Berkeley Voters To Decide Whether To Initiate Public Bank With New Parcel Tax

Authored by Lear Zhou via The Epoch Times,

Voters in Berkeley, California, will decide in the coming election whether to start a public bank using a new parcel tax as seed money in order to create long-term investments in affordable housing, green energy, and small businesses.

The public bank, as a nonprofit corporation engaging in commercial or industrial banking business, would be “wholly owned by a local agency, local agencies, or a joint powers authority” of local agencies, according to the measure text.

“While big corporate banks invest our public tax dollars outside of our community, a public bank can recirculate our money in our community to fund projects and build a stronger, more resilient, local community aligned to our values,” Measure Z states.

The proposed parcel tax would last six years and would be $0.06 per square foot of residential improvements and $0.09 per square foot of other properties’ improvements, with potential annual increases.

“All funds received from the tax are subject to the review, allocation, and approval by the City Council,” the measure states.

The Berkeley city attorney estimated the parcel tax would raise over $58 million in six years. It would start on Jan. 1, 2027.

“Unlike a private bank, Berkeley is an owner. The community holds seats on the bank’s board, reviews its books, and has direct input into what it funds,” Coalition to Keep Berkeley Money Local stated on its website. “And when the bank turns a profit, that money comes back to Berkeley – not to Wall Street shareholders.”

A board that includes elected officials, financial professionals, and community members would set policy and lending priorities, and daily operations would be run by professional bankers, according to the coalition.

Opponents worry that the money would be lent not only to Berkeley but to the whole East Bay.

“It’s not a Berkeley bank. It’s Berkeley money for a regional institution,” StopMeasureZ.com states.

Originally, supporters of the public bank envisioned it as a regional bank with multiple jurisdictions sharing the costs and benefits, according to a report by Within Our Means Berkeley. Measure Z is a departure from that idea and asks Berkeley alone to fund the regional bank, according to the report.

“By concentrating the initial capitalization burden on Berkeley while allowing the bank to serve the broader East Bay, the measure creates a ‘free-rider incentive structure’ that undermines cost sharing and proportional benefits – the historic policy objective,” the report states.

A public bank must obtain a certificate from the Department of Financial Protection and Innovation, and it must get Federal Deposit Insurance Corporation insurance.

If the planned bank does not get the required authorization by June 30, 2033, the collected funds may be used to offer loans for the same purposes, such as green energy and affordable housing, according to the Measure Z text.

The city manager would submit annual progress reports, including funds collected and spent, to the city council for review; and the city auditor would independently audit the progress at least once every three years, according to the measure.

Meanwhile, StopMeasureZ.com states that, “If [the public bank] never opens, the City keeps the money and ‘may’ lend it out – a job the Housing Trust Fund already does.”

The measure needs a majority vote to pass.

Since 2020, California has allowed local agencies to establish public banks. Only up to 2 public banks can be authorized by the Department of Financial Protection and Innovation per year, and no more than 10 can be established in total in California.