Two relevant and inspiring podcasts are:
Adrian Holovaty's (Founder of EveryBlock) presentation A News Feed for Your Block given at the O'Reilly Media Where 2.0 Conference 2008. EveryBlock is a great example of what can be done with municipal data. It is also funded by the Knight Foundation and there is talk that the software will be made freely available.
Micah Sifry's (Senior Technology Adviser at The Sunlight Foundation) interview at IT Conversations. The Sunlight Foundation works mostly at the federal level but in this interview there are many good examples of how engagement with the process can happen from the grassroots groups and from watchdog groups. All of the Sunlight Foundation's software is freely available.
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