Philadelphia Business Journal, by Ryan Sharrow, Editor in Chief, March 3, 2022
(photo by Laura Smythe / Philadelphia Business Journal)
City Council voted on Thursday to create the Philadelphia Public Financial Authority, a move that positions the city to launch the nation’s first municipal bank.
Council passed the measure 15-1, with Councilmember Brian O’Neill, a Republican representing the city’s 10th District, casting the only dissenting vote. The bill was introduced in December by Democrat Derek Green, a former banker who is a councilman-at-large.
Proponents of the effort say the bank would provide Black and brown businesses with better access to capital.
Green said the goal of the Public Financial Authority “is not to compete against current businesses or organizations, or duplicate existing services, but to offer credit enhancement products, such as letters of credit, that will provide greater opportunities for co-operatives, entrepreneurs of color, and other business organizations to access additional credit to help build cash flow and job growth.”
Since Pennsylvania law does not require municipalities to charter a bank, the Public Financial Authority will be created in compliance with the state’s Economic Development Financing Law. The EDFL allows cities to borrow money from public and private entities, lend money, extend credit and provide loans. It also allows for providing working capital for projects through tax-exempt or taxable bonds.
Under the bill, a nine-person board of directors will be selected by the mayor, both initially and as vacancies arise. Each time the mayor is to appoint a member, City Council will also have the opportunity to recommend candidates.
Directors will also appoint a nine-person policy board. Members must be one person from the Pennsylvania Community Development Financial Institutions Network; one member who has represented consumer or community economic interests for at least two years; one member who has demonstrated commitment to the needs of low- to moderate-income households; and at least five members who have at least five years of experience in, and a “demonstrated commitment” to, one or more of the following:
- environmental justice;
- racial justice;
- low-income housing;
- public education;
- public health;
- co-operative development;
- neighborhood-based small business development;
- gender justice;
- public transportation.
One member must also be a board member or officer of a minority-owned bank.
An executive director will also be hired.
According to Green’s office, the creation of the Philadelphia Public Financial Authority is needed because only 6% of businesses with employees in Philadelphia are owned by African Americans, despite the city’s population being 44% African American. About 4% of businesses with employees are owned by Latinx Philadelphians.
The bill now goes to the desk of Mayor Jim Kenney, who has 10 days to sign it into law.
