantation in CIP-16

Hi,

Just my 2 cents.

What is the relation between Security Token and the Citizen NFT? and How the Security Token is going to bring benefits to City DAO Citizen?

From my view, Security Token is just going to take control of Citizen. Yes, we can raise more money, but for what? we are still in early phase, frankly we are still struggling with small projects, we are not ready for more investment. Please be patient.

Once we become more mature, then we can think of City Dao Token which created with real use case and bring benefits for Citizen.

Please find my suggestion here

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Wow!!! awesome. i always support

Out of all the ideas I have seen for project-2 so far, this is my favorite.

Agree that CIP-16 is a valid concern but that shouldn’t stop us from pursuing this or other projects. We just need our lawyers to draft agreements that ensure that there is no legal risk to citizens.

If the citizens vote to confirm this they are doing so under the expectation of earning a profit as a result. This may not be how you set up the proposal but the incentivize is implicit. Thus, it renders the tokens securities.

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How is that so ?

Where is the expectation of profit to citizens ?

This token concept has already largely been discussed and much of what you propose is not feasible from a securities law perspective.

Moreover, we are not struggling with our first project. Even in the slightest. So I don’t know what evidence you have to come to that conclusion.

There would be 0 relation to the citizen NFT financially, as that is also not feasible from sec perspective.

The benefit to citizens is being able to attend events and possibly rent out units in these building communities.

The security token is purely to allow investment in the property in a liquid manner as $8,000,000 is not a significant amount of money to achieve the goals we are proposing.

That 8mm will likely be used to put towards a security token raise so citydao owns part of the asset.

Again, citydao treasury, NOT CITIZENS.

We need an operating agreement that citizens only receive governance rights with 0 expectation of profit or return.

Rights can be overturned by a constitution that take on the liability

Only concern. Wouldn’t the projects be linked together via the roadmap? Ie. We bought land in Wyoming, therefore shouldn’t we build/purchase the real estate in Wyoming?

That aside, the idea to purchase elsewhere seems to be limited to Austin, NYC (post-de blasio) and Miami in US.

Miami is the sexiest, but the cost of doing things there is tremendous which might create a higher barrier of entry for people to travel there and participate regularly. Thus decreasing socio-economic diversity in participation.

Austin is growing and could support the work-life balance people might be looking for in a collaborative ecosystem.

Also could consider looking at other models. Prospera Honduras is something to worth reviewing, but significant capital would need to be raised I presume to run.

I’ll break it down:

– First, the act of purchasing a revenue generating asset, unless we are first decide to form as a not-for-profit enterprise, enters us into a General Partnership in the eyes of the law.
– The real world utility is managed by a 3rd party. This puts us squarely into the criteria of an investment contract as defined by the Howey test. From Investopedia (Source):

  1. An investment of money
  2. In a common enterprise
  3. With the expectation of profit
  4. To be derived from the efforts of others

We have already done 1 and 2, and this action is 3 (unless my previous point is addressed) and 4.

Your proposal for a Security Raise complicates this further. If I understand it correctly, you want to raise funds “to pursue a number of ventures”. There are a lot of issues I don’t have time to get into, but a few:

  • What is the relationship between Citizen Tokens and Security Tokens? Does this require re-structuring Citizen Tokens into a new corporate structure? Are funds being co-mingled in the Treasury and how does this effect the nature of the tokens?
  • What’s the incentive for the Citizens? After all this would give us less say. The incentive is that this implicitly increases the value of our Citizenship tokens, gives us more operating leeway, or both, implicating ourselves as holders of a security (for the reasons described above). You can argue these incentives are non-existent but in doing so you would have to argue there is no incentive for the citizens. i.e. a net negative for the Citizens and self-defeating your proposal.
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Am re-visiting this having read through #legal-team. It seems, philosophically, this sets the direction of CityDAO as a profit-seeking venture. Moreover, the terms on which the Citizens originally purchased their citizenship tokens is unclear but if they were merely contributions (which I think can be convincingly argued they were / are (secondary sales) not), how does this align with the mission that the Citizens thought they were buying into?

The goals outlined in the security raise document are telling:

  1. To provide investors with an opportunity to invest

Why is this a good thing for the community? It purports “growing faster” as a benefit but that seems like a negative considering the current lack of coordination mechanisms under which we are languishing. This only benefits the Citizens if we are considering Citizenship as a security under which this would appreciate our token values. Otherwise our attention and “contributions” are being harnessed for the benefit of VCs? Seems like the Citizens are getting the short end of the stick either way.

  1. Create a liquid asset

Again, this benefits investors in a for-profit venture.

  1. Raise Capital to pursue a larger project scope

We are putting the cart before the horse with when the purported reason is “a security token will allow citydao to pursue a significantly larger project which will progress its development and goals”. We currently lack clearly defined goals and having more money, along with a cadre of investors and a clearly defined management class complicates this immensely.

Overall, this seems like an excellent way for a few individuals to capitalize off of CityDAO’s brand without being obligated to compensate the Citizen token holders (because that would implicate this entire venture of selling unregistered securities).

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Hi Lyons,

I wasn’t aware that the Token concept has been discussed. Can you share the link of that discussion?

Yes, we have completed the 1st project successfully no doubt. However, look at the Charter (previously Constitution), frankly it is a mess (no offense to anyone, I’m one of the contributors to that mess).

If you need more evidence, please let me know what is City DAO vision? Shared Value? Voting mechanism?

Most of Citizens are not in the place of our units. How can they attend events, or rent out of units. Let me remind you we are from all over the world.

Citizen can receive governance rights with 0 expectation of profit or return, then what is the point of governance right? who will receive the profit? Citizen will govern the CityDAO and VCs (or someone else) will receive the profit?

No offense, but I couldn’t get it.

Why just these cities? Is that based on legal restrictions or are you talking about the demographics?