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How to start a city
The legal and financial mechanisms
We’re often asked, “how are you actually going to do this?” This post is an overview of our answer. Best we can, we’re writing this in plain english, but note that everything addressed here will ultimately be expressed in formal legal agreements.
Overview of the overview:
Involves four primary parties:
- New Athens Launch Company: The private company that shepards the process.
- City of New Athens: The democratically-controlled government of the city.
- Investors in New Athens Launch Company: The source of the money needed to kickstart the city.
- Host state government: The government of the U.S. state where the city gets built.
Process unfolds across three stages:
- Stage 1: Pre-Charter. Recruiting residents, businesses, and investors. (We’re here now.) Ends when charter signed with a state government.
- Stage 2: Startup. Initial buildout. Ends when launch company hands off daily operations to city government.
- Stage 3: Self-Rule. City successfully up and running. Continues into foreseeable future.
Governed by three key contracts
- Launch Services Agreement (LSA). New Athens Launch Company : City of New Athens. Establishes terms for launch company deploying capital, handing off power to city government, and sharing future tax revenue (investor payback).
- State Charter. New Athens Launch Company : Host state government. AKA: Charter Agreement, AKA: Civic Innovation Zone. Sets terms for city paying state in exchange for state giving city freedom to build.
- Investor Agreement. New Athens Launch Company : Investors. Standard venture terms. Typical fundraising path. Revenue comes from launch company earning portion of city gross tax revenue (rev share). Not reinventing any wheels here.
Stage 1: Pre-charter
This is now. Goal is to create feedback loop of interest from people who want to move to the city, businesses that want to move to access our people, and investors who want to profit from people and businesses moving. Activities resemble sales, marketing, and recruiting.
New Athens Launch Company | City of New Athens |
Recruits residents | [does not exist] |
Recruits businesses | |
Raises capital | |
Pursues Charter Agreement with a state government |
Milestone 1: Charter signed.
NALC and host state agree to location and terms for building the city.
Stage 2: Startup
The crucible. Adventurers and pioneers. A constellation of construction sites across thousands of acres. Leaders forged.
New Athens Launch Company | City of New Athens |
Deploys investor capital to kickstart growth of the city | Year 1: Start from zero |
Set up government that will take over after handoff | Year 2: Begin advisory governance as prep for handoff |
Accelerate national marketing and recruiting to bring in more residents, businesses, and capital | Year 3–10: Refine agencies and systems in collaboration with NALC’s topic-area Launch Teams |
Milestone 2: Governance handoff
Startup stage is complete. Launch company hands off all formal control over city activities.
Stage 3: Self-rule
The city is successfully planted. Launch Company role changes: no longer formal power; instead, makes targeted grants to support growth. Onwards for the foreseeable future.
New Athens Launch Company | City of New Athens |
Makes grants to support growth. | Assumes full control of city |
Collects $ from city based on contract. | industrial vacuum cleaner - hoover population from other parts of the country |
Milestone 3: Final Payment
50 years later, city makes final payment on original contract with Launch Company.
FAQ
During the Startup stage, how is it OK for a private company to be making laws?
Launch company never final authority. The state government has power via the charter agreement, including power to shut everything down.
Everyone benefits from launch company having brief window of central management
- state benefits because it has single point of contact to troubleshoot problems and, worst case scenario, shut everything down
- city benefits from central control because laying infrastructure is faster and easier with central coordination and capital deployment.
- residents benefit because they came for the promises made by the company. company needs chance to deliver. if residents not happy, they leave and everyone (investors, state government, launch company) loses tons of money.
These benefits have natural shelf life, we think around 10 years. After this, democratic governance better for everyone—because America.
Why is the investor payback period 50 years after self-rule?
Long enough tail that investors can recoup initial investment and, if the launch company did a good job, profit.
But also not too long. Any longer would create a situation where residents are paying on a contract that nobody alive had a hand in signing—and thus nobody alive can explain from direct experience. This is bad. On principal, must be less than one human lifetime.