Treasurer's municipal-bank task force outlines models and deadlines as advocates urge a big public bank

SAN FRANCISCO

Treasure's office staff told the Board of Supervisors' Budget and Finance Committee on Dec. 17 that work on a municipal-bank feasibility study is nearing a task-force final report in January, but key financial questions ' including start-up and capitalization costs ' will be finalized only after further task-force review.

Amanda Free of the Office of the Treasurer and Tax Collector said the task force convened in February and includes community advocates, bank practitioners, attorneys and government partners. She said staff will present financial models in the final report so policy makers can weigh costs and benefits in concrete terms.

Molly Cohen, the treasurer's senior analyst who led the modeling, said the task force prioritized five public-policy goals for a municipal bank: affordable housing, small-business lending, infrastructure, serving the un- and underbanked, and cannabis-related services. Cohen described three draft bank models: a divestment model (the bank assumes the city's commercial-banking functions), a reinvestment model (focused on below-market community lending), and a combination model that attempts both. She said the divestment model is the most expensive to stand up; reinvestment is cheaper but yields lower financial returns; and the combined approach is slowest to break even.

Cohen told the committee that some draft numbers have been presented internally but argued the task force needs time to incorporate substantive feedback it received during the public review in September. "We will outline a path to break even or profitability," she said, but added that start-up costs and the time to reach breakeven can be significant and likely measured in years.

Supervisors pressed for more granular figures and asked whether interim steps could be taken while the task force completes its work. Free and Cohen offered a possible interim approach: a commercial loan fund that could be established without a state public-bank charter and could build a lending portfolio while staff pursue a charter. The treasurer's office said securing a state charter remains a near-term objective: most municipal-bank models would require a change in state law to create a public-bank charter.

Public comment filled more than an hour of the hearing. Dozens of speakers representing the San Francisco Public Bank Coalition, labor groups and community organizations urged officials to "go big," arguing a municipal bank could finance affordable housing, renewable energy projects, student loans and small-business support while keeping city deposits and investment decisions under local oversight. Many commenters urged the city to press state lawmakers to create a public-bank charter and called for strong, democratic governance structures to ensure community accountability.

"We have the money; let's go," said a coalition representative. Supporters cited international examples and the Bank of North Dakota as precedents for public banking and urged the city to use a public bank to redirect investment away from fossil fuels and predatory lenders.

Chair Cohen thanked staff and advocates and urged the task force to include tangible decision criteria in the final report so the Board can judge how well each model would deliver on stated policy goals such as local control and financial empowerment. The hearing was continued to the call of the chair; no formal vote on establishment of a bank occurred.

Why it matters: A municipal bank would shift how the city manages its deposits and finances public projects. The final report is expected to provide the Board with modeled costs and timelines to help choose whether to pursue a charter and which model to adopt.