Description of Intent:
What is a Nevada County Public Bank? A bank owned by Nevada County. A small portion of the county’s investment portfolio would be used to capitalize the bank and the county would deposit its “working funds” (i.e., its checking accounts) in the bank. The only other depositors would be municipal entities in the county and county operating units that maintain their own accounts. The bank would not be a retail bank, making loans directly to a borrower. Instead, it would primarily share in loans made by local and regional private banks, although it could make loans to governmental entities within the county in lieu of their going to the bond market, saving the fees charged for originating and servicing the bonds.
Why a Nevada County Public Bank? To use Nevada County money for the economic and social benefit of Nevada County businesses and citizens. Fractional reserve banking will enable the bank to multiply a relatively small investment into a major credit infusion into our County’s economy. As currently proposed, a $10 million capital investment would generate approximately $50 million in additional credit to meet the credit needs of businesses and individuals. Local CPAs confirm that the County has been starved of credit since the 2008 financial crisis, resulting in job losses and opportunity losses as well as reduced tax and fee revenue.
Meeting the credit needs of Nevada County, independent of the whims of the “Wall Street” markets, will provide for the future economic security of our County. Projects needing funding, like a local slaughterhouse or a Briar Patch expansion into a larger facility, could be funded.
- Local businesses get better access to more, lower cost credit
- Credit and a stronger local economy will help fill empty storefronts, generate jobs
- Projects can be funded that benefit the County but are turned down by private banks
- Loans can be predicated on using local businesses, avoiding “flight” of money and jobs from the county
- Homeowners can get more favorable loans for targeted property improvements like renewable energy and conservation
- County projects can be funded by low interest loans instead of bonds subject to large bank fees and interest
- Stronger county economy will generate greater tax and fee revenues for the County, funding County services without tax increases
- A Nevada County public bank will strengthen local and regional banks by enabling them to make more and bigger loans, which will allow them to compete with “Wall Street” banks, as is the case in North Dakota, which has a public bank
- Loan programs could be developed to support students attending Grass Valley Sierra College
Is it a safe investment? Nevada County’s investment and working accounts total between $155 and $200 million, depending on the timing of revenues and expenses. A $10 million capital investment represents only 6.5% of the lowest amount. The bank would be managed conservatively and professionally. In addition, loans shared with private banks would be structured so that any losses are first absorbed by the private bank up to its share of the investment. The bank could help build itself a healthy loan portfolio by offerings loans to NID – with its superior credit rating – thus saving NID the fees involved in issuing bonds, something which it does regularly for its infrastructure projects.
Proposed Charter Text – Preamble to Public Bank Section:
We the people of Nevada County instruct our county officers to establish a Bank of Nevada County (hereafter referred to as the Bank of Nevada County Bank, BNC or “the bank”), wholly owned by the County of Nevada, for the purposes of meeting, maintaining and expanding the access to credit for financial activities within our County , investing in our businesses and citizens and providing for the economic security of our County independent of the whims of the national and international financial markets.
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.