I’m at the TechCrunch50 show again this year looking out for interesting mobile and local companies and people. I missed yesterday when Yext, RedBeacon and a few other local startups launched — more to come when i’m able to dig deeper.

City Sourced just demoed, which falls into the mobile local bucket, giving users a chance to report crime and vandalism. The way this works is through an iPhone app that lets users take pictures of things like graffiti or old couches on the street. Using the phone’s GPS and compass reading, the app tags and locates that content, wraps it up and sends it to City Hall.

On the other end, the company works with municipalities to enable their back end systems to receive and process all of these acts of citizen reporting. This includes lots of data and mapping mashups that allow city officials to plan law enforcement patrolling and clean-up efforts.

A quick demo showed how incidents of vandalism jumped from May to June in San Jose around many school districts — presumably having to do with summer break. San Jose is the company’s first customer and it is reportedly in discussions with a few of the top 10 populated cities in the U.S..

Its success will come down to the ability to form these deals but also the ability to market the app to users. The data sets will obviously only be as good as the amount of people that are using them. It’s novelty could cause it to rise above the noise in the mobile app world, and you can easily picture it being featured in the app store or on Apple’s “there’s an app for that” television spots.

Next up, the company will develop a Palm Pre app, with Android likely to follow. Interestingly, the company reported that it has received a grant from Palm to develop an app. This is the first i’ve heard of Palm paying app developers and could represent a larger effort by Palm to boost its relatively lackluster library of apps. More on that soon.