APPENDIX B Public Bank Feasibility Study, Final Report – January
23
PUBLIC BANKING FEASIBILITY STUDY FINAL REPORT for the
Consultants Katherine L. Updike, Managing Partner Building Solutions LLC
Christopher Erickson Arrowhead Center New Mexico State University
January 2016 Table of Contents Executive Summary……………………………………………………………………………...3 Introduction …………………..…………………………………………………………………4 Background and Purpose Consultants Limitations of the Report Brief History of Public Banking
Consensus Document…………………………………………………………………………...7 Introduction Summary of Banking Sector Concerns City of Santa Fe Collateral Policy Liquidity External Bond Financing Market Conditions Emerging Banking Entities Impact Investing Conclusion
The Strawman – A Feasible Approach to Public Banking..…………………….……………19 City Banking Function Possible Phasing Governance Considerations Operational Considerations Examples City Policy Issues
Local Crowdfunding/Peer to Peer Lending Hub Steps Examples City Policy Issues
Risks and Mitigants……………………………………………………………………………24
Public Banking Initiative Crowdfunding Initiative
Feasibility - An Overview…...…………………………………………………………………28 Economic Impact Analysis – Summary of Arrowhead Study……………………………….30
Combined Economic and Fiscal Impacts……………………………………………………35
Summary of Financial and Economic Impacts………………………………………………40
Appendices……………………………………………………………………………………..41 Appendix A – Consultant Curriculum Vitae Appendix B – City of Santa Fe June 30, 2015 Cash Investment Report Appendix C – Michigan State Crowdfunding Appendix D – List of Abbreviations
2
Executive Summary
A public banking initiative for the City of Santa Fe is feasible and has the potential to provide enhanced fiscal management, improved net interest rate margins, and a more robust local lending climate. This need not be accomplished solely by starting a public bank, but rather also can be done by improving and integrating current City financial activities, using the relationship with local lenders to greater economic advantage, and encouraging new modes of lending to improve the over-all financial system in the region.
The recommended approach is deliberate and recognizes the need to treat any changes in financial policy at the City with the caution warranted when managing public assets. A staged approach encompasses the following steps, more fully explained in the body under The “Strawman,” the description of a Santa Fe bank that allowed the Consultants to actually analyze specific fiscal and economic impacts: