San Francisco’s a town with a lot of mobile apps that can help its residents to navigate everyday life in the city. Routesy provides real-time transit information; Mom Maps helps both residents and tourist parents alike quickly locate kid-friendly places to hang out; Zonability helps make local zoning rules more accessible.

In fact, a small cottage industry of app-makers based on government data has sprouted up since the city launched DataSF, its machine-readable online library of government statistics. Seeing the potential for more development, San Francisco has started to push government 2.0 projects as a way of promoting economic development. It turns out that San Francisco is only one of several cities that have been mulling over this idea.

Earlier this month, Mayor Ed Lee announced that the city is partnering with digital age civic group Code for America to create an “accelerator,” where young programmers will be given the opportunity to peer at the innards of city government, and to imagine commercially viable solutions that could help San Francisco, as well as other city governments, to be more efficient. Google is seeding the project with $1.5 million, and the Kauffman Foundation is also providing an unspecified amount. The announcement was part of a larger one about a job training initiative its organizers are calling San Francisco Citizens Initiative for Technology and Innovation (sf.citi), which will be chaired by angel investor Ron Conway and will have former TechCrunch CEO Heather Harde as vice-chair. Social gaming company Zynga has said in sf.citi's launch statement that it will work will "local service organizations" and elected officials to train and place workers at local tech companies.

More details on how it’s all going to work are sketchy: Code for America is still looking to staff up its project with a board of advisers and a director.

Jennifer Pahlka, the founder and executive director of Code for America, says that the accelerator will be modeled on YCombinator, a startup funding model that involves young entrepreneurs, short time frames, rapid development, and demo days at the end of it all to attract investors. And Conway, someone who worked hard to get the mayor elected, will also be on hand to mentor the entrepreneurs. An e-mail to an aide asking about more details about sf.citi and Conway's potential financial interests in the companies has not been returned as this post is being published.

Government 2.0 geeks will no doubt find the news exciting and look to San Francisco as a beacon illuminating the way forward in a year when more local governments contemplate leveraging their work with the tech sector — not just being a booster for their local tech industries, but actually doing business with the companies within it — an economic development tool.

“I think a lot of people were afraid of looking a little crazy, but now San Francisco has gone ahead and done it and made the idea legit,” says Mark Headd, a civic hacking advocate who is former chief policy adviser to Delaware’s tech and information department.

Headd has been urging local governments to think of open data as an economic development tool for some time. In particular, he has argued in the past that financially strapped states could leverage the data in lieu of loans and grants to stimulate the creation and growth of small businesses. Hoping to spur the creation of new businesses, cities like New York have been hosting contests with prize money for people making use of government data NYC Media Lab, a collaboration between the city and local universities to connect tech-sector business with relevant research, and have given grant money to General Assembly, a coworking space and incubator for startups. But San Francisco's approach may be the most hands-on of any city to date, and focuses specifically on what startups could do to solve problems that government has, or maybe that citizens have because of government. That's new.

For their part, Baltimore’s administrators have also been considering opening their innards to the city's start-up scene in hopes of spurring new businesses, its chief information officer, Rico Singleton, told techPresident.

“I have certainly started the discussions, and I would like to see Baltimore do this,” he said in an e-mail. “I have some additional meetings coming up with the representatives in the angel community to discuss how we can bring this fruition.”

Like San Francisco, Chicago and many other cities, Baltimore has built its own extensive open data catalog as well.

Meanwhile, Chicago is also working on fostering such civic startups. Through an effort called the Smart Chicago Collaborative, the city will start providing sometime this Spring a small amount of office space to developers interested in civic hacking projects. The shared office space will accommodate about “a half a dozen people,” and will be located in Chicago’s new 50,000 square foot Tech Center, a larger shared office space that’s meant for high tech entrepreneurs.

“What I’m most excited about with open data, aside from Code for America, is the ability for small companies, or even just independent developers, to develop a subject matter expertise in government data that can be channeled into business with the city,” John Tolva, Chicago’s chief technology officer, said in an interview.

He mentioned a group of civic hackers who created Chicagolobbyists.org, a web site that took the city’s open data on lobbyist activity and made it visually compelling.

That group of developers could have gone on to create a company to build the city’s new lobbyist registration database, Tolva says. (The deadline for the request for proposals was mid-December.)

“It’s an opportunity to use open data as an economic driver to change the skills mix of vendors,” he says.

But the group of developers ended up running into a wall that many in the civic hacking community are likely to run into: the stodgy world of government procurement.

Though the group had already demonstrated its skills, it didn't win the contract to develop Chicago's online lobbyist registration database because it was unable to meet the city's rigid boilerplate vendor requirements.

For example, entities submitting proposals had to be actual companies with three years worth of audited financial statements, as well as meet various insurance liability requirements.

“We were just five guys,” says Paul Baker, one of the developers who devoted a big chunk of his spare time with four other civic hacker types to create Chicagolobbyists.org.

He notes that Chicago's request for proposals ran 150 pages. Other more established, expensive information technology companies like IBM often allocate two months worth of a staffer’s time to provide all of the required information for such proposals.

Baker says he isn’t sure how a city should alter its procurement process to accommodate civic startups. But he noted that he and his fellow volunteers individually are highly qualified: Baker is the founder and president of Webitects, a web development firm whose clients have included Wikipedia, President Barack Obama’s 2008 campaign and many others. A couple of other of the developers who worked on Chicagolobbyists.org work at Groupon.

Back in San Francisco, procurement could also likely to be an issue that the city’s civic startups run into once they formally become commercial entities.

“The city is very good at creating feel-good requirements for its vendors that simply result in compliant companies marking up and reselling everything from hardware to IT software and services,” says Adriel Hampton, an open government activist and a former investigator for the San Francisco City Attorney’s office. Hampton is intimately familiar with the city’s procurement processes as a result of a past investigation into a fraudulent scheme.

One of San Francisco’s local ordinances covering vendors competing for the city’s services concerns workplace practices and human rights. As the city’s web site states itself, “It can take weeks for the city to determine that your company complies with the nondiscrimination in contracts ordinance, and so you should submit form HRC-12B-101 and accompanying documentation as soon as you get your city vendor number.”

Hampton says these requirements “can’t be touched politically,” but cause the most trouble in the system because the delay in the approval process deters both small businesses and large businesses alike.

The good news is that there appears to be a determination at the top of each city’s administration to remove the barriers that might impede the momentum and enthusiasm behind the movement that is powering the growth of these civic startups.

In San Francisco, for example, when asked about potential procurement issues, city Chief Innovation Officer Jay Nath, who works directly for the mayor, declared that “there are no sacred cows.”

Similarly, Chicago’s Tolva says that he sees the wall that Baker ran into as a temporary setback.

“Government procurement is the way that it is for some very valid reasons, to ensure fairness in a way that does not have to be ensured in the private sector, and to ensure sometimes, that the skills are there to protect the lives of the city’s residents” he says. Nevertheless, “there’s no question that procurement needs to be modernized, and we’re deep in the process of doing that both technologically and procedurally.”

Tolva also works directly with Chicago’s Mayor Rahm Emanuel. Both have received praise from the developer community for their commitment to transparency, and moving aggressively to push city government into the information age.

Meanwhile, Lee has certainly positioned himself to be a national leader on this front.
Last week, the U.S. Conference of Mayors announced that its members had chosen Lee to head up its new innovation and technology task force. Its mission is to issue policy recommendations on how cities can foster economic growth through tech startups. Open data and commercial app development was on the agenda.