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(a) California Assembly Bill 857, the Public Banking Act, effective January 1, 2020, authorizes local agencies to create public banks for the purposes of achieving cost savings, strengthening local economies, supporting community economic development, and addressing infrastructure and housing needs for localities.
(b) A San Francisco Public Bank would create a fiscally safe and sound institution to invest public funds in a manner that aligns with the values and interests of the City, including investments in City residents, businesses, and sectors that serve the public good and that are underserved or unserved by the existing financial industry.
(c) The City and County of San Francisco has a population of over 800,000 residents who, through decades of public elections, have repeatedly prioritized local control, transparency, and economic opportunity as valued pillars of public interest. These interests would be served by sustainable and responsible community investments that promote economic security, housing affordability, environmental sustainability, and general wellbeing for all San Franciscans, guided by the creation of lending priorities focused on those objectives.
(d) The complexity of establishing a public bank requires focused, sustained planning and interim steps to ensure ongoing viability.
(e) This complex task is a valuable one, as City government banking services are provided by large national banks that invest in sectors that may harm San Francisco residents or contradict the City’s values. These banks continue to resist pressure from national movements to have their investments reflect values of transparency, environmental responsibility, and social justice, and they have been criticized for racially-biased predatory lending and foreclosures and for investments in fossil fuels, weapons, and private prisons.
(f) Traditional financial institutions’ executive compensation and employee incentive programs often are dissociated from the external or public effects of their investment policies, in some cases causing significant financial harm to customers and shareholders.
(g) While a Public Bank will require planning and investment of public funds, it can create significant long-term benefits for the City, which include allowing local tax dollars to be invested in local priorities while still ensuring the safety and preservation of capital, liquidity to meet City cash flow needs, and return on investments.
(h) A Public Bank can and should balance both fiscal solvency and investments in residents, businesses, and sectors that reflect San Francisco values, advancing issues of social, economic, gender, racial, and environmental equity, among others.
(i) The long-term financial and social well-being of the City requires sustainable and equitable economic growth locally, nationally, and internationally, which in turn requires equitable and transparent financial investment and opportunity.
(j) Increasing interest among municipalities and regions across California and the United States in public bank formation provided the impetus for the enactment of the Public Banking Act, Assembly Bill 857.
(k) The Budget and Legislative Analyst of the Board of Supervisors has produced reports regarding banking, community supportive banking options, and public banking, including on the following subjects: “Community Supportive Banking Options,” September 8, 2011 (Updated); “Community Supportive Banking Options 2017 Update,” November 27, 2017; “Large Bank Social Responsibility Screening,” May 19, 2017; and “Municipal Bank for San Francisco: Issues and Options for Consideration,” July 24, 2020. These reports are on file with the Clerk of the Board of Supervisors in File No. 210078.
(l) In 2017, in response to Resolution No. 152-17 urging the formation of a Municipal Bank Feasibility Task Force to research the viability and advisability of a Public Bank, Treasurer Jose Cisneros formed such a group. After 18 months of work, it produced a report entitled, “Municipal Bank Feasibility Task Force Report,” dated March 2019, which analyzed three models: (1) a lending entity focused on investments in affordable housing and small business lending to achieve community goals; (2) a bank that performs the City’s cash management and other banking needs, allowing the City to divest from large commercial banks; and (3) a bank that combines these functions. A copy of said report is on file with the Clerk of the Board of Supervisors in File No. 210078.
(Added by Ord. 87-21, File No. 210078, App. 7/2/2021, Eff. 8/2/2021)