San Francisco could create the nation’s first public municipal bank under a recently proposed charter amendment.
Legislation to create the structure and governing rules for a Municipal Financial Corporation and San Francisco Public Bank was introduced by District 11 Supervisor Chyanne Chen with the backing of four other supervisors.
Once established, the bank would provide low interest loans to fund projects in the city such as affordable housing, small businesses, and climate sustainability, according to a breakdown of the amendment by the San Francisco Public Bank Coalition, a nonprofit organization co-founded by Supervisor Jackie Fielder that has pushed for the idea since its formation in 2017, according to its website.
The charter amendment proposed by Chen would not fund the bank or identify how it would be capitalized but simply creates the entity that could become the bank and establishes how it would operate.
“San Franciscans need and deserve bold solutions to address our most pressing challenges,” Chen said in a statement. “We must use every tool we can to keep San Francisco affordable and to advance solutions that lead towards a just economic recovery for all.”
Law paves the way for a community bank
The idea for a public bank in the city gained momentum after the passage of a state law in 2019, Assembly Bill 857, paved the way for cities and counties to lend their credit to people and corporations.
An analysis of creating such an entity was released locally in 2022 by the San Francisco Reinvestment Working Group — a group of financial experts and community leaders — and it outlined a business model and how it could succeed. The group’s report was unanimously supported by the Board of Supervisors at the time, according to the San Francisco Public Bank Coalition.
Chen’s legislation draws on the group’s ideas, which include a governance structure with a banking board made of members chosen by San Francisco’s treasurer, controller, city attorney, mayor, and Board of Supervisors. The bank’s independent board would then make hires for the bank’s operation.
“The SF Public Bank will put people over profits to invest in what we all need — affordable housing, climate-resilient infrastructure, local small business, and green energy.”
Misha Steier, San Francisco Public Bank Coalition
The amendment would restrict the bank from making loans outside of San Francisco and from making loans to entities involved in “fossil fuels, private prisons and detention centers, weapons manufacturers, tobacco products and businesses who engage in labor or human rights violations,” according to a statement from San Francisco Public Bank Coalition.
Misha Steier, a spokesperson for the San Francisco Public Bank Coalition, said the introduction of the charter amendment was an “exciting” moment for the bank’s longtime backers.
“The SF Public Bank will put people over profits to invest in what we all need — affordable housing, climate-resilient infrastructure, local small business, and green energy,” Steier said in a statement.
What the bank could do
The bank could fund a range of projects and services including investing in community land trusts and electrification of the city, including installing more electric vehicle chargers; helping businesses grow and expand, and other local initiatives in the public and private sector, according to the San Francisco Public Bank Coalition.
The amendment will next be heard in the Rules Committee at its meeting on either June 22, June 29, or July 6.
It is co-sponsored by Supervisors Fielder, Shamann Walton, Myrna Melgar, and Bilal Mahmood, but needs the backing of one more member to pass the full board.
If a majority of the 11-member board backs the amendment, it would go before voters in the general election on Nov. 3, where it would need a simple majority to pass.