Description of Intent:
This section of the charter describes how the public bank is intended to operate and what it is intended to do:
The public bank (hereafter referred to as the Bank of Nevada County Bank, BNC or “the bank”) should be operated professionally and safely in order to protect the County’s financial resources.
Generally, the purpose of the public bank is to invest a portion or all of Nevada County’s investment funds within the County in order to better and more directly leverage those funds for the benefit of the economy of the County and its citizens.
More specifically, the BNC’s loan activities should conform to the following guidelines which will best serve the citizens of the County:
- Maintain the supply of credit within Nevada County by expanding loans when private banks restrict credit in order to limit the impact of economic downturns on the county economy.
- Make low-interest business loans for operations, expansion and start-up in order to maintain and expand the Nevada County job market and make Nevada County businesses more competitive.
- Give priority to small businesses and to co-ops and employee owned businesses because such businesses are motivated to stay in and invest in Nevada County
- Quickly provide consumer and business credit for disaster relief to ensure rapid economic recovery.
- Provide low-interest student loans for classes (college and technical courses) attended within Nevada County, encouraging continuing education and expansion of educational opportunities within the County.
- Provide Nevada County governmental entities (including NID) with low-interest loans that avoid the private bank fees associated with bonds. Those fees can equal the actual interest costs, thus doubling the total bond costs.
- Develop loan programs designed to prevent foreclosure and housing vacancies and encourage “green investment” such as energy efficiency and renewable energy.
In order to ensure that BNC loan activities benefit Nevada County, it should only make loans to business and for activities in which the majority (75% or more) of those operations, activities and expenditures are within Nevada County. An appropriate qualification system should be developed for this purpose.
In order to support a healthy local banking industry, the BNC will only make loans in partnership (shared) with local and regional private banks whereby the private bank provides all underwriting and processing services and underwrites a minimum of 30% of the loan.
In order to provide for the safety of the BNC and ensure that the private bank provides responsible underwriting, the private bank must retain its share of the loan on its books and may not securitize and sell off the loan in any way. The loan must be structured such that any losses related to the loan are assumed by the private bank up to the amount of its participation before any losses are assumed by BNC..
Proposed Charter Text:
The officers and governance of the Bank of Nevada County are instructed to be guided by the following in all decisions and activities relating to the bank:
The bank shall be operated professionally and consistent with maintaining the safety of Nevada County funds.
- The bank shall maintain the supply of credit within Nevada County during economic downturns.
- The bank shall make low-interest business loans for operations, expansion and start-up.
- The bank shall give priority to small businesses and to co-ops and employee owned businesses.
- The bank shall quickly provide consumer and business credit for disaster relief.
- The bank shall provide low-interest student loans for classes (college and technical courses) attended within Nevada County.
- The bank shall provide Nevada County governmental entities with low-interest loan options to issuing bonds.
- The bank shall develop loan programs designed to prevent foreclosure and housing vacancies and encourage “green investment” such as energy efficiency and renewable energy.
- All consumer and business loans shall be made in partnership with local and regional private banks. The private bank share shall be no less than 30% of each loan. The private bank may not securitize, sell or otherwise remove itself from liability for losses relating to each loan. Loans shall be structured such that any losses are incurred first by the private bank up to the amount of its share of that loan.
Links to all Charter pages:
Nevada County Charter – Introduction
How to establish a Nevada County Charter
Preamble to the Nevada County Charter
Preamble to Charter section establishing a public bank for Nevada County
The mission of the public Bank of Nevada County
The governance of the public Bank of Nevada County
The Citizens Bill of Rights
Nevada County Officers & Governance
Use of Instant Runoff Voting and establishing campaign finance limits
“Buy Local” preference for Nevada County purchases & contracts section
Click here to be taken to the Nevada County Charter online survey page.