The city of Cambridge, Massachusetts’ Finance and Budget Department has a long history of civic interaction with its residents. Following the success of a participatory budgeting program in 2014, the city looked for more ways to engage residents in the financing of its capital plan. The result was its first minibond issuance -- $2 million of general obligation bonds to finance projects ranging from school renovations to the implementation of Cambridge’s Complete Streets plan.
The bonds were sold in $1,000 denominations through Neighborly Securities, a start-up broker-dealer that focuses on expanding individuals’ access to the public finance. The first ever online sale of small denomination bonds that cleared through the Depository Trust Clearing Corporation, the minibonds were priced to yield 1.60%, the Municipal Market Data triple A benchmark rate on the day of the sale.
This issue was sold entirely to the five Zip Codes that comprise Cambridge and more than one-third of the buyers were first time investors, making it a truly grassroots financing. Meanwhile, Neighborly completed similar financings in Lawrence, Kansas, and Burlington, Vt., demonstrating the adaptability of the mini bond for issuers across the country.