In addition, the feasibility study — produced by El Paso-based Building Solutions LLC and the Arrowhead Center at New Mexico State University at a cost of $50,000 — states that the fiscal and economic impact for the city could be more than $24 million in the first year of implementation.
“The idea would be to go forward and develop a model — be it in the form of a bank or some other structure — that takes the public’s treasury, allows for maximum transparency in terms of how it’s invested, and uses it in a way that has greater benefit to the public than currently exists,” he said at a Wednesday morning press conference. The mayor said the city would hold at least two public meetings this spring to allow citizens to get details and ask questions before there were any efforts to develop a model.
The bank could serve the city by funding capital improvement projects with internal funds without raising taxes or using bond proceeds, according to the report.
Gonzales said the city now pays 3 to 5 percent in borrowing costs on bond issues now goes to Wall Street and such financing could come from a public bank in the future, saving money that could go for city initiatives. And, he said, “Right now, the big banks of are the beneficiary of our deposits.”
The bank public potentially could be utilized by the city, Santa Fe County and Santa Fe Public Schools to broaden funding strategies on a broader scale, and in time could work to combat predatory lending practices by pay-day lenders against individual borrowers.
A bank offering home loans or car loans to individual citizens wouldn’t happen right away, if at all, the mayor said. “We’re a ways away from that,” he said, adding that the city would take a slow, methodical approach to building a public bank model.
The bank could, however, benefit small businesses by providing access to capital. He emphasized that a public bank would not compete with local banks and instead could partner with banks to free up capital.
“To some extent, it’s sort of putting on training wheels,” Katherine Updike, managing partner of Building Solutions, said of an initial implementation of the model.
Updike said the Bank of North Dakota, formed nearly 100 years ago and considered the “gold standard” of public banks, did nothing other than internal funding in its first 20 years of existence. She said the model contemplated in the report was not designed to serve private citizens, “it’s geared toward public-sector deposits.”