Quincy Digital Bond Issuance

Band of Traders Podcast

Quincy Digital Bond Issuance

Speakers: Kyle Hedman, Eric Mason and Rick Coscia

Kyle:

All right, hello and welcome to the China Shop, home of the Band of Traders. If you're here because of the digital bond offering then welcome, I hope you decide to stick around. I'm your host Kyle and today we're recording a very special episode. In fact, I'm sitting in a conference room with Eric Mason and Rick Coscia, in the historic town of possibly the oldest functioning seat of government in the county, in Quincy, Massachusetts. Eric Mason is the CFO for Quincy and Rick is the city's Strategic Asset Manager. Now I was led to believe that Rick was sort of Eric's sidekick, but after seeing Rick's credentials, I think we might have more of a puppet master situation.  

Eric: I would agree with that Kyle.

Kyle:    Rick, we're going to have to get you on I think for another one-on-one at some point here.

Rick:    I’m at your disposal.

 Kyle:    Well, the reason why I'm down here is because Quincy has done something that's never been done in the United States before by issuing a blockchain-based municipal bond. There's a lot to digest in that statement, which is why we're here with Eric and Rick today. Our goal is to provide a resource for anyone out there wondering what the hell Quincy just did, what that means for the future.

Before we kick off that discussion though, I just want to say thank you for inviting me up here. My wife and I, we have had a wonderful time exploring the sites in Quincy and the surrounding areas. Laura and her sister have been researching their genealogy lately so it turns out she has more than a few connections to the area. Mary Perkins Bradbury, who was her eleventh great grandma, was tried in Salem, found guilty but escaped long enough for everyone to stop being completely insane. There's Mr. and Mrs. Edward Fuller and their son Samuel, came over on the Mayflower. Giles Badger and Captain Edmond Greenleaf her 11th and 12th great grandfathers who founded Newbury, and of course seventh cousins to John Quincy Adams. So, we had a lot of fun checking out the sites and finding out all kinds of new details about these people. It turns out it's a bit of a miracle that she actually made it to today. There's quite a few spots where that line could have been snuffed out. If we have any extra time, I'd love to record a bonus episode with you guys just nerding out on history.

 Eric:     Oh, absolutely. 100%.

 Kyle:    I know you're up for it. Now the thing that really struck me most though during my stay here is just the outsize impact this town has had on our nation's history. There's so many firsts like the Mayflower Compact that had just much larger ramifications than anyone expected at the time. And it kind of sounds like Quincy might have done that again. So, on that note, we should probably start with the obvious question here. Like, what did you guys just do?

Eric:     Yeah, so, well first I just want to say thank you to you, Kyle, and Laura, and to Rick for, you know, letting us sit down and talk about this. Because I think what's important about this is, what we just did was complicated. It certainly was. And I think it's the role of government, it's the role of Rick and my job to try and be as clear as we can on it, and walk through some of these complicated processes. Because the fact that it is complicated can make it hard to, it can make it confusing to the people who should know how it works. And we want to sit here and take this opportunity to work with you guys, who do a great job understanding both the complexity of these issues, but also making it into an entertaining and educational experience, to really disclose what we did, and I think that word is important here, is disclose, is you know, we want the public, and we want everybody who's curious about this to know why we did it. What are the benefits long-term, short-term, and what are some of the challenges? I mean, you know, this isn't going to be an info commercial, we're not selling you one of those like…

 Kyle:   Right.

 Eric: Convection ovens that can ro- that can cook the full chicken that I loved to watch when I was sick and at home.

Yeah, so what exactly did we just do? That's a cool question. So, we just took the first step in democratizing Quincy investment to the individual. So right now, the city of Quincy pays about $25 million a year in interest payments on our bonds. And those go to large investors. They go to, I won't name any particular firms, but we all know municipal bond. And a question came about when we were talking about this, probably a little over a year ago. And we said, what would happen if that $25 million stayed in Quincy? What would happen to that?

And you know, my background is in economics. I can tell you multiplier effects. I can tell you all that stuff. But at the end of the day, something that really interested me in this process, and something that Rick knows a lot better than I do, is that a lot of our debt is bought by SMAs, which are essentially wealthy individuals who just can buy bonds. That seems unfair.

 Kyle:    Yeah.

 Eric:     We're government. We shouldn't be, it shouldn't be the wealthy individual can buy the bond because they're a wealthy individual.

 Kyle: Right.

 Eric:     That's a broken system, to be honest. And this new technology, DLT, digital ledger technology, gives us the ability to take the first step, which we did here, to democratize that. A guy driving his kid to Squanto school, which we just got an MSBA approval to start rebuilding, as this technology advances, we took the first step in a reality where that man could take his 401k and invest in the school that he's dropping his kid off at, get that tax-free income, and save for a future. He's living in Quincy, these are families in Quincy who can also invest in Quincy. And prior to that, that wasn't an option.

 Kyle:    Right.

 Eric:     It was an option for ultra wealthy individuals. And I think one of the reasons that we were able to do the first DLT-based bond in the United States is because we had different incentives than the private sector. The private sector, you know there’s, rightfully so, they’re trying to make money for the shareholders now and in the future. That's not our goal.

Our goal is to maximize and democratize every dollar that the city gets in here. It's to get the greatest return on public services for that dollar, and also make it as equitable and accessible to every individual. Those are different incentives. Both noble incentives, but different incentives.

 Kyle:    Right.

 Eric:     And so, we were able to partner with JP Morgan. We were able to work through our great financial advisors, Hilltop Securities, our excellent bond counsel, just a- you know, bond counsels, they really, you know, for something… this is more of a regulatory, this is more regulatory hurdles, and they were excellent on that, Locke Lord. But even, you know, people beyond that, even working with independent economic analysis through Dorminson Consulting. You know, working with Blockwise Advisors to understand this technology and understand how it's going to be implemented. But then even beyond that, I mean, we have a great financial team that's always here, that's always working, both internally and externally. And so, I look at like Markham LLP, which prior to us using Markham LLP, they had recently merged with Powers and Sullivan. So, Jim Powers and Todd Jerzyski. While they, while your independent auditor doesn't provide advice around these things. it's still a couple decades long relationship, and helping us understand good internal independent auditing processes. And you combine that together in this long march approach, and you end up being able to do something kind of special here, which is take a step to opening up the largest financial market in the country, the bond market…

 Kyle:    Right.

 Eric:     To the individual. So that's why we did it. That was a long -winded answer, but…

Kyle:    That's really cool, but I mean there's got to be some other financial incentives for the city to do this as well. right?

 Eric:     Yeah, no the primary incentive here is really twofold. This current bond offering isn't going to offer any sort of financial advantage, but it opens the door to pronounced financial advantages down the road. The first time you do anything, you're not efficient at it.

 Kyle:    Right.

 Eric:     We're doing the first thing for the first time. We could see documentation fees be cut by half. We could see open transactions. So, two parts is, issuance costs can decline because blockchain technology is incredibly good at record keeping. It’s actually…

Kyle: Right.

Eric:     Great at it. But the second is, as you open, this is from an economic standpoint, as you open the market... So, supply and demand, as you increase the demand for, you can look at it two ways, you could say increase the demand for bonds and by having bonds in a more open market, you can increase their accessibility. If you're, this is a more principal agent thing, if you are the only operator in the market for, say a blockchain, and somebody wants to buy a blockchain-backed bond, you know, that really helps you with the price setting.

 Kyle:    Right.

 Eric:     Second side is increasing the supply of buyers. So, if you de-marketize this and suddenly, you know, anybody who has, you know, $5,000, can suddenly buy your bonds. They don't have this huge hurdle like SMAs. Suddenly they can even see more bids and that can suppress interest rates.

And on one final note, when we talk about sequential oligopolies, which is really what bond markets are, the first actor, the first person to move in a sequential oligopoly, gets the greatest benefit. And the metaphor I always use for this is, you know, I'm a millennial, so I grew up with like Razr scooters.

 Kyle:    Right.

 Eric:     And whenever I give this example in class, I'll be like, name another company that made scooters. You know other companies made scooters, but…

 Kyle:    You don’t know the names of…

 Eric:     You don't know the names of them.

 Rick:    Yeah, I’m just going to jump in here and you know, Eric is exactly right; when the first point he made is like why we do this, and the democratization of the process of buying bonds. Now, he talked a little bit about SMAs and high-net-worth clients buying those bonds in terms of the individual level, and he's exactly right. But I would also add that that pool is actually even smaller because when we sell our bonds, and we're a double S&P-rated credit issuer, the majority of those bonds, if we're going to sell $100 million, whatever it is, the majority of that, yes, there are some individual high-net-worth and SMA buyers, but the majority is taken up by institutional investors.

 Kyle:    Right.

 Rick:    They're going to be insurance companies. They're going to be investment management companies. Just those type of asset managers that match their assets with their liabilities. So that pool of available bonds is actually even smaller. We do have, you know, we can see, on Bond Day, on sale day, we can see who's buying those bonds. And yes, there are some very affluent people who are buying them in the past, but that actually is a fairly small amount. Those are being absorbed by either brokerage houses, individual institutional investors, institutional asset managers and insurance companies.

And the other thing I would just say too about the, kind of jumping on Eric's example about the Razr scooters is, ultimately what do we, what is the goal of going in this platform? And there are going to be some big advantages. Now all those advantages won't be here on day one, but they are the instantaneous ability to access those funds, the lowering of transaction costs, the reduction in the removal of potential, you know, as many intermediaries.

Because now, when you issue a bond, not to bore everyone with the process, but there are underwriters and there are custodians and all those things. Those things will all apply, but that number is reduced. And when you reduce intermediaries, what do you do? You kind of compress costs down. So that's ultimately what the objective is, again. But this is the first step to kind of opening up the ability to buy bonds, but also for the taxpayer, for the city, that our debt service would be lower because we don't have as many kind of building costs.

Kyle:    Seems too, as I was reading through just the process that you have on there, you have a period where you do, I think it was called rate squeezing, where you start to lower the rate and then check to see what kind of subscription you still have to the bond offering. So, the more people that you can open that up to, then it seems like there's more opportunities for the city to be able to save on the interest rate. And how much does a percentage point on a $10 million bond give you?

 Eric:     Yeah, a huge amount. I mean, I mean on $10 million it’d be three or 400 ,000. No Kyle, that’s right, buddy. Like you're right on. That squeeze period is so important. And the more people you have sitting in the market, that's the more people who can ask, hey, how much will you lower? How much will you lower? How much will you lower it? And when you democratize stuff like this, you just have better access to the unsuppressed rate. Again, like Rick said, it's not going to be there on day one, but you don't climb Mount Everest in the first step.

 Rick:    Right. And Kyle, I've already bored you with this analogy, and it's a clunky analogy, but I think it's accurate. It's the ATM analogy. Years and years ago, the banks, institutions, instituted ATMs, and everyone thought, well, who's going to want to be able to go outside at 11 o 'clock at night and take out $100, right? And there's another startup cost, right? There was a startup cost, there's a technology cost to that. But that has taken off. Right, now it's to the point where most people do most of their banking remotely. Now, that hasn't done away with the traditional way of doing banking, right? We talked yesterday about banks are increasing the number of branches that they have, and tellers that they have, and services that they provide. That model of banking has changed a little bit. So, they both coexisted, but it's an additional transactional resource that now the consumer has, and it's obviously taken off.

 Kyle:    Right.

 Rick:    And you can see it in your checking accounts, interest rates, right? It's allowed the bank to reduce costs. That's not a perfect example, but…

 Eric:     It’s a good example.

Kyle:    No, I like that example. It's good because, yeah, the ATM didn't eliminate the bank, but it changed it.

 Rick:    It changed it.

 Eric:     Yeah, absolutely.

 Kyle:    And I think that's kind of what you guys are getting at here. So how does this actually work then? Like what are y- you're taking blockchain technology and you're applying it to bonds. Can you kind of tell me exactly, or maybe high-level overview, of what that integration looks like, why that's appealing?

 Eric:     Yeah, absolutely. So obviously, Rick can jump in here too, because he knows it very well. So, bonds don't trade that well. Generally speaking, municipal bonds trade about once a year, which is insane, it’s such a low amount of trading. When you have a more stagnant market, you are, it's hard to express menu costs, basically, is what we call it in economics. When you don't have transactions, you don't have price efficiencies.

 Kyle:    Okay, too much time goes by before you get a chance to reevaluate what the price of that thing should be worth.

 Eric:     Yeah, Kyle, right on, exactly. It's like, you know, you have gold, you can have gold sitting in the corner and you paid $2,000 an ounce for it. And in your mind, it's $2,000 an ounce and it's $2,000 until you sell. It's unrealized gain or unrealized loss. Part of that is because bonds are difficult to trade. Just in general, like you can have bond funds and stuff and the private sector has done like an excellent job of trying to add velocity to this market. But at the end of the day, bonds are blocky instruments by design. I mean, a bond is designed to be held.  

 Kyle:    Right.

 Eric:     You receive a coupon payment and you get a long-term investment. That doesn't disregard that velocity in a market's good for price maximization. The more transactions in a market, the more likely that market is going to be able to see equilibrium given that it's a non -restrictive free market. That's just the reality of the data we have to show us.

Kyle:    That sounds like that'd be very useful for you guys too, because trying to price one of these things, it's something that only trades once a year, like what does that- that process has got to be very nerve-wracking.

 Eric:     Right, so Kyle, this is wicked interesting. So just to have a-, just a little side track on this, right now when you price a bond, you're really not pricing a Quincy bond, you're pricing a tax -free, AA-rated municipal bond for some fixed term, which really means you're basically a proxy against the treasury of that term, which is interesting because a treasury has tax implications

 Kyle     Um-hm.

 Eric:     So, there's a data series on the Federal Reserve called HQM, High Quality Market Bonds, and you can actually almost perfectly tether Quincy or any municipal bond to that. And what's some- we do some pretty robust data analysis here at the city when we're measuring all our bonds and stuff, which is all our financial analysis data, and you can tether it. But it doesn't tether to AA public sector bond sales.

Quincy has, because we have the Quincy data, and it doesn't tether perfectly to, AA doesn't tether perfectly to HQM AA, there’ll be some gap for tax advantage. So, what ends up happening is you're basically trying to sell in the market with, and this is why negotiated debt is great, don't get me wrong, you're basically trying to say, hey, will you pay more for this? Will you pay less for this? We sold bonds that the first offering was eight times oversubscribed. So, we're not priced right, right?

 Kyle:    Yeah.

 Eric:     And Ramirez and Company who was our underwriter for negotiated debt, amazing, they're great public sector, they're great underwriters, but they're particularly excellent in the public sector. They do a good job of pinching that. But if you have back-end transactions, you know, in a secondary market, by proxy, you know what the price is.

 Kyle:    Right, right.

 Eric:     And to give you an example, what's more valuable, a US dollar right off, freshly printed, or a US dollar that's been around in circulation for three months? The same value.

 Kyle:    The, yeah.

 Eric:     Because they're transacted at the same rate. Can't say that about a bond. Increased transaction optimizes price. A US dollar's a US dollar. $5 of a Quincy bond and 5% should be the same value. Except you're speculating, because it's not like there's five of those bonds that are rolling off a printer every day.

 Kyle: Right.

 Eric:     And I think that's really the interesting part about this, is adding transactions will help us. And it’s, you know right now it’s, we're early in the process and it's exciting. This is an awesome opportunity we've had. A lot of hard work by a lot of people. I mean I- I'll tell you right now, Rick was the hardest working person on this.

 Rick:    That's debatable.

 Eric:     You can, they can debate that but...

 Rick:    Thank you, though.

 Eric:     Yeah it, the increased transactions, because it trades so slow, it just means we're going to have a ton of data as these markets ramp up. And we're going to be able to make better financial decisions as we go forward as we're trying to sell these.

 Kyle:    So, there is no secondary market for municipal bonds right now, is there?

 Eric:     Like there is, it's very weak. I mean, if you have a velocity of one a year…

 Kyle:    Um-hm.

 Eric:     Are you really a market?

 Kyle:    Not really.

 Rick:    Right.

 Eric:     Not really, right. Like, it usually goes into these massive public, we have public bond funds. And those public bond funds are, you know, hold them because they want those coupon payments, they want to avoid taxes. I mean…

 Rick:    Correct.

 Eric:     Rick can chime in better than me here as a CFA and an MBA. What do you, I mean…

 Rick:    Yeah, no, that's absolutely right. I mean, the value of the municipal bond is always in those investors who are looking to kind of reduce their tax exposure. So, I mean, it's not a sexy asset class. You're not looking for growth, you're not looking for income, but...

 Kyle:    Right.

 Rick:    What you're looking for is some, you know, some hedge against inflation, but you also want to...

 Kyle:    Safety.

 Rick:    It's a safety. It's a ballast. And again, it's going to outpace inflation, but it's not going to... The investor who is really interested in investing in municipal bonds doesn't care about growth or anything. They are at a certain level that their taxation is their priority.

So again, that that pool, as Eric mentioned, is very kind of static and it's who you, it's those usual suspects, right? It's endowments, it’s the foundations, it's high-net-worth investors. It's institutional investors, it's a mutual fund that…

 Kyle:    Right.

 Rick:    That potentially is like going to be gobbling up the majority of our municipal funds because they they're issuing, they issue or they manage a municipal bond fund So they're looking for Massachusetts debt, which is very… This is where Eric can jump in really quick. Massachusetts debt is extremely attractive for all those reasons.

One thing, I wanted to back up a little bit, and when you were introducing us, you introduced me as a Strategic Asset Manager, and that's true. But the main reasons we are always looking into these endeavors, like how can we do things better, more efficiently? How can we save costs? How can we think outside the box? I think in previous conversations, we've talked a little bit about how we issued a $475 million pension obligation bond several years ago. And that's because, you know, it's not unique to Quincy, but a lot of public funds, public pension plans are underfunded.

 Kyle:    Um-hm.

 Rick:    And so, you know, the strategy of doing that and the strategy of doing th- of the blockchain bond, it kind of dovetailed because the mayor is, even though he's not, you know, Eric will attest to this, he does not even have a computer in his office, is always looking for ways, always encouraging us like, look, we need to address this problem or how can we save money doing certain things this way? We're frequent issuers in the market. How can we think outside the box and do that? And so, I always say, Eric, who's embraced this technology and really drives a lot of these new initiatives, that's a strategy, right? I always look at myself as a tactician. Okay, like this is the blueprint we should use in doing this, and finding a better way to issue bonds. But I always look at, strategy always drives us, tactical, right? So if the mayor and Eric have decided that we need to address these issues, whether it's an underfunded pension plan or whether it's how do we drive down costs because we're in the market so much when we're issuing out bonds, what other technology, what can we kind of be first through the door of... that's where we can work as a team and we s- it's great to work in an environment like that, where that's embraced, as opposed to saying, you know, and especially in the municipal issuance bond market, it's a very, again, as kind of piggybacking off what Eric said, it's a very old school manual way of selling securities. And that hasn't changed in a long time. And we've had these conversations with our underwriters and they repeatedly remind us of that.

 Kyle:    I noticed that when you have large institutions involved with something that's been around for a long time, they tend to not like change too much.

 Rick:    Bingo.

 Eric:     They maximize that efficiency and they maximize efficiency.

 Kyle:    Right.

 Eric:     They've been around for long enough.

 Kyle:    So, is there any concern that opening things up to, I guess, more of the public would, I don't know if alienate is the right word, but would there be less interest from some of these larger institutions knowing that you're kind of messing with their setup?

Eric:     Well, this is where it becomes strange from our perspective. We are a security issuer.

 Kyle:    Um-hm.

 Eric:     The city of Quincy issues securities, and we issue a very unique type of security. We issue a tax-free bond that is backed by the full faith and credit of taxing authority mixed with the taxing authority of the state of Massachusetts, the highest HDI in the entire world, the state of Massachusetts. It's one of the most robust economies in the world. It's so baseline, it's such that, it's what you need to base everything off of because it's as about as risk-free of government, of investments you can have and be tax-free. So yeah, there might be some uncomfortability with it. And that's why I think the private sector would be less advantageous to be the first actors on it. So, could it alienate some investors? Like maybe, but they need us.

 Kyle:    Right.

 Eric:     They need us. They need access to tax -free bonds. And I think something that's interesting that's going to happen is we keep seeing large federal deficits. Regardless of the politics behind it, we see large federal deficits.

 Kyle:    Right.

 Eric:     That means that the market, we call it crowding out in economics, it means that the federal government goes in and basically crowd outs other issuers, and they pull in all that debt. And basically, anybody who wants to be a supplier of funds to be borrowed, that all gets sucked up by the feds.

And when you have trillion-dollar deficits, that becomes a real thing. Now this becomes this kind of beautiful dance that occurs afterwards, where it's saying these large institutional investors, they will buy up all those treasuries because they're great for your baseline rates. They're great for establishing, you know, in the Fisher equation, what is that, risk-free rate of return. But they still have the tax implication on them. So, what happens is, well, you still get that borrowing, and you still get that taxation, that's all good. And that removes a lot of dollars in the economy that could be used for borrowing. So, you might have a small pool of investors who just simply won't touch anything with taxability. And we do see, as Rick said, you will see that with some corporate investors.

 Kyle:    Um-hm.

 Eric:     But if that's a smaller pool of funds you're pulling from, they can charge a higher interest rate because of scarcity.

Kyle:    Right.

 Eric:     As you democratize debt and you basically say anybody can jump on these bonds, you're suddenly expanding that pool, which means you're suppressing interest rates without changing the underlying safety of this. Like if you can…

 Kyle:    Right.

 Eric:     You can make bonds more sellable, you just increase coupon rates. I mean, Rick could call and increase the coupon rate and sell a bond quicker. But we're fidu-…

 Kyle:    It doesn't benefit the city though.

 Eric:     Bingo, yeah, we're fiduciary so we can't do that. But instead, we can take this not as a demand-side issue but a supply-side issue and say, hey, let's let more people through the door.

 Kyle:    Right, right.

 Rick:    And I think, you're right on, Kyle, when you talked about, will this upend the apple cart a little bit? And it will, and I think there are some parties that it will, and I think, and the jury's out on this, but I think on the underwriters, the underwriter segment, that may impact them. Because if the transaction is that, so much more seamless now and transparent and immediate, do you need an underwriter to kind of go out and sell th- and as Eric mentioned, one of the main priorities that Mayor Koch has kind of asked us to kind of, that's why we're exploring this, is the opening up of the ability for Quincy people to buy bonds that fund services, buildings, activities, and infrastructure that they're going to immediately or directly benefit from. Yeah, that's the benefit there. And if you can open up that market and, to many investors and you know like Eric said, the impact on the interest rate they’re paying, do you need, and this is a question, it's a, more of a rhetorical question than a statement, but do you need the underwriter's service there? I think I go back to that unelegant(sic) example of the ATM. I think they're going to coexist. Are we going to no longer issue bonds to traditional negotiated debt? No, that's not the case, but this is also another resource for us.

 Eric:     And Rick, just to jump off that, that's a good point. See, I think, I do think the ATM example is good. I think underwriters are here to stay, because I think they're going to handle the negotiation side of, I think this is going to be very similar to the ATM. There's twice as many tellers today in the United States than there was when the ATM first came out.

 Kyle:    Really?

 Eric:     Yeah, but the tellers aren't doing the baseline repetitive actions. I think you're going to see a huge value increase of underwriters because they're going to come in and they're going to understand timing in the market, which underwriters already do that great. I mean, Rick works with, works with some underwriters, he can tell you all day long how good Ramirez is.

 Kyle:    Less of them can be dedicated to doing the administrative record keeping stuff…

 Eric:     Right?

 Rick:    Exactly.

 Kyle:    And more of them doing the skilled part of that job.

 Eric:     Right, you're going to have greater economic efficiency. I want to, just to editorialize just for a second, and Rick did a good job hitting on it. One of the big things when we talked to the mayor about this, this policy originated internally, but it also originated with Council President Ian Cain, who's been a very big advocate of blockchain digital ledger technology. His Qubic Labs actually hosts the Boston Blockchain Week here. And I sat on a panel with the CFO of Lugano, Switzerland, who actually sold the first municipal blockchain bond in the world.

And as we sat down, we have Ian Cain, who's a brilliant, brilliant guy, and understands this technology to really an impressive degree. And you know, when we started talking about this, we looked at the deal that was done in Germany that was, I think that was the first blockchain bond. And you know, he had this like, hey, like, you know, the city's always adaptive to new technology, and started talking through it. And it was cool to see, you know, the heavy tech driving policy side, but equally, it was awesome to sit down and talk with the mayor and the mayor is like, wait, this can democratize debt, like we can have people investing in Quincy? And to see those two lines of thought hybridize, to create a better financial environment and political environment for the average Quincy taxpayer, I was like, that's awesome. I was like, that's really unique to see policy collide. I really think that speaks to a lot of the financial decisions that get made in the city. Like the POB, Pension Obligation Bond, that we did. And even when it comes to, right now we have a $157 million bond that's pending for our downtown investment, which is going to have a medical office building and large commercial retail…

 Rick:   Specialty retail, specialty grocery.

 Eric:     We're not allowed to disclose yet. It's because we do this DLD above approach and yeah, maybe he doesn't have a computer in his office, but it's funny because he's never been afraid of technology on this stuff.

 Kyle:    Right.

Eric:     He gets experts, he gets the Ricks of the world, and he brings them in and he's like, hey, this is what I want to do. If we can create better access for the average Quincy guy, why wouldn't you do that? And I'm like, there's a lot of people in government who don't do stuff like that. They don't think that way. They want to maintain the status quo as opposed to always taking steps to create a better environment for Quincy, for people who live in Quincy.

 Kyle:    One of the, one of the thoughts that's come to my mind of like the implications that this could have, is just thinking that as a, you know, as Quincy residents, if you are wanting to, say fund some sort of improvement, and that's something that you believe in and want to support, now you suddenly have a way of influencing whether or not that project goes through.

 Rick:    Yeah.

 Kyle:    If everybody wants to subscribe to this thing and support this project and put their money towards it, now the rates are going to come down, you're going to get better return on the dollars that you're borrowing and it just makes everything better.

 Eric:     Yeah, and it's funny, when I sat down with the mayor after we had first started exploring this, so he said, this is what he said to us was, guys, I like the idea here, I like the concept here, but like, this is what he says with projects like this, anytime, same thing with the pension obligation bond. All right, sit down, devote time to doing this, do the homework, come back to me.

 Kyle:    Um-hm.

 Eric:     Right. And he is the Chief Executive for the city. So, we came back and talked to him and we went through everything. And it is funny, he gets the technology, he gets it. It's funny, if you talk to him, he'll probably be like, oh, I don't fully understand, I’m like you get it better than most people. And he says to –

 Kyle:    The smarter ones usually try to not…

 Eric:     Yeah, exactly. And so, he says to me, we're sitting there and, he's a very like end-goal guy. Like what does this mean when the rubber meets the road? He respects the technical aspect of it. You know- you turn the rudder, right? The technical aspect of it. But he wants to know where the ship's going when it's all, when it's all said and done.

 Kyle:    Is there an iceberg to the left?

 Eric:     Yeah, right. And so, his big thing was like de-risking it.

 Kyle:    Um-hm.

Eric:     Like what are my, I know we're probably talking about that in a few, but de -risking it. Is this a greater threat to the taxpayer? Is this a threat to the city's financial health? And the answer to that question is emphatically no.

 Rick:    Yeah.

 Eric:     In fact, in a lot of ways, it's safer to do it this way. But the second was, he said to me, he goes, from a pure, because he's lived in Quincy his whole life, his family's lived in Quincy his whole life, he is a Quincyite. And he was like, he says to me, he goes, so there could be a day where we build a new school, the example I gave earlier, and somebody's in line waiting to drop off the kid, and the school that's dropping the kid off is also making a dividend payment into their 401k, and I was like, yeah.

 Kyle:    That's awesome.

 Eric:     That's what he said, he was like, and we can do this with giving more access to the Quincy individual and in the long run, you know, potentially cutting down pretty dramatically on documentation costs? I told him, I go, sometimes it's called a Pareto improvement in economics. Sometimes there's just better choices.

 Rick:    Yeah.

 Eric:     And it was a lot of work. Rick usually takes maybe six weeks to draw up a, even a large bond deal.

 Kyle:    Um-hm.

 Eric:     And this has been about what, a year?

 Rick:    Yeah, yeah.

 Kyle:    Oh wow.

 Rick:    And there's a lot of things to work on. And all those benefits and all those, the impacts that Eric described, those are true. And I also think there's another thing that I think was really cool in being first. And it's not a metric, it's not something you look at and say, well, it's a decreased interest rates at this point, or your transaction costs, or your documentation costs have gone down, is that being first always, and this is what I give, I applaud the Mayor, Mayor Koch and Eric on this, really driving this point home. It's like, look, when you're first, you also, I mean, there's always some growing pains when you're first, but you also have the ability to kind of shape what future deals are going to look like. You have a seat at the table on how the blockchain, the selling of blockchain municipal bonds is going to take place. You know, you've done it, you've been through it. Other providers are probably going to seek you out because they know you're open to it. You'll have a say on like, this worked really well. This is where I think we could probably do better, because you already been through it.

 Kyle:    Right.

 Rick:    So being a, you know, being an early adopter gives you some advantages as opposed to like, well, this is a stance, this is, we've set precedence here. This is the way we got to follow, which is not necessarily true for early adopters.

 Kyle:    Right.

 Eric:     I mean, with our experience of the pension obligation bond, we acted fast. I was…

 Rick:    Bingo.

 Eric:     I was actually sitting in this room, December 12, 2021, we had a big TV over there and watching the sale come in, and we hit the bottom of the market, 2.62 % on it, and everybody was still trying to figure this stuff out. Like, oh, should we do it? Should we do it? And then rates jumped and it became, it's still economically feasible now, but it's not…

 Kyle:    Not like it was.

 Rick:    Not the margin you had. Again, to that point, like Eric's phone, being the Chief Financial Officer, you know, he was getting calls from Chief Financial Officers across the state. You know, again, it goes to be that, not that issuing a pension obligation bond you're an early adopter, it's been around for a while, but they were, how, you know, they were asking advice. How should we do it? Does this make sense? Does my math, they were sending Eric their homework saying…

 Kyle:    Right.

 Rick:    Does it make sense? So again, you have the benefits of already going through it. And so, you have your, your opinion matters…

 Kyle:    Right.

 Rick:    To other people who are looking into it.

 Eric:     Yeah, and I mean, that’s the benefit of having a very strong Chief Executive. Like, the mayor said I want to do this, let's start exploring it. And we were able to drum up like Milliman for our actuary services. We were able to form, what's the word we use? What do you have a, um, you have all the different underwriters, it has a cool name.

 Rick:    Oh, a syndicate.

 Eric:     Syndicate, yes.

 Kyle:    Oh, God.

 Eric:     It's such an awesome name, but we should probably not use that name.

 Rick:    It's a great godfather name.

 Eric:     Yeah, great godfather...

 Kyle:    Shadow council works well, too.

 Eric:     I would say kitchen cabinet, like under Andrew Jackson. But John Q. Adams is buried pretty close by, so I don't want to be insulting him.

 Kyle:    Well, one of the, when we were talking about upending the business and maybe potentially ruffling some feathers. I think the one that I'd be most concerned about would be the underwriters themselves, because it seems like they probably, seems like they have the biggest stake in the game. They're probably the ones who are, make the most money on these types of deals. But it seems like JP Morgan is the one that was basically developing the…

 Eric:     Yeah.

 Kyle:    Technology that this is being listed on. So, this isn't something that they're trying to suppress, this is something that they're embracing, and that's what's exciting…

 Eric:     Yeah.

 Kyle:    As I learn more about this project.

Eric:     Yeah, absolutely. You know, the guys who used to print bonds when they used to be in paper, are probably pretty upset when they moved to computers.

 Kyle:    Right.

 Eric:     Except those, except the guys who, you know, bought a website.

 Kyle:    Exactly.

 Eric:     And I think that's kind of what we're looking at here with, with like JPM is, you know, the Onyx platform was pre-built and, you know, they've been working on it for a long time. Like the JPM team is massive, very supportive, very candid. I think that was one of the things working with them was like, they're just honest. And one of the things I found very interesting working with JPM is they could explain everything. Every single thing they could explain on it. It's like talking to a mechanic who could tell you how the gap on a spark plug, it was...

 Kyle:    Right.

 Eric:     And we do expect that from our underwriters, and our underwriters for our negotiated debt sales do that with us too.

 Kyle:    Um-hm.

 Eric:     Like we can call Ramirez and Company, they'll tell us everything. Their bonding analysts down there are amazing. They're absolutely like top tier. Like really, they are. Kyle, we've talked enough, you know that I'm an analyst's analyst. So like…

 Kyle:    Right.

 Eric:     I mean that in my full nerd out, oh, how excellent they are. But I think it's innovation, like I think as we go through these processes, I think what you're going to see is underwriters become more valuable, because when you have an emerging technology, you need an expert. And as we have this emerging technology, you're going to see these underwriters who are willing to change and willing, not necessarily willing to change, but willing to be proactive in this. You’re going to, see them succeed. It's going to be more economically efficient.

I'm one of those guys who are like, I've said this before, I like Milton Friedman, not my favorite economist, but also like, in my to have an opinion on good economists. Sir Arthur Lewis is always my favorite. And he, It definitely didn't happen, but it's a famous quip, where he was in China and they're like, oh, look at all these people digging like a dam. And he's like, why are you guys using shovels? Why not have an excavator? And they were like, oh, because we have 100% employment with that. He goes, okay then give them spoons.

 Kyle:    Right.

 Eric:     He really was an excellent economist at trying to, like getting people to understand stuff.

 Rick:    He was. Yeah. I didn't wear my Milton Friedman shirt, t -shirt today. But as I said yesterday, he was very good about simplifying the economic theory to the masses where people could embrace it. That was always, I think, the value that he provided.

 Eric:     Yeah, I agree with that. I do think his theories on money velocity…

 Kyle:    Um-hm.

 Rick:    Well, he ended up being wrong, but…

 Eric:     But yeah, but like, I mean it’s…

 Kyle:    Still good ideas, the other ideas, right?

 Eric:     Yeah, I mean, is it his fault he didn’t see credit cards coming.

 Kyle:    Fair enough.

 Rick:    I'll just say this, Kyle, real quickly about…

 Kyle:    Yeah.

 Rick:    And to your point about the underwriters. Yeah, I mean, there's always it's new. It's a new technology in underwriting. There's always an initial hesitancy and trepidation because they’re like look, it's new and you don't need to do it this way. We've been, this has worked for so many years. Why are you going to do it? Well, you can try to thwart technology and advancement, but it's coming.

 Kyle:    Right.

 Rick:    And it's going to change the industry. Is it going to change it next year? Probably not, but it's going to take some time. And you can get on board or you can be left behind. And that's kind of, again, it's amazing. As, you and I talked, I came from a different world. I was in the private sector and I always thought like oh, okay Well, I'm coming to the public sector., they're not going to embrace technology. It's not going to embrace change. Well, I was really really pleasantly I mean really surprised. I think Quincy is unique about that too, and I think it goes to leadership, right? It goes to Mayor Koch and it goes to Eric and it goes to like a senior team Yeah, I thought I was going to be bored. I am not bored.

 Eric:     No, it’s really, it's like government's always a strange animal because you have some government that feels antiquated, you have others where it's like it feels very modern. I mean, and then we talk about Mayor Koch's influence on this. He's the ultimate pragmatist. That's one of the funnest things about working for him. When I got into government, I started working from zero, I was 21. But my background, my academic background, when I was going through it, was government was sometimes seen as antiquated, and government is usually antiquated, don't get me wrong. But it was seen as non-dynamic, and I thought that was interesting. And my mentor in economics, he actually, he worked, you know, he worked with the federal government…

 Kyle:    Um-hm.

 Eric:     And you know, he told me one time, he's like, you know, government depends on leadership. You know, you can be very innovative depending on who you're, who's running the show. And I've never seen that more than Quincy. Like I really, it is quite, I tell, like I have buddies from government all across the country. Like I'm an economist, so half my buddies work in the public sector. And I tell them what we do and they're like, you guys get to do stuff like that? And I'm like, yeah, and right now in Quincy, we kind of have this unique combination where you have our mayor who's pushing, who always wants to push innovation, how to make things more efficient, how to take the public dollar and get more out of it, which I love. That's my favorite thing about my job. I know it's as nerdy as that sounds, but I love the idea of you have X hundreds of millions of dollars. Can you get more out of them? Can you maximize that? And to have an ecosystem around here where that's the objective, where that's what, you know, the mayor wants to be done. But then you combine that too with right now the City Council, City Council President, Ian Cain, who know this, who really knows how this stuff works. And you kind of get like that moment where, you know, uniquely happens in government, where the environment's right to try and take on a new challenge. And a new challenge that, as we go down this road, could really strongly benefit not just the city's financial picture, but the citizenry. And you know sitting, right now we are seated 60 feet away from John Quincy Adams grave.

 Kyle:    Yeah, we were in there yesterday.

 Eric:     Yeah, like John Quincy Adams is credited with starting the public service in the United States. And we're actually sitting right below his office. So, this, where we're sitting right now, his office was above us when he was in Congress.

 Kyle:    That’s awesome.

 Eric:     I feel like it's full circle. I feel like that's what we're supposed to be doing. You know, we're not just supposed to mail it in every day. Like…

 Kyle:    Um-hm.

 Eric: We're supposed to come in and say how are we, we're a professional public service, right. Be a professional. A professional tries to take the resources they have and get more out of them every single day. I think this is an example of that.

 Kyle:    Yeah.

 Rick:    Yeah, and I think there's a great symmetry too. We didn't talk about what this money's going to be used for. So, it's $10 million. But I think the elegant symmetry of it is, we're using this avant-garde technology, right? And what is this, we're going to be issuing 10 million dollars of blockchain-based bonds And what's this money going to be used for? Well, it's going to be used for the old-school paving of roads, sidewalks, improving side streets, curbs, side curbs. So, I think, I think that like there's a, there's a there's a nice symmetry to that where you, you know, you're meshing new technology with old-school needs or municipal needs.

 Kyle:    You said roads, can you double that?

Eric:     We spent so much on it. It was funny, we went out to dinner last night and I know you guys are originally from out in Arizona, and I'm very jealous of the space Arizona has…

 Kyle:    Right.

 Eric:     And not freezing temperatures. So, we did a $100 million road improvement plan like four or five years ago and I remember one time I was up in front of the, I think I was up front of the council and I was asked, well how much road liability do we have? And I was like, that's a wicked smart question. And so I was, I want to sit down and do this. $800 million is the roads in Quincy.

 Kyle:    Wow.

 Eric:     So, like a hundred million dollars is a great start and a great movement, and you know, we get about $2 million from the state in Chapter 90.

 Kyle:    Um-hm.

 Eric:     But it's just like so much, it's just so much road liability because like the minute you get a crack in a road, you're you’re hosed.

 Kyle:    Right.

 Eric:     Like because of where we live, it's like freeze, thaw, freeze, thaw, freeze, thaw, rips it apart. Though the left turn, you, Kyle, not to go off topic a little bit, but you have, you guys have some pretty heated opinions about the left turn lanes?

 Kyle:    Yeah, yeah. It'd be nice to have them.

 Eric:     I think Laura brought up a funny point when we were at dinner. She's like, yeah, you guys were in Oklahoma City and they don't have left turn lanes anyways, like at least they have space to do left turn lanes.

 Kyle:    I know, right?

 Eric:     I will say, Kyle, you had a point about Massachusetts drivers just not staying in their lane.

 Kyle:    I do want to say, if you're listening to this in your car, just let somebody in.

Eric:     Yeah, that's what I mean.

 Kyle:    Make somebody's day nicer.

 Eric:     Yeah, that's why you can't see the yellow lines because it's just rubber on top of them.

Kyle:    So, we kind of talked about the vision of what you guys think this is going to lead to. Does JPM share that vision since this is ultimately their technology that it's listing on? Do they have plans of creating a secondary market or an exchange where these can trade maybe on a daily or weekly or monthly basis? Or is this going to be something that they package and stick into their 401k type options that you can choose for your retirement?

Eric:     Yeah, so I think we can, and we’ll bounce back and forth…

 Rick: Absolutely.

 Eric:     On this one. So right now, so it's in its, from a proven technology base, this is a mature technology in terms of like, they know how the system works.

 Kyle:    Um-hm.

 Eric:     But it's early market for how it interacts with third parties.

 Kyle:    Right.

 Eric:     Like the city would never engage with a technology that's not proven out beyond a reasonable doubt.

 Kyle:    Right.

 Eric:     And, you know, like I mentioned earlier, this technology is a lot safer than in many cases than traditional, non-digital bond payments because it's blockchain. Like there's literally not enough computing power on the average, even, you know, you could get a bunch of computers in time together to break, you know, that data continuity. And also like the way the bonds are paid, like right, I don't know if people know this, but when you pay a bond, it gets wired in, and that wire has to be done in a certain time to an intermediate US, like for us it's US Bank. And if that wire doesn't hit in time, even if the city put it in early enough, that can result in a default. So that's why Molly Smith, our Treasurer, on days of bond sales is…

 Kyle:    Frazzled?

 Eric:     Yeah, no not frazzled. She's very cool, calm and collected.

 Kyle:    Yeah, yeah.

 Eric:     But she can be very assertive in making sure that the city's wire is top priority. And our banking partner is always very happy to oblige to that.

Kyle:    We showed up for this like 15 minutes early. And I can't stand being even late for minor appointments. I can't imagine having something like that hanging over my head.

 Eric:     $10 million bond.

 Kyle:    Yeah.

 Eric:     And so, with the JPM technology is that we have a JPM account, and it's automatically taken out of that.

 Kyle:    Oh, that is awesome.

 Eric:     And automatically pays across a digital ledger to all these people. And that's only possible with digital ledger technology, with blockchain technology. Now, JPM's vision, you know, it's kind of hard to speak for JPM. So, I don't want to like, I'll say like our perspective, or my perspective on how I view JPM's process on it. I think JPM is excited for this. I think JPM sees themselves as like, you know, they already have people on the platform, and it is about the secondary market. I think they're trying to create an entire ecosystem…

 Kyle:    Right.

 Eric:     And forget about Eric Mason the CFO, but as an economist, I'm excited for that. I like when somebody's like, let's create a new market and lower the barriers to entry. Let's make it more efficient. Let's make transactions as quick and as seamless in settling. That’s the thing about blockchain, you can settle immediately.

 Kyle:    Um-hm.

 Eric:     I'm excited for that. I think that, I bet that, you have the, you have JPM, which is like, you know, the size of a country when it comes to…

 Kyle:    Oh, I know.

 Eric:     Its economic power. They got some smart, motivated people in that office, who I bet they have plans for 30 different ways it could go. And I know one of the plans they have is going to be right. I know that.

 Kyle:    Right.

 Eric:     My thing, and I’ve said this on some of the calls with them, is I'm like, I think there's a good chance it's just massive headwind, sorry, tailwind. I think it's just an opportunity where once people have access to this platform, from the biggest guy to the smallest guy…

 Kyle:    Um-hm.

Eric:     It's going to become you know, the easiest way to trade on the secondary market, municipal bonds, and you're going to create, or any bonds in general, and you're going to create that velocity. And once you create that velocity, I think it's a self-sustaining reaction.

 Rick:    No, you're absolutely right. And to your, to the part of your question, Kyle, where you talked about like, you know, they're looking to create a secondary market to (inaudible) and the answer is yes. The answer is yes because, you know, while we were going through this deal, and one of the reasons, you know, the timeframe for us was, we needed the funds at a specific time and we wanted to take, we wanted to take, explore this avenue. So, it kind of, it kind of worked out really well as to why we're doing it in April. But you know parallel to that, JP, JP Morgan is having conversations with other people who, other firms who are large or kind of your usual suspects. I'm not going to mention them but, who wanted to take part in this and they wanted that, they would have, they would have been on the primary issuer or the primary buyer of the, of these bonds. At the time it isn't working out for them, but they are in line and they are planned to be in that secondary market.

So hypothetically, you know, JPM buys these bonds and they want to sell them in two or three years. They have certain firms that are already in line saying, yeah, we want to take part in this process. And, you know, and Eric and I have been on some of those calls where they kind of, because of our backgrounds, we've been on some of those kind of, I don't want to call them due diligence calls, but those introductory calls and to…

 Kyle:    Right.

 Rick:    Explain their technology, and how this works, and our timing and everything. And the response has been very, very, very, very positive to the point where, again, some of the firms are like, yeah, we want to take part in this. And that takes some time. You have to have a custodial relationship with JPM. That takes some time. You have to open up accounts and things like that. So, it probably won't, you know, the real simplistic way of saying it is probably not going to happen in this go-round. But I can see in subsequent issues that they are going to have a secondary market already built out because, so they are working on that end as well as, as well as, completing this this issuance, they are working on building up that secondary market lineup of investors as well, so.

 Kyle:    We've talked a bit about like how… the process itself. I think you guys mentioned in the beginning that the process for this one isn't necessarily any different than any other bond that you guys have issued in the past. The only difference is that the blockchain is integrated on this, and it's got the potential. So, were there any other potential risks with pursuing this route? Was it unanimous with the council supporting this? Because I know even with the pension bond, I think there was some, at least one person who was trying to fight that.

 Eric:     So, to kind of answer the first section about the council approval, the State of Massachusetts is kind of weird. So, the chapters that basically allow the council to borrow, so the council votes to authorize a bond sale, and it's an executive function on how you sell those bonds.

So, you have the option, which a weird thing, you could probably place debt messages, it's like, I could go to a bank, or actually, let me rephrase, under the law, Molly could go to the, the Treasurer could go to the bank. Like yeah, I have authorization to borrow $30 million, and if a bank was like, yeah, sure, here you go. Completely allowed to do that, which is wild to me, right?

 Kyle:    Right.

 Eric:     Then you have the option of competitive debt sales, which is a, you know, everybody puts their bid in on a day, rip it open, and you sell to the lowest bidder. Negotiated debt sales, which really, we do competitive debt sales usually for (inaudible).

 Rick:    Yeah, yeah, yeah, because you're right that just, we're just rolling over most of it.

 Eric:     Yeah, we’re rolling over most of it. It's it's lower issuance cost It's a, it's a better strategy. And then negotiated debt is for you know bonds because it's much longer term and that's when you know Rick get- Rick and our underwriters get to fight it out in the free market in one of my f- most beautiful dance in the world Then we have like, we have options like this. I mean, this is really more like a negotiated sale, or maybe, this is probably closer to private placement…

 Rick:    Private placement, direct placement, that’s…

 Eric:     Direct placement, that’s the term I was looking for.

 Rick:    Oh, yeah. Same.

 Eric:     So, while the City Council authorizes and endorses the debt for the purpose of roads and sidewalks, they don't, by statute and by charter, play a role in the actual, what the mechanism we use.

 Kyle:    The mechanics of how it’s done.

 Eric:     With that said, like, Ian Cain, the President, Council President, he's somebody who we have sought advice from and sought knowledge from on this, and he's been supportive of it. But that doesn't result like a vote for it.

 Kyle:    Okay.

 Eric:     In terms of the process, the hardest part about this process has been sussing it out, for lack of a better term, is to understand it. Because at the end of the day we're fiduciaries, which means we have to completely understand the financial position and the financial process we're putting the city into. Rick and I come from very different backgrounds and that's part of the reason we work very well together. Rick is a traditional finance expert. MBA, CFA, everything you want to see on the side of it. I'm some dude who's really good at R programming and likes to ramble about economics.

 Kyle:    Among other things.

 Eric:     Among other things, yes.

 Rick:    An MBA, a Masters in Economics and published Economics, I think he's downplaying a little bit, but yeah. We do have slightly different…

 Eric:     Yeah.

 Rick:    But he's by no means a financial hack, okay? Let's not, let's not…

 Kyle:    No, we know that.

 Eric:     Yeah, and one of the parts that really makes it work on our side is, my entire professional experience has been in public finance and Rick has done great in public finance but has an incredibly impressive private finance background. So, when you bring on new technology like this, you get a lot of coverage. And so, we were able to put together, I I don’t know I guess I would call it like a dossier…

 Rick:    Yeah.

 Eric:     Of questions and understandings. And you team that up with people like Rick Manley out of Locke Lord, Mike Mettinger, those guys…

 Rick:    Molly Smith, our Treasurer.

 Eric:     Molly Smith, our Treasurer, who, she comes from a private sector background and then she started at CDBG as their Finance Director. So, she knows the, she knows the federal grant side. Now she's the Treasurer for one of the largest cities in New England. And then you get like Sender(sp?) and…

 Rick:    McNerney(sp?).

 Eric:     McNerney, and Lisa Driscoll(sp?) from Hilltop Securities, and you got Dr. Dormey(sp?) and Dr. Eric Olson(sp?) from Dorminson Consulting, and you just keep expanding this, and John O 'Keefe(sp?) and Justin Natal(sp?) from Blockwise and there’s whole roster of individuals who honestly, I'm probably forgetting some of them now, and I apologize. But we basically put that team together and said, okay, break this.

 Kyle:    Um-hm.

Eric:     Break this, tell me this is stupid. Make me not want to do this. I, like I want, it's like, I say this to my auditors every year, I say this to Jim Powers and Todd Juresky, of mark- Markham in Boston when they write my management letter. I'm like hurt me. Everybody I want you to tell me, I'm not doing everything perfect, that's impossible. I want you to write that down. And and we take that same approach when it comes to this, to this deal. The problem is that it was just a lot more stuff to go through.

 Kyle: Yeah, right?

 Eric:     But our big concern on this was federal regulation. I got to tell you, it was Bondwich(sic), is that the…

 Rick:    Bowditch, yeah.

 Eric:     Bowditch, yeah, which was JPM's, JPM was, brought on the team to look at the legal side. Those guys, they were thorough. They were very, very thorough. And so, then you partner with, you partner with JPM and we go through this process and it took like a year to go through…

 Rick:    Yeah.

 Eric:     To understand everything.

 Rick:   All in, yeah.

 Eric:     Because as fiduciaries, we are never going to enter the city into a position that, if we have the option to sell a bond traditionally, we should do that…

 Kyle:    Um-hm.

 Eric:     Absolutely. Unless there is a mechanism that can protect or promote the financial health of the city. So, if at any point during this process, there was something here that was going to be a threat to the financial security of the city, it would have stopped immediately. In fact, that was one of the mayor's first directives. He said, I'm interested in this, I love the idea, I keep going back to the concept of a Quincy resident investing in Quincy and getting tax-free returns. That is an awesome idea. That does not, there's no negotiation to a threat to the city's financial health.

 Kyle:    Right.

 Eric:     And as we went down this road, we had v- what we very quickly realized is that this offers protections that traditional bonding could never offer. One is the, we've had cy- it’s been public, we’ve had cyber security issu- threats at the city. And no- we had one where our ERP got assaulted, and I got to tell you, Brian Glavin(sp?), the IT Director, and Brendan McVeigh(sp?) who run, who basically run our ERP, they never got any sensitive information. The system worked perfectly. I made a comment on a due diligence call one day, I go, you know, we found out the airbag worked.

 Kyle:    Right?

 Eric:     We don't want to know the airbag worked, but we found it out. So, we understand, we've went through that. We've went through being locked out of MUnits, because that's our ERP, because it shut down when it detected a threat. And they did a good job, the system was in place, but we couldn't even get into our own system. So, we were like, Rick was calling up one of our banking partners and being like, hey, can you print a bunch of money market checks for us?

 Rick:    Immediately, or like by Friday, yeah.

 Eric:     And of course, our banking partners were like, yeah, sure. I'm like, wow, I did not expect a yes from that. So, we have a little bit of sensitivity to that.

Kyle:    Also, I just want to get a quick shout out to your IT group here. I've never met a more polite, helpful IT group anywhere.

 Eric:     Oh, yeah. Rich is the best. Oh yeah, our IT guys are awesome. Richie's pisser, like he’s just…

 Rick:    Yeah.

 Eric: You call him up with a, he ‘s one of those dudes that likes challenges too.

 Kyle:    Yeah.

 Eric:     Who is like ooh okay, I'm going to give this a try. So, we're really sensitive to cyber threats.

 Kyle:    Um-hm.

 Eric:     And you couple that with like Councilor Cain’s background in this, we all kind of get that, we're all familiar with it. And you know, it's kind of like, I'm a nerd. You guys know that, like I love this. So, we start talking about blockchain technology and it's like, well, you know, we have cyber security threats. And I had somebody, I had a, I forget who asked me one time, but they were talking about basically the difference between like, you know, what is like a blockchain? And the example I always give, Kyle, if I said it to you before, is it's, you know, the first blockchain was a passport. Like you can walk around with something that you carry and it can tell you where you've been, how long you were there and all that stuff.

 And I said the block on that blockchain carries such a near impervious ability to be hacked solely because it's just so dense, the numbers. It's just the ability, the encryption to break a blockchain is a comically high number. You couldn't get a computer to do it. I mean, you could get a quantum computer to do it, and obviously some of the tests are on like the new 28 or 20-bit, 20-qubit computers and stuff like that, have been able to break stuff like this. But even they struggle.

 Kyle:    Um-hm.

 Eric:     Even they really do struggle. So, it's like…

 Kyle:    Wow.

 Eric:     You would have to have like an entire nation putting resources, even honestly, like most nations on earth couldn't even gather the resources to attack a blockchain. But if they ever had to attack a digital bond, I mean, they're safe, don't get me wrong. Digital bond sales are safe, they're incredibly safe, they're incredibly encrypted. This is just a greater level of encryption.

 Kyle:    Um-hm.

 Eric:     And so, when I look at it, I go, what's the threat here? It's a safer process. Oh, and by the way, the fact that they just pull the money out of your bank account and immediately distribute it.

 Kyle:    Eliminating that headache of…

 Rick:    Yeah.

 Eric:     Right.

 Rick:    And to your question, Kyle, about, you know, was there any, you know, I don't want to say pushback, but was there any concerns and the risks and de-risking? A lot of it was on our side, in terms of like going through scenarios of, what if scenarios, right? In Eric’s world, you have an economic proof, right? Okay, so you put out that economic proof. Now every other economist is testing that proof to make sure it's airtight and it makes sense. And we did that as well too. And the doomsday scenario would be like, what if the Onyx system goes down, right? What if technology blows up, right? How are you going to do your debt payment, right? And kudos to Molly Smith, because she always brought that up. It's like, okay, what if the systems go down the day that we need to make a million-dollar debt payment that is supposed to be immediately taken from our blockchain depository account to JPM so that they can pay our…

 Kyle:    Right.

 Rick:    Bondholders? Well, we have a failsa- we have a backup plan that we can always go back to a traditional way of doing it as well. So that never goes away. But so, I guess that's a kind of a long -winded answer to your question as to, you know, how did you kind of, was there any concerns about risking, and the risk inherent in this? And Eric's right, the security, it wasn't our concern. It was, what if we can't make our debt payments? And believe me, we spent enough time on that through Molly Smith, Eric, Rick Manley, our bond counsel to make sure there were things in place to say like if hell went to a handbasket, we'd still be able to do business as usual.

 Eric:     It's a- and again, JPM was incredibly up-front walking us through all this. I'm sure they probably, I mean, we asked every question probably three different ways. And, you know, it was, you know, it's funny. I mean, it's, we know how these process work. So, it was just pure de-risking, and we spent…

 Rick:    Yeah.

 Eric:     A long time getting through that. I mean, it's not like they were building the Onyx platform as we were doing this.

 Kyle:    Right, right.

 Eric:     It was, it already existed. We were poking and prodding it just seeing how it was, it fit with us.

 Kyle:    Seeing if you can break it.

 Eric:     No, exactly. I mean, cause…

 Kyle:    Yeah.

 Eric:     Here's the thing, we could walk away at any point we wanted to.

 Kyle:    Right.

 Eric:     And go issue this bond. If we said, ah, we don't want to do this work, can you go issue this bond? We're going to have that debt in the market within 24 hours, it would be all bought up, and it would be no issue here.

 Kyle:    Um-hm.

 Eric:     But we were like, let's take this opportunity to see if we can kind of redefine the game here, and bring this closer to the individual, to the individual citizen.

 Kyle:    So eventually then, what is, what do you think that process is going to look like? Do you think the public will ever be involved in like the initial offerings, or is this going to be probably something that's relegated to the secondary?

 Eric:     So, the long-term goal is is primary issuancy, and I know that sounds crazy, but like that's our goal.

 Kyle:    It does, but doing it through a blockchain type platform or blockchain-based thing seems like it makes that a lot more feasible.

 Eric:     Yeah, like the ideal goal, and this is like, if somebody said, Eric, you can create the ideal situation, it would be a blockchain that would be available to be purchased day one, right. By, as a primary issuance, on a unit basis of a penny.

 Kyle:    Um-hm.

 Eric:     That would be perfect. Now, there's some practicality to that because you still have underwriting and stuff like that, you still have the, right now, there's been multiple times in the United States where people have done local preference bids. And people can call in and try and place a bond order. That can be a little problematic, because I think a lot of people are confused how municipal bonds are sold, where you're putting in a rate, like, hey, I'll give you 3.5 % on this bond. But somebody come in and say 3.47%. And I don't want that individual to feel like, oh, did I just lose out on the bond? Well, technically you did, because there is one rule that we alw- not one rule, but there's one primary thing that Rick and I always have to consider, or Rick, Molly and I, as the fiduciaries involved in this, we need to get the best price for the city.

 Kyle:    Right.

 Eric:     And that's our primary goal. Now you can make considerations for efficiencies over time and stuff like that, like any interest rate analysis you do. But you just can't say, oh, if you live in Quincy, you get an extra 1% on the bond. We're not allowed to do that.

 Kyle:    Yeah.

 Eric:     What I think is going to end up happening, it's my personal belief here, is that you're going to see, and this has happened before with local preference issuance. You're going to see local preference issuance, but you're going to see it on a blockchain basis, which are going to allow people to engage in it similar to a trading platform. You're going to be able to put in, like, you know, when you buy an account, (inaudible)…

 Kyle:    So, like an IPO where you try to subscribe to it?

 Eric:     Right, or an option where you say, I'll buy it at this price. And you'll have this giant pool of investors. It won't just be Quincy people, it'll be anybody all over the country who will say, I'm willing to pay this amount, I'm willing to pay this amount. It will just operate like an ask/bid process. And after the day of sale, click, you log in the next day and you see that, oh, hey, you got $10,000 at the rate you wanted. That's the ideal scenario. And there's nothing really from a technological standpoint stopping that right now. What's stopping us right now from doing that, and I don’t mean us as in Quincy, I mean us as a financial market, is that it's a new technology.

 Kyle:    Um-hm.

 Eric:     It's like, you didn't just, they didn't just make the car and start racing them, right?

 Kyle:    Right.

Eric:     Yeah, racing was very dangerous. (Inaudible). And because this is heavily regulated, as it should be. You know me, I'm not the biggest guy saying everything in the world should be regulated, but financial assets should absolutely be regulated. I do think there's a little bit of a curve as the federal regulation gets comfortable with this. I think once they see that you have increased security, you have increased actors in the market, so you're going to be suppressing interest rates, and democratization, it becomes a very weird thing like what's not to like about it. But the long-term goal is that, you know, you're, it’s 7 p.m., you come home from work, you're sitting in your house in, I don't know, Hough’s Neck, you got your iPad in front of you, and you're like, oh, Quincy's doing a new fire station, all right, let me, oh, okay, can I get 10,000 and I'll put my bid at 3%.

 Kyle:    That's right down the road, yeah, I'd like to have some better fire protection.

 Rick:    My kids are going to that school, are they building a new school in Squanto, (inaudible).

Eric:     They finally, they're like, oh yeah, they paved my road. I can have, put Kyle's left turn lane in.

 Rick:    More immediate.

 Eric:     But yeah, so yeah, the long-term goal here, I know we, I know we, I I sound like a broken record, I keep saying the word democratization, but it really is, it's bringing it to the people. Government shouldn't be picking winners and losers. It shouldn't be like restricting markets just because somebody has more zeros in their bank account. That shouldn’t happen.

 Kyle:    And we've talked about it in the past, I don't know if that's ever been on any of the episodes we've recorded, where you talked about an experience in Oklahoma sitting on the energy board?

 Eric:     Yeah, yeah, on the Tulsa energy board. It was something funny, one of the guys I sit on there, he's a, the head of a pretty big company, so I'm going to refrain from saying his name. But he's a good man. He's had a very successful career. And he's from Oklahoma. And he wanted to buy bonds that being issued in the municipality he lives in. And he was basically told he wasn't effectively liquid enough or wealthy enough to open an SMA to buy debt. And he was like, he kind of asked him, he's like, well, so nobody can do this. And I thought about that and I said, okay, the system's broken. It's not even that it's just excluded for people who are high-net-worth individual, ultra-high-net-worth individuals. This man would be beyond that.

 Kyle: He’d be way up there.

 Eric:     It's like, no, the system's broken. Not broken, broken is a bad word. I don’t want to use the word broken, but it's…

 Kyle:    It's not efficient.

 Eric:     It's not efficient and it's not built for the people that a city serves, which is its citizenry.

 Kyle:    Right.

 Eric:     Let's try and keep, so to me It's like let's keep that $25 million in Quincy.

 Kyle:   Right.

 Eric:     And you know when Rick and I talked about this, and we worked with the mayor on it, and you know he hears about you know, increased access to, you know better financial vehicles for individuals. Keep the $25 million you know, pumping and flowing through the economy of the city. And you mix that in with the council president who gets the technology and is interested in it. We were just in a very unique circumstance in Quincy where we had the will to do this.

 Rick:    Correct. That's a big part of it. And, you know, I'm going to tie this way back to kind of the point Eric made early when we first started talking is, could you go to Fidelity and buy a municipal bond mutual fund? You could. You know, the transaction costs and the management fees would probably be a little bit higher. But the thing is, you know, as he alluded to, you don't know what's in that bond. If you want to invest in Quincy, Massachusetts debt because it's going to fund those projects that are important to you, you can't do that. You could maybe buy

 Kyle:    Right.

 Rick:    A New York bond or Massachusetts bond that, you don't know what those underlying issuing, securities are underneath. Or you can, but there's a pretty good chance they're not going to be 100 % Quincy debt or they're not going to be even a majority of that they're going to be all over…

 Kyle:    It's going to be a basket of…

 Rick:    It’s going to be a basket, now if you just want that bond that's fine. But this is totally different. This allows you as, like you said, a Quincy residence to be like, you know, I am really a supporter of the new school that's going in and I know they're issuing debt to fund that…

 Kyle:    I want to make sure it goes through, I...

 Rick:    I'm here for that and…

 Kyle:    Yeah. 

Rick:    Here are my dollars that vote with that. You can't do that right now You can't do that right now. You can get municipal bond exposure, but it's a it's a different animal.

Eric:     Yeah, and no, Rick, just to jump off, that's an excellent point. Obviously, your background, you’re going to know this a lot better than me, but like, the systematic risk in municipal bonds isn't really the same as systematic risk in say, like equity. And when I look at that, I go, okay, like so Quincy, if you're buying a municipal bond, you're not just buying something that's backed by the full faith and credit of the city of Quincy and our authority to tax. There's all these other systems, like Massachusetts and all these other prerequisites that are required that really secure up that bond. And you may say, oh, you have these ginormous municipal funds like Rick just brought up. I don't really think if you look at the percentage, and Rick, yell at me if I'm wrong here, if you look at the risk of exposure, it exists the same as the difference between an ETF and an individual stock.

 Rick:    No, that's right.

Eric:     Again, this is why Rick is very valuable to have around. Like I'll ponder, like, let me think about something, and half the time Rick's like, well, no, Eric, that's not how that works. And the other half, he's like, no, you're the right track.

 Kyle:    Right.

 Eric:     But yeah, it's just been a really interesting opportunity to kind of do something that, I don't know, to be honest with you, to do something that I never thought would be something that would be done. And certainly, nobody thinks of government ever being the first guy to do anything like this.

And you know, that's, I had to give a TED talk on this, you know, government's different at the local level, we’re just different. I think the functionality of it's going to be crazy. And you know what's funny? Lugano, Switzerland, that issued the first one, they're a municipality, like they're a local government.

 Kyle:    Right.

 Eric:     So, it's like, no state's done it yet. I mean, we had some people, you had the Marshall Islands, you know, try out, they never really did it.

 Kyle:    Yeah.

 Eric:     They try out, you know, the Marshall, I think they called it the Gold or something like that, but the Marshall Island. But that was more like a blockchain -based currency. Estonia has like the E coin, but that never really took off. Russia had like that Petro coin and so did Venezuela.

 Kyle:    We don't worry about what Russia does.

 Eric:     Yeah, two heavily sanctioned countries coming up with a crypto, with a blockchain currency. It was not super smart.

 Kyle: Right.

 Eric: Yeah, I don't know where I was going with that, I was just saying local government.

 Rick:    No, and I think you're absolutely right, and this is where you probably, your opinion probably, you could weigh in on this is, yes, it is surprising that like, it’s you know, the local government that's embracing new technologies, embracing new ways of issuing their debt. But I don't know, Eric. I think, I don't know if there are a lot of municipalities who would do th- who would have the fortitude, let's say, to say, like, no, let's break through the glass. Let's be the first one through the door, doing all your due diligence and testing it and making sure. I think most municipalities would be apprehensive and be like, well, let's make sure it's been done, that precedence has already been set, and as opposed to saying, like, you know, with you and the mayor saying like, let's try this, let's do this, you know that’s…

 Eric:     Well…

 Kyle: Somebody’s got to go first.

 Rick:    Because, and I don't, because full disclosure, this is the first municipality I've ever worked with, and maybe there are kind of more other, you know, maybe larger cities that have this tact, but that would do this. It's just not the way they do business, there are more traditional ways and you have to have someone, you have to have a leadership that's open to doing it differently.

 Eric:     Yeah.

 Kyle:    Yeah, when you're reporting to, you know 100,000 people, it makes it hard to take risks.

 Eric:     Yeah.

 Rick:    Yeah, there's an aversion.

 Kyle:    Yeah

 Rick:    There's definitely risk aversion, yeah.

 Eric:     Yeah, and I think what's kind of funny, something I've noticed with municipalities and kind of what we're doing here is, they ta- you guys said the word perfectly, it's risk. And they go, is this a risky process? And some of the people we've talked to on this so far, in private, we obviously don't disclose the process or anything like that, but just kind of the general idea. And I hear that word risk, I hear that word risk, and there's, in government there's this kind of assumption that change is risky. It's not always true.

 Kyle:    Right.

 Eric:     You know, and we looked into this process, I would make a bet that we looked into this process on how to issue a bond on this platform, and through this process, better than most municipalities looking at how they do their negotiated and competitive sales.

 Rick:    Yeah, right.

 Kyle: Yeah, that…

 Eric:     We understand this process every, single byte and bit of this. And so, when I talk about risk, and I look at that, I go, yeah, it's risky if we didn't do the due diligence, but a year worth of homework, the same thi- and I saw this, we were able to talk more publicly about the pension obligation bond, because that was a little different. I saw that with the pension obligation bond. I saw individuals like from other municipalities call to talk to me, and I got lucky enough to have the Hill to pick up that op-ed. So, I got calls from all over the Commonwealth and all over the country asking me about these. And they, it sounded the exact same. It was like risk, risk, risk. And I kind of said, what's your alternative? And they go, well, just pay the unfunded liability. I go, so you pay the unfunded liability, I go what’s your discount rate? Like 7 .1%. Okay, so you can borrow that at 2.6%. So, where's your risk? And they were like, what do you mean where's my risk? I have to pay back the note. And I was like, and you have to pay the unfunded liability. I go, in economics, we talk about things on the margin.

 Kyle:    Um-hm.

 Eric:     We don't talk about risk. We talk about riskier. We don't talk about, you know, we always talk about the change in things. And so, I said to them, I go, your risk is not doing this. It's called opportunity loss.

 Kyle: Yes.

 Eric:     And that, opportunity cost is one of those weird things where you can't physically see it. So, it doesn't feel like somebody's taking something away from you here.

 Kyle:    Right.

 Eric:     It's an opportunity cost environment right now.

 Rick:    It's funny, I do ha- that’s, you're bringing me back, Eric. I remember that conversation we had with the mayor when we talked about it. I know we're talking about blockchain, but we did talk about the pension obligation bond. And there was, it was like, well, there's risks. I remember the mayor distilling it so, you know, simply. He’s, well, I still have the unfunded liability, right?

 Kyle:    Yeah.

 Rick:    Yeah. We still have to pay that, right? Yeah. And we're paying it at this rate, right? So, I can't risk that away.

 Eric:     Yeah.

 Rick:    This is a way of just moving it on the balance sheet and having more favorable terms, right? I was like well, yeah, that is actually the right way to look at it. That's why we did it.

 Eric:     You refinanced it.

 Rick:    Thank you, yeah, we refinanced it.

 Eric:     That was very funny. He always cracks me up, because he was just like well, this number is 7% and this number's going to be two to 3%.

 Kyle:    Right. 

Eric:     So, I want the two to 3 %, and I was like, I love working for this dude. I love working for this man, it's awesome. He just, like some people just, and I do love that ultimate pragmatism, that is a rarity in government, I've noticed in my decade being around government of just somebody who's like, here's the ups, here's the downs, and we're just going to pick the better one. It's okay not to just follow the herd. And I think that's the opportunity we're looking at right now.

 Kyle:    And it's not like you guys didn't protect yourself too. I mean, I think you said at any point you could have pulled out of this process…

 Eric:     Yeah.

 Rick:    Yeah.

 Kyle:    Any step of the way.

 Rick: And Eric said this too, that JPM's been a great partner. So don't get me wrong. They want to get this done because, listen, we'd like to be altruistic, but everyone has their own selfish reasons for doing it. We want to be first because we think it's going to ultimately be beneficial to the city. It's going to save us costs. It's going to save us. Be more efficient, save us time, liquidity, and all those things. And JPM wants a, they want a feather in their cap too.  They want to pr- not that this isn’t a proven platform. They've done other transactions, but...

 Kyle: But that's what makes capitalism amazing is when…

 Rick: Exactly.

 Kyle:    The interests align.

 Rick:    JPM can't be like oh great, Quincy's willing to do this if it doesn't go well, it doesn't go, like JPM doesn't want that headline risk, right? Like they are a, they are the gold standard when it comes to investment banking, private banking, you name it, and traditional banking. They they're going to move heaven and earth to make sure this thing goes as seamless as possible, and that they get the headline advantage to it as well. And they have the resources and deep pockets and reputation that can ensure that.

 Kyle:    Um-hm.

 Rick:    So that's one reason we decided to go with a captive platform with JPMWare. You have to be on their, to take part in this, you have to be on their, you have to have a custodial relationship with them.

 Kyle:    Um-hm.

 Rick:    That's a, that’s kind of a sleep well at night factor for this, right? Like you’re not dealing with a fly-by-night service.

 Kyle:    It's not the Royal Bank of Scotland.

 Rick:    Right, right. I think they do, I think they should be fine. I think they're well capitalized.

 Eric:     Yeah, it is funny working with JPM. It's funny you know, you work with that team, and they almost don't act like, not act, but they're your partners, and you're going through it and all this stuff, and occasionally, I'll just be on the calls like yeah, but you're JPM. You have more financial autho- have more financial power than like, every country that's not like the United States and China.

 Kyle:    Right.

 Eric:     Like the UK and JPM probably have the same ability to fluctuate markets.

 Rick: True.

 Eric:     But they're very respectful not to just be like, we have trillions of dollars, we can just deploy at something.

 Rick:    Yeah.

 Eric:     But yeah, it's kind of funny to work with them because it's just that again, they're not out there being like, we're JPM, we can handle this. Like it's a $10 million deal. It's not, I mean, that's not even, I would be surprised if $10 million is material in their financial statements.

 Kyle:    Oh, that's probably a…

 Rick:    That's a rounding error thing.

 Kyle:    Yeah, exactly.

 Rick:    Rounding error.

 Eric:     Yeah, but they give you the same amount of respect and treatment as if we were doing like a $2 billion deal with them. And I kind of like it because I think this has been a lot of work in this process for everybody, for everybody. I mean, Rick's on calls two, three times a week with their team and his team, and it's 20 people, 25 people on the call.

 Rick:    Right.

 Eric:     It's gotten to the point right now where it's kind of funny, because we were tal-, the Treasurer's on the calls too, and I was on a call, I feel like it was on Friday, and they're redoing all the windows on the side of the City Hall. And so, it's like, there's a crane up there, so I'll be on the phone, and there will just be, or I'll be on the Zoom call, and there'll just be a head of a guy rising behind me on a scissors lift, like repairing a window. Nice guy, seems like a nice guy.

 Kyle:    Yeah.

Eric:     Waved at him. Ask him if he wants a diet Pepsi or something. But while he's on the first floor, so they can see the scissors lift…

 Kyle:    Um-hm.

 Eric: Like driving back and forth. And so, I won't name drop him because I would feel bad doing that. But he's basically like always interested on where the...

 Rick:    He’s fascinated by it.

 Eric:     The lift.

 Rick:    Fascinated. That project isn’t done yet?

 Eric: Oh yeah.

 Rick:    He’s sitting downtown Manhattan, right.

 Eric:     Yeah. Yeah. I mean like, that's what this process turned into. We become very familiar with the technology, and as we become very familiar with the technology, naturally we become very familiar with the people using the technology. To the point where, like where this gentleman could probably tell you the exact status of the window repair at City Hall.

 Kyle:    Right, I love that.

 Eric:     He’s like, he drives home, I don't know maybe he has a dog, he's watching Jeopardy or something and he’s like, oh, I, still in the back of his brain, he could tell you what floor has the windows replaced in Quincy City Hall.

 Rick:    He's unusually obsessed with the progress of this.

Eric:     Yeah, yeah, he’s very…

 Kyle: So, this is this is a complete aside, but did you guys have any interactions with Jamie Dimon? Could you get a question to him for me? I want to know if he's going to run for Fed President after Powell eventually steps down.

 Eric:     I mean…

 Rick: No, I met him in my, in my previous life I had met him, but that's a good point. I mean, I'm a kind of a fan of his…

 Eric:     Yeah, I am too.

 Rick:    He's a smart guy and you know obviously what he says moves markets and his opinions matter. I don't think, I don't think he would take the pay cut to (inaudible) dollars. But you know that that's my two cents.

 Eric:     Yeah, its, I mean Isaac's pretty, pretty high up there.

 Rick:    He is, yeah right, Isaac Sine, who is the Managing Director at JPM. The great thing about, and…

 Eric:     He’s a hustler.

 Rick: This doesn't answer your question Kyle, but it is tangentially kind of related, is that one great thing about JPM is that you know they don’t, their technology is always kind of state-of-the-art. They spend a lot of money. They have their own divisions that just, and I always use this, and he uses, Jamie Dimon, I've heard him say this before, is like, they're a technology company that happens to do banking as well.

 Eric:     Yeah, right?

 Rick:    And that’s that gave us some comfort. And that comes from Dimon, like his embracing of technology, and pushing for technology. I know he has some pretty strong opinions on Bitcoin and on blockchain. But that's great working with a company that is like that.

 Eric:     I mean, we have you know, it wasn't disclosed as to how much they spent to build Onyx.

 Kyle:    Probably a lot.

 Eric:     It is a beast of a platform…

 Rick:    Yeah.

 Eric:     Like that thing, it’s, I'm a car guy, like looking at a Dodge Viper. You were built for power. Not comfort, not to go pick up groceries, you were just built to 12 cylinders, and...

 Kyle:    Or one of those Hellcats.

 Eric:     Yeah, right. Small aside, we had a, we had a customer in the station when I was growing up who got a Hellcat, and I don't know if it was his son, somebody in his family went to drive it and didn't realize how fast it accelerates, put it into a telephone pole when pulling out of the driveway. You know you pull out your driveway, you pump it into drive and hit it. I think the kid was still trying to turn the wheel. The guy was so happy, comes in the gas station, he's like, fill him up, feed power. And telling him how happy we were about it, and then the next week, of course, I'm an idiot, I'm sitting there, the guy’s in his nice like little Ford Ranger. I'm like, oh you didn’t take the Hellcat out today? Just has the sourest look on his face and he tells me the story and I'm like, I'm going to go back inside.

 Kyle:    When I was eight in Bakersfield, I I hit a brand-new Corvette, it was like literally taken off a lot that day, on my bicycle. Jammed up the front headlight to where it wouldn’t pop out anymore.

 Eric:     Were you okay?

 Kyle:    Oh, I was fine. We were just, I was racing somebody down the parking lot and this guy just kind of came out of nowhere. We were idiots. We sent one guy up on the bike to go check to make sure that road is clear. He came all the way back, he's like, yep, you're good. Like, oh, okay, yeah. Worst part was telling my dad.

 Eric: Like was that an insurance claim? Like how did that work?

 Kyle:    Yeah, I think he was more concerned about hitting a kid on a bike. I didn't think of it from his perspective.

 Eric: Oh yeah. I mean if you're driving a Corvette and a kid hits you on this bike, I’m like oh I got a Corvette. I’d feel weird like complaining about that. Oh, you hit my incredibly expensive car.

 Kyle:    I know right? So, tell me what, what is this, what happens after the bond sale goes through, because it's getting priced today, right?

 Eric:     Yes.

 Kyle:    As we're recording this?

 Eric:     Yeah. So normally post bond sale analysis is an internal function.

 Kyle:    Um-hm.

 Eric:     And we have great analysts in our department, Reese Mullen(sp?), who's a business analyst, but Rick, Rick will feign this, but Rick's a really good analyst too. He understands bond market sales. But so, we actually have Dorminson Consulting under contract. And so Dorminson Consulting, particularly Dr. Jack Dormey and Dr. Eric Olson have quite a unique background. Dr. Jack is 25 years in the Federal Reserve in Philly. He was a bank examiner. He would go into banks and you know, make sure they're happy and healthy. And Dr. Olson is the chair of Tulsa's finance school, which has a prolifically great public finance program. So, we have their company coming in to analyze what happened. Now, the reason we want to do that is twofold. One, we want to have internal documentation by experts who are third parties to tell us what happened with this deal.

 Kyle:    Um-hm.

 Eric:     Now here's the thing, it's a bond sale. As exciting as this day is, and exciting as this process is, it's a bond, it’s a municipal bond sale, it’s, yeah, we're not reinventing the wheel here. When we talk about having a conversation to understand what happened, we're trying to understand, it's almost like, I know they don't use the Richter scale anymore, I forget what term they use for it, but we want to basically see on a seismograph, how did this push markets? We want to see, we want to track, you know the velocity of exchange post sale.

 Kyle:    Um-hm.

 Eric:     So, it won't just be, it'll start day one afterwards booked in for a while. And we have so much great benchmark data for municipal bond sales, and we want to see how are we different? We want to understand what that difference was. And I think bringing in third parties who are just experts, I mean really, I don't think you could possibly find a better team than somebody with almost three decades of banking experience at the Federal Reserve, and another gentleman who is literally, does all this innovation, has experience with blockchain, but then also teaches at an excellent public finance school, to tell us what we did…

 Kyle:    Um-hm.

 Eric:     And what that outcome was. And the second would be that report would be for public disclosure too. Much like this conversation we're having right now, is so people understand our thought process, and understand what the goals were. All right, great, that was the goals of what we tried to do. But let's bring in a third party and…

 Kyle:    Verify.

 Eric:     Tell them how it, yeah, right?

 Kyle:    Did what we think happened, was going to happen, did that actually happen?

 Eric:     Yeah, I'm a big believer in FMA. It's actually part of financial policies. Forecast, manage, analyze. Predict where you're going, set a course, manage to that course. But don't forget to turn around and see if you hit your target. So, this is the A of the FMA.

 Kyle:    Um-hm.

 Eric:     Yeah, we're very excited to see what that report's going to bring through.

 Kyle:    When is that report going to be completed, do you think?

 Eric:     So, there'll probably be an initial preliminary report maybe three weeks to a month afterwards.

 Kyle:    Um-hm.

 Eric:     And then there'll be what I would call a totality report probably like six months afterwards, as they begin to try and measure post-sale trading. Post-sale trading will be, I personally think, I’m an economist, of course, I think it's the most, trading is the most interesting aspect.

 Kyle:    Right.

 Eric:     But I think to how much of a market disruptor it was.

 Kyle:    We probably need to reconvene when that comes out then, because I think we're going to want to really dive into that report.

 Eric:     No, absolutely, I think that would be very, I think that would be very productive., And honestly, like similar format. I've said this publicly before, but when we talk about financial transparency, we put our basic financial statements online.

 Kyle:    Um-hm.

 Eric:     We always do. You need to have an incredibly good understanding of GAP and GASB to be able to just look at prepared financial statements. They should be online, people should have access to them, you should absolutely be able to look at them. But it's the reason we bring on ClearGov, all right? Because it makes it more palatable. You can type in your property tax bill and just keep looking through until you know exactly how much we're paying third grade teachers at a school.

Processes like this, and again, I want to thank you, Kyle, I want to thank you, Laura, for coming down here, and talking with us, because this is a hugely important thing. We're not the private sector.

 Kyle:    Um-hm.

 Eric:     We don’t’, we should never assume we can be private about things. It's not how anybody in the administration wants it to be and it's not how it should operate. We just did something that some people may say was monumental, other people might say who cares. Regardless, we don't get to decide opinion on it. What we get to deci- what we have to do is that people like Rick and I have to sit down, and especially Rick who went through this process and myself being the CFO, and create an environment where the average Quincy resident can come here and say, okay, what did my government do? What was the purpose of this? Whether you agree or disagree with us, I think this type of disclosure is important. I think when we have that data six months from now, and we sit down, and I'm sure we'll have another pleasant conversation, or you can yell at me, Kyle, that's fine, you'll come and yell at me, and say, hey, this is what we saw, this is what happened.

 Kyle:    This is what we didn't expect that actually happened.

 Eric: What we didn't expect, yeah. There could be stuff that happens on here…

 Kyle: And there will be, I one hundred percent assume that's going to happen.

Eric:     Yeah. To be honest with you, one of the crazy things I could see happening is this crazy post-sale market velocity of this thing getting traded a bunch of times.

 Kyle:    Right.

 Eric:     And then the horse is off to the races. Now it's no longer, is this a good technology for government to use or a bad technology for government to use? Should you examine using it? No, now it's like, whoa, look at that secondary market trades, that will suppress interest rates.

 Kyle:    Um-hm.

 Eric:     And now all the municipalities looking around going, we might have to start doing this right.

 Kyle:    Right.

 Eric:     That would be, that that becomes like, you know, fusion, like it's just self-containing reaction.

 Kyle:    The really interesting thing is going to be when does the next one happen? Who does the next sale? That’s…

 Eric:     I’m, we ca- so we have some idea of who the next one's going to be.

 Rick: Correct.

 Eric:     With a different, you know, different market player we have heard. Obviously, we can't disclose we can't disclose that. I'm curious, too, with you, Kyle. I'm curious about this because I'm sitting there going like, you know, it's never the first guy, it's the first follower that matters.

 Kyle:    Um-hm.

 Eric:     I don't know. I don’t know. I think it could be, could be really interesting.

 Rick:    I agree with Eric. And I'll just really kind of put a button in, but I just think there will be a flurry, quote unquote, a flurry of activity after this deal. Whether it's new issuers, whether it's potential custodians getting on platforms for the secondary markets and things like that. We've been close enough to a where we can smell the smoke…

 Kyle:    Right.

 Eric:     Yeah, there's a little bit of a space race going on right now, like a couple different firms trying to be the first to issue.

 Rick:    That's right.

 Eric:     And for us, it's not about being in a race though, because we have to follow that fiduciary responsibility. So, we just kept kept freight-training along.

 Kyle:    I mean, you want to be first, but you also want to do it right too.

 Rick:    Yeah, yeah.

 Eric:     To us it's always about, you know, maintaining that fiduciary responsibility…

 Kyle:    Um-hm.

 Eric:     Primarily. And it's funny, it's the slow, smoothest, what…

 Kyle:    Slow is smooth, smooth is fast.

 Eric:     Yeah, exactly, slow is smooth, smooth is fast. That's really how it was. Like, we had all these people popping up as we were going through this process who were trying to do it.  

Rick:    Yeah.

 Eric:     And we’re just that freight train. Same speed freight train. And because we just kept on the due diligence part and kept up that momentum, you know?

Rick:    Eric had a big point about like what's taking so long for certain people to be on, get on? It is the due diligence, right? It's the regulatory requirements, and when you're dealing with compliance and legal and regulatory, like that, they go at glacial speeds so…

 Kyle:    Part of the problem is nobody knows what questions to even ask when something is new.

 Rick:    Exactly.

 Eric:     Right?

 Rick: That was part about that, you know we we went to, prior to getting our S&P rating for this deal, conversations had to be had saying look, we're looking to see you know, you know, we're in the market all the time You know our credit, you know our, you know Eric gives them our basic financial statements ad nauseum, to the point where they know everything, our revenues, expenses, everything. And but, and they're like so you're just selling bonds and it's going to be a, it's going to be on a different platform distribution platform, right? I’m like yeah, and they’re like yeah, that's not going to, nowhere will it affect your credit at all.

 Kyle:    Right.

 Rick:    We're looking at the financial health of the city.

 Eric:     Yeah, exactly, that's one of the more interesting parts is that like, you brought up earlier, Kyle, the council's involvement, their authorization, the S&P’s involvement, it's like, hey, you're making your payments, this is a $10 million note, like…

 Kyle:    Yeah.

 Eric:     And so, we sit there and go, well, what's the challenges here, and it’s, I think, you know if we were in the private sector, to be honest with you, I think we could have been even quicker on it. But we wouldn't have the same incentives.

 Kyle:    Right.

 Eric:     And that's what made this beautiful about this process. And it is weird that when, you know, maybe people will care, maybe they won't. But when you look back in time, it's like, who's the first person to do this in the largest market? It was government?

 Kyle:    Right.

 Eric:  A municipality did this?

 Rick:    The Chief Financial Officer. I got to give him a call.

 Eric:     Well hopefully be working at McDonald's.

 Kyle:    I think Eric you got a meeting coming up here in a…

 Eric:     Yeah.

 Kyle:    Couple minutes, and I think Rick too. Probably need to wrap this thing up. I think we did manage to answer most of the media questions that should be out there. If there are any though that people think that we missed, please feel free to send us an email. You can do that bandoftraderspodcast@gmail.com, or you can do that via any of our socials. Eric maintains a professional Twitter that he likes to be yelled at on. If we get enough questions through this, then I'll make sure that Eric knows the job's not done. We'll get him back over here and answer those. If you were hoping for more technical details of like kind of the nuts and bolts of how this happened, Eric, you just did a podcast that should be out by the time this is out.

 Eric:     Yeah.

 Kyle:    What’s the name of that one?

 Eric:     Oh, Rick was on it. Rick what was it, the Bond Buyer?

 Rick:    Oh, the Bond Buyer. It will be, it's going to be on Bond Buyers, it’ll be on their digital platform and it will be, do you need to know who's conducting it or just?

 Kyle:    No, just where they can go to find it.

 Rick:    It'll be on Bond Buyer. If you go to the bondbuyer.com, they usually have a nice link there, a big blue link that I post on their podcast section. I think it's a me- t- they actually have a blockchain section of Bond Buyer. So, you'll probably find it there.

 Kyle: You know when that'll be out?

 Rick:    Probably over the next week or two.

 Kyle:    Okay. So, it should be out about the same time this is going out.

 Rick:    Correct.

Kyle:    So, if you like what you heard and you feel like sticking around, please you can go check out bandoftraderspodcast.com, where you can sort through the hundred or so other guests that we've interviewed. Make sure we have all these links in the show notes so people can find those. I will be back soon with another slightly less historical episode, but until then, share this with your friends like a Bay Stater trying to educate the rest of the U S about the significance of the Mayflower Compact, and have a great day.