Governing a SF Public Bank

SFPBC’s Proposed Governance Structure to the Reinvestment Working Group

Introduction & BackgroundIn October 2019, the state of California passed AB 857 to provide a pathway for local government agencies to charter public banks. A year and a half later, the San Francisco Board of Supervisors created The San Francisco Reinvestment Working Group (RWG) by unanimously passing ordinance No. 87-21. The RWG is tasked with submitting to the Board of Supervisors and the Local Agency Formation Commission (LAFCo), a business and governance plan to establish a non-depository lending corporation wholly-owned by the City. Also within one year of its first meeting, the Working Group must submit to the Board and LAFCo a separate business and governance plan for the MFC to become a state-licensed public bank. Among other requirements, this plan must include the business plan elements required for a State public bank license; a study required to apply for a State public bank license; and lending priorities. The plan must recommend a governance and regulatory structure for the Public Bank; modifications to City laws and regulations; and whether the City should partner with another local agency in the establishment and operation of a public bank.

The RWG began meeting in April 2022 and is being consulted by HR&A Advisors, The Findley Companies, and Contigo. The governance structure outlined below is a model generated by advocates within the San Francisco Public Bank Coalition (SFPBC), which has been organizing around a public bank since 2017. The SFPBC submitted this proposal to the RWG and its consultants for consideration.

Download the governance proposal here!

In 2021, the Board of Supervisors passed an ordinance establishing the San Francisco Reinvestment Working Group to oversee the formation of a business and governance plan, consisting of the Controller, Treasurer, and technical experts in financial institutions, affordable housing financing, small business lending, environmental justice and renewable energy. Under the stewardship of the Local Agency Formation Commission, HR&A Advisors, and consultant Gary Findley who has experience starting over 100 banks, the San Francisco Reinvestment Working Group prepared a Final Governance Plan, Business Plan, and Viability Study for a San Francisco Municipal Financial Corporation and a San Francisco Public Bank, which was accepted by the Board of Supervisors in 2023. This plan has the approval of the SF Public Bank Coalition and forms the basis of the Governance Proposal Proposition B seeks to establish in our City Charter.