CIP-63: Parcel Home - Acquire a CityDAO House in Denver

CIP-63: Parcel Home - Acquire a CityDAO House in Denver

Parcel Home can meet many of the desires for CityDAO’s next parcel and build upon what we learned acquiring Parcel 0. Our first piece of land had limited use but provided opportunity for Citizens to visit and experiment. The logical next step is acquiring a house!

No idea is going to make everyone happy, but based on two months of relative inaction, it is my position that CityDAO should prioritize and maintain a bias to action. The idea here is that we can meaningfully expand our property rights allocations in light of actual use opportunities while enabling further community engagement and community value-add, while further allowing for experimentation around some of the radical concepts that have given CityDAO so much momentum.

It is in this spirit that @scottfits and I propose the following Parcel 1 process:

Parcel 1 – CityDAO Multi-Use Property

TEAM: Q2 2022 CityDAO Real Estate Guild Facilitators - Scott / Josh

PARCEL: A property in a tech-friendly/crypto-friendly environment with little or no Homeowners Association / local ordinance “blockers”

USE: Possible Uses include, but are not limited to:

  1. Space for CityDAO Citizens to co-work and stay (can use blockchain based reservation system and NFT entry, and other blockchain applications
  2. Space for Community and Facilitator Meetups/Retreats
  3. Rental Income (AirBNB/VRBO “Season” during high tourism months)
  4. CityDAO Sponsored Hacker Houses
  5. Co-Working “Season” – Invite other DAOs/Projects to come and collaborate/collide
  6. Experimental “Season” where we test unique ideas relating to Quadratic Voting, Quadratic Funding, SALSA, and other unique ways to allocate property rights (but in experimental sandbox and without long-standing consequences)
  7. Other Uses as may be proposed by the Community from time to time

ACQUISITION PROCESS:

  1. Pass this CIP, authorizing acquisition of up to $650k.
  2. Team selects property
  3. Make contingent “cash” offer
  4. Pay earnest money and bring property under contract
  5. Immediate temperature-check Snapshot to confirm property acquisition.
  6. If voted “YES” – we offramp fiat and close on transaction, while off-ramping extra fiat to place into interest bearing account for purpose of “cushion” on operating expenses, taxes, and insurance
  7. If voted “NO” – we find another property.

COMMUNITY BENEFITS: Place to stay, IRL collaboration and relationship building, useful during ETH Denver, engaging project for the CityDAO Community to rally around, experimentation leading to additional positive PR from influencers and meaningful public goods building outcomes

FINANCIALS: Upon passage of this proposal, it is authorized that $650k from the treasury is converted from ETH and offramped into fiat toward the Purchase Price, fees, taxes, and other costs of acquiring of Parcel Home. We propose moving the cash to fiat soon so that we are able to test the DAO’s new FTX off-ramp and is well positioned to make an all-cash offer in the heated real estate market.

We also point out that the $650k is not lost funds - the DAO could likely use home equity loans for future financing if needed.

BUSINESS MODEL AND OPERATING EXPENSES: There will be no initial monetization, but we will set aside a percentage of the purchase price in an interest-bearing account as a reserve for several years worth of insurance, taxes, property management, and operating expenses.
The estimated monthly costs will be around $600 / mo for things like internet, electricity, water, trash and property management.

TEAM COMPENSATION: If Scott and Josh are able to execute on this Parcel Home proposal, they will be compensated with eight (8) CityDAO Citizen NFTs and $2500 USDC each upon final closing.

EXAMPLES OF POSSIBLE PROPERTIES:

https://www.realtor.com/realestateandhomes-detail/3431-E-29th-Ave_Denver_CO_80205_M21190-32305

https://www.realtor.com/realestateandhomes-detail/34425-County-Road-145_Blanca_CO_81123_M14345-29239

https://www.realtor.com/realestateandhomes-detail/953-Kalamath-St_Denver_CO_80204_M11475-23002

https://www.realtor.com/realestateandhomes-detail/2215-Capulet-St_Austin_TX_78741_M71664-69261

https://www.realtor.com/realestateandhomes-detail/8829-SW-223rd-Ter_Cutler-Bay_FL_33190_M55437-40311

https://www.realtor.com/realestateandhomes-detail/616-Lockhart-St_Pittsburgh_PA_15212_M35363-99317

COMMUNITY INPUT:
Due to the fast-moving real estate market, we may need to make several offers and move quickly - so it’s infeasible for the DAO to vote on each property individually. This proposal authorizes the team to make the final call on the acquisition of a property, but the team will also use Snapshot or Discord votes to temperature-check things like property location and gauge DAO sentiment on acquiring certain properties.

23 Likes

This is great and love the bias to action.

To be clear, the main point of this CIP is to approve:

  1. Authority to make a cash offer, to then be put to CIP to be funded.
  2. Promise of compensation for Scott & Josh if the transaction is completed.

Is that correct?

I don’t know if I personally agree with this as the best next parcel, but I 100% agree it should go to a vote.

3 Likes

Some decisions are consequential and irreversible or nearly irreversible – one-way doors – and these decisions must be made methodically, carefully, slowly, with great deliberation and consultation. If you walk through and don’t like what you see on the other side, you can’t get back to where you were before. We can call these Type 1 decisions.

But most decisions aren’t like that – they are changeable, reversible – they’re two-way doors. If you’ve made a suboptimal Type 2 decision, you don’t have to live with the consequences for that long. You can reopen the door and go back through. Type 2 decisions can and should be made quickly by high judgment individuals or small groups.

– Jeff Bezos, 1997 Letter to Shareholders

Gentlemen, in biasing action, you are asking CityDAO to commit to a Type 1 path. I would be open minded if your proposal understood this commitment and took it seriously. Unfortunately, it does not.

Let’s imagine for a moment that you listed these possible uses when applying for a commercial mortgage. How should a loan officer consider, for example, “CityDAO Sponsored Hacker Houses” as a sustainable driver of cashflow? Our hypothetical mortgage officer would laugh you both out of the room, and you know this.

A serious proposal would illuminate all of the ways in which this is a sustainable path forward, both intrinsically (as an asset on CityDAO’s balance sheet) and extrinsically (helping us accomplish our mission of building a city on-chain). At a minimum, it would include a serious business plan as to how the asset will balance its costs with revenue. Moreover, it would include a plan as to how any of the proposed uses will actually be realized and by whom. As it stands, the DAO is exceptionally poor at defending against grift. Unless the incentives are changed, how will this be any different?

After abysmal treasury management which depleted our buying power by 75%, the last thing the DAO needs is to undertake a large capital expenditure without a plan to at least break even on it. Hypothetical real estate appreciation is wishful thinking; you both realize all this yet are cutting corners to please the mob. I, for one, am not pleased.

1 Like

I believe, and correct me if I’m wrong here @DAOvolution as I was not involved in putting together the above CIP, that the goal here is that considerations like this will be part of the CIP to actually fund the purchase.

I will strongly be pushing for that CIP to include an in depth business plan and financial model, including crucially, specific goals on how this will further the mission of CityDAO.

Also @will I think by setting the precedent of allowing parcel proposals to be made in a format like @DAOvolution and @scottfits have put together above, we are empowering more people to put forward what they see as better paths for CityDAO. So if you have a better idea for what parcel 1 should be, please go ahead and propose it!

7 Likes

Love this, let’s go.

3 Likes

I support this CIP. The market is trash, the treasury is thrashed, and recalibrating what we can attain as a DAO has changed. But this will allow us to put something on the map. So, if you view this CIP as a step one of more to come, for both income generation and exercises in public goods, then you may agree that this is a solid move. Some further breakdowns of the financials would be appreciated, but the given examples don’t seem to be astronomically out of reach for the DAO. (I personally like the Austin and Philly locations…) I hope this CIP gets distributed to the DAO further, and at least gets a chance to be voted on. Excited to see what comes next.

3 Likes

Nevermind. I get it.

Like @kkopczyn, I like the bias towards action. But, I also agree with @will that this is a Type 1 action, so should be further fleshed out.

Most concerning to me, it is not at all clear that the proposed locations are in “a tech-friendly/crypto-friendly environment with little or no Homeowners Association / local ordinance ‘blockers’”

Perhaps with the exception of the Blanca, CO property, each of the example properties are inside municipal limits, which come with ample zoning, political, and regulatory labyrinths. All of the proposed uses are of a business nature, which are likely not permissible without a special use permit. We may quickly run into unhappy neighbors in a down real estate market.

At a minimum, the team needs to produce sufficient information on the regulatory and zoning landscape in the proposed purchase location, as well as specify that all of the proposed uses (and especially the revenue streams) are workable in a property proposed to be purchased.

Also, how much money is being allocated to due diligence and closing costs? And what contingencies will we have on an offer? Inspection? Appraisal? Title Insurance? Warranty deed? NDA?

5 Likes

Agree with both points, and support this proposal.
Let’s research and put the plans together!

2 Likes

TL;DR I support this proposal with one addition: I want to propose an integration of Parcel1 NFT governance token mint with its own treasury, and using CityDAO treasury strictly for CityDAO operational cost.

Full comment:
Definitely think proposals in this format is the right way to move forward. I hope to see more proposals like this in the future. I think the location, scale of investment, future potentials all make sense, and I’m excited for the value it will bring!

One thing I’d like to suggest is bringing the idea of governance token into the planning.

Our governance structure so far:
citizenNFT – governance of CityDAO
parcel0NFT – governance of Parcel 0

Wouldn’t it make sense for future parcels to have their own governance token where people who would like to be involved in decision making of specific parcels can opt in to participate? Isn’t the whole point of parcel0 an exercise for us to fractionalize real estate properties and create legal wrappers around them to help us govern future parcels in similar fashion?

If we did that it would create a separate treasury and decision making authority which allows more ‘localized’ governance, and possibilities to provide direct benefits for governance token holders (timeshares & things)

CitizenNFTs are owned by a global audience, it make less sense for someone in Europe to vote on issues regarding to a parcel in CO.

Also want to second to the concern for treasury management that @will pointed out – ETH is at its all time low and it’s not the best timing to take out something like $650k to fund a house which has a relatively stable price (we’re spending a lot more than we would have) not to mention there will be project operation fees that come after that. (payrolls for parcel 1 administrative & operational costs, cost of decoration & renovations, etc)

Thank you team for putting this together. Hope all the comments can be constructive and provide hindsight in helping us shaping a better strategy moving forward.

3 Likes

There is no shortage of “blockers” or reasons that smart people can conceive as to why this is a bad idea. I never said it was a good idea - and I have pointed out the market situation (ETH crashing while Real Estate is at its ATH) many times to all of you verbally and in writing above, so very well aware of the considerations there.

Wondering - has anyone considered putting up their own proposal for Parcel 1? Its easy to criticize and try to poke holes. Lets hear what everyone else wants to DO (besides talk while doing nothing LOL).

There is nothing stopping any of you from posting CIP-64 for Parcel 1.

@will I told you I am on board with your proposal, please post it.

@wdclapp (and everyone else here quite frankly) knows quite well that my preference is to make a big play for a large piece of land where we can build something real, or possibly to partner with an existing city in a large way. Are we to wait 3 years until you all feel “ok” to make our next move for Parcel 1 as CityDAO? Why is everyone so afraid to do anything besides talk?

As stated - this is about maintaining a bias to action. The “special use permits” and “payrolls for parcel 1 administrative & operational costs, cost of decoration & renovations, etc” (which is totally inaccurate understanding of OPEX and intent here) are not meaningful blockers, just more fear, uncertainty, and doubt.

I don’t know that this proposal is the right one, but I am looking forward to reviewing many more instead of needing to “justify” it.

If you have a pulse and an idea, please post it!

1 Like

Definitely agree we want to see more proposals coming up. This proposal is setting up a great example for the first of its kind.

I think all the comments here can be considered as improvement suggestion instead of ‘blockers’. I don’t think anyone intend to terminate this idea, but are just suggesting on ways to refine it instead.

Looking forward to seeing continued development for this proposal!

1 Like

I’m on board for the next steps in this.

@will to my understanding this is a forum post for suggestions and discussions. It’s likely fair to say that every person in the DAO would like more info on this, which I’m fairly certain @DAOvolution and @scottfits would be happy to provide and that many people in the DAO (including myself) would like to contribute in putting together for everyone :slight_smile:

To my understanding, proposals here are to gauge interest, open the subject formally, and to see if there’s enough support to move forward on the next steps.

So in that light, it’s got my support.

Let’s take the next steps, flush out the next set of details, summarize the road map for this and ultimately, let’s get the next win for the DAO overall with a risk/reward balanced win.

I don’t disagree with you with respect to the naysayers, but at the same time we have to be open to amending these proposals on the board. That being said, I like the action plan as well as the fact that it comes back to the community for an up or down vote. However, I was wondering what you think a realistic timeline would be on the acquisition process (1-6) action plan you outline.

I don’t share all of walts concerns, but I do think that when the plan comes back for the up/down vote that it should specify those allowable uses, as well as be sure that inspections and appraisals can be released to the community and are not proprietary to the inspector (or something of that nature).

I also agree with NICO that we should at least explore additional funding sources as part of this process and I feel like the Grants and Investments guild should be able to help with that in the next quarter.

Why wouldn’t the community hold the keys to decision making around Use/Seasons? It can be the Parcel 1 community, using a DRUMROLL… Parcel 1 NFT. None of this is earth shattering. The proposal is not written in pen, its written in pencil. Tell me what you want it to say and I can change it.

1 Like

I respect and trust you as a citizen so I just want you to say you will specify those allowable uses when it comes back for up/down vote, as well as be sure that inspections and appraisals can be released to the community

The only real change is putting on this proposal what you think a realistic timeline would be on the acquisition process (1-6) action plan you outline.

@DAOvolution can you say more how this CIP will work with “Comments on Parcel 1 Winnowing Process”?

Based on that previous post I was kind of waiting for a few Parcel 1 proposals to come up for a vote, and then after that the team could execute. Is the lack of movement because we’ve just been slow in putting together proposals?

Also for the record, I totally agree with the sentiment that it is WAY easier to sit here and think of reasons we shouldn’t do something. I fully support/advocate that citizens should be proposing solutions as much as possible. I think it sets the right tone and helps us move more towards action.

For now that process has been paused with possibility of bringing it back down the road when conditions permit more of a launchpad environment. More than likely it is to be scrapped entirely in lieu of project teams with a mission-focus

Love this idea. The only suggested addition (similar to Niko’s) is that we issue a NFTs (give Citizens first dibs) that correspond to the right to a parcel that they can do whatever (either as perpetual ownership or like a lease that extends as long as citydao owns it as decided by citizens). This would serve the purpose of raising funds to maintain the land and also will attract holders that are invested in building.

We should make some time during our weekly meeting for each CIP proposer to “pitch” the idea and take questions. maybe total of 7min for each pending CIP…

Now that this is up to 19 likes, I think the question of how much a proposal changes as part of forum post prior to going to snapshot is an important one. This one has changed from 0 treasury impact upon passing to $650k treasury impact.

@DAOvolution I’m not 100% clear from the text above, but would this allow you to make the purchase without further voting on the specific parcel as long as it fits the $650k budget? Or is the offramping of $650k ETH just to lock in the funding in case ETH goes down further?