People try to apply blockchain to everything without any meaningful reason to do so, aside from marketing gimmick and a little press for themselves.
"But Bartlett argues that the current system for issuing municipal bonds has become byzantine and dependent on an array of middlemen who add costs and slow things down. It’s so expensive to issue a bond, in fact, that it’s essentially useless as a tool for funding a single small municipal project. Bartlett says a blockchain can eliminate much of that overhead and allow organizations to be more “targeted” in their fund-raising—for instance, by issuing bonds to finance a single community theater, a housing project, or the purchase of an ambulance."
The reason why municipal bonds are expensive to issue is because of strict oversight and regulation. Whether the city raises money via bonds - or paper napkin contracts - the process/regulations/oversight is essentially the same. It's not like ICO is some magic answer to cost savings. Printing the actual bond paper is just as cheap as ICO. That's not where the cost is.
Also, a city that needs to issue ICOs for "a single community theater, a housing project, or the purchase of an ambulance" is a city that doesn't know how to manage their tax revenue and budget in the first place.