The Slow Muni: Public bonds for local economies
Four years ago, I attended an Investor’s Circle (IC) conference at which Carlo Petrini, founder of the global Slow Food movement, was an honored guest. Woody Tasch, Chairman of IC, used the opportunity to outline his hopes that investors would begin to invest in local food systems in order to make them more ecologically sound, nutritious, and economically viable. In outlining the concept of Slow Money, he echoed the sentiments of many socially responsible investors that long-term thinking and multiple bottom-line investing is a critical priority in restoring the health of ecosystems, including man-made ecosystems such as agriculture.
With the rise of farmer’s markets, farm-to-table restaurants, and renewed focus on proper nutrition, the notion of Slow Money is a laudable strategy for nurturing local living economies that provide green jobs and keep capital circulating within a community. Plus, it facilitates relationships between people and their food, including slowing life down enough to enjoy it.
Over the years, local and organic food producers have often started their enterprises with the help of visionary social venture capitalists, since such investment opportunities are by law limited to accredited investors (e.g., the very wealthy). The reason for these regulations is that high net worth individuals can afford to take the higher risk of investing in start-ups, and unfortunately that means retail investors are generally unable to invest in new local opportunities unless they self-organize, which is very difficult to do. (But not impossible! See James Frazier’s post on the Local Investors Opportunities Network in his region.)
Standing in the back of the IC session listening to Woody present the notion of Slow Money, it occurred to me that the conversation was narrowly focused on equity investing. I wondered why we couldn’t consider debt (that is, bonds) as an investment opportunity: what if we could organize local communities to issue Municipal Bonds, to borrow funds for development of local food infrastructure? Off the top of my head, I called it the Slow Muni, and voiced it as a question from the back of the room after Woody’s presentation.Forward to the 2009 national SRI conference, where Woody is a speaker and is signing copies of his new book, Inquiries Into The Nature of Slow Money (see also the Slow Money Alliance website). When I tell him I was the one who had suggested the Slow Muni idea, he enthuses that the concept has been part of every major presentation he’s done since I offered the idea, but he didn’t know who I was: and right then, he asked me to spearhead a task force to make it happen.
We are now looking to pilot Slow Muni in a couple of states. The most likely path is that a legislature will need to create an agricultural development authority, which will establish the criteria by which localities could issue these types of bonds and direct the ways in which the funds are to be spent, such as for water and soil infrastructure, certified kitchens that manufacture value-added products, devoting public lands to agricultural production, or purchasing prime agricultural lands that are under development pressure. Funds might also be channeled to non-profit farming organizations that use either their own or public land.
The Slow Muni, being a local or state bond, will also require that the beneficiaries of the food produced are public, which will encourage local procurement in publicly-funded institutions (e.g., schools, hospitals, prisons). Crops could be grown at these institutions and prepared to meet health standards through on-site certified facilities, or they could be grown on undeveloped or redeveloped brownfield sites for use by multiple beneficiaries throughout a community. As a tradeoff for this investment in local food systems, it’s likely that legislatures that endorse Slow Muni bond funds will not be able to designate that programs focus on organics, due to questions of constitutionality or political expediency (i.e., the existing role of traditional agriculture in state or county politics).
Currently, local Slow Muni teams are working to identify states where legislative support and worthy, fundable agricultural projects may already exist. Part of the challenge is that most states haven’t considered the municipal bond as an appropriate investment vehicle, because governments haven’t been in the business of directly facilitating food production for its citizens.
The relocalization movement, spawned in part by the eighty national chapters of the Business Alliance for Local Living Economies and emboldened by the proliferation of CSAs and farmers’ markets, should make it politically and economically feasible for the new and unprecedented Slow Muni to take hold in the United States. Stay tuned!
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