Voters in San Francisco will decide whether to give the city legal permission to create a nonprofit public bank. If approved, many more steps would follow before its creation.Supporters say the new bank would provide the city with new tools to support would-be homebuyers and small business owners, as well as advance other local goals.Opponents say creating a new bank is a slow, expensive process and will take too long to address problems that are pressing now. Supervisor Stephen Sherrill recommends the city focus on beefing up existing tools.

Voters this November will decide whether San Francisco should start down the path of creating the nation’s first municipal bank.

Supporters say existing commercial banks haven’t met the lending demands of affordable housing developments, climate-friendly projects and small businesses. Public bank advocates envision directing the bank to provide loans to support these initiatives.

“Think about how many affordable housing projects got pushed back,” because, despite being approved, they cannot get the funding, says Supervisor Chyanne Chen. “We’re talking about thousands of houses.”

Business corridors in many neighborhoods, including Chinatown, haven’t fully recovered from COVID-19, says Chen, who co-sponsored a charter amendment that would take the first steps toward creating a public bank. These neighborhoods still contain many vacant storefronts, Chen says.

A 2023 working group report estimates San Francisco needs an additional $1.3 billion to $2.4 billion per year through 2030 to fund its affordable housing development goals and $1.3 billion per year to reach its goal of hitting net zero greenhouse gas emissions by 2040. Proponents of the public bank argue it’s unlikely the city could meet those goals relying only on private lenders. These private banks also often can’t meet the needs of the smallest business owners, the report says.

A public municipal bank is a relatively new idea for the U.S., which only has two public banks. The Bank of North Dakota was established in 1919, and many public bank proponents see it as proof that the idea can succeed. It has supported programs to help agricultural producers weather disasters and assist public employees during government shutdowns. It reported “another year of strong financial performance” in its 2025 annual report. The other is the Territorial Bank of American Samoa, which opened in 2016.

But bringing the idea to San Francisco faces some local pushback.

Supervisor Stephen Sherrill says insufficient funding for affordable housing and small businesses are pressing, immediate problems, while establishing a public bank will take many years and require raising a lot of money.

“It’s an expensive and time-intensive approach to solving problems that, one, we very much have today, and two, we have other mechanisms to deal with,” Sherrill says. “It is a redundant tool on top of tools that we already have and aren’t using.”

Instead of the bank, Sherrill advocates for San Francisco investing more heavily in its Affordable Housing Trust Fund and giving more grants to small businesses. The city could also issue bonds to fund climate projects. (Chen, in turn, sees a public bank as a way of expanding on, not replacing, existing tools for addressing these needs.)

Public bank advocates also want to stop taxpayer money being deposited with private banks that don’t uphold certain values. The public bank would be prohibited from investing in sectors “that exacerbate negative socioeconomic and environmental outcomes” including fossil fuels, predatory lending, detention centers and weapons. Sherrill, however, says anyone who wants San Francisco to avoid depositing funds with banks that invest in certain causes can just run a ballot measure to require the city to do so.

Envisioning a Bank
This would be no quick undertaking. If approved, the ballot measure would give San Francisco legal permission to create a nonprofit municipally owned financial corporation. It would take time to get that started. Eventually, that corporation would transform into a public bank and begin accepting deposits. Creating either entity would depend on San Francisco having enough funding. Chen estimates startup costs could be between $2 million and $6 million.

If they come into being, both the corporation and bank would partner with existing local financial institutions to provide loans for local borrowers, filling gaps in the lending market, Chen says. They’d prioritize key affordability, small businesses and environmental goals.

The bank and municipally owned financial corporation wouldn’t be run by politicians. Instead, a board of banking professionals would run the bank, under the oversight of a committee appointed by various city officials, including the mayor and treasurer-tax collector.

Sherrill says that keeping bank leadership independent from politicians makes good financial sense, but could make it hard for the public to push for funding projects they want. The public has more direct control with funding sources controlled by elected officials, like the Affordable Housing Trust Fund.

Other Public Banks
Supervisors are split on whether the Bank of North Dakota’s success means anything for San Francisco.

Sherill believes it’s not an apt comparison, because North Dakota’s bank has “every single bit of state revenue flowing through it,” an amount the municipality couldn’t achieve. “For us to begin putting all of the city’s deposits into a public bank with lower interest rates, we’ll have liquidity concerns,” he says.

The state bank also serves a more widespread, diverse population, so is spared the risk that a disaster hitting one area could cause all its borrowers to default, Sherrill says: “Here in San Francisco, having a geographically homogenous lendee is a very dangerous concept. … [In North Dakota] it’s a less geographically homogenous situation [and] they have less disastrous risk from earthquakes for all of their lendees.”

Chen, meanwhile, expects professional bank leadership to make plans for mitigating risks, and says the two banks would be comparable because North Dakota and San Francisco have similar population sizes. It’s also not the only example of a successful public bank with a long history.

Other parts of the world have their own public banks. Buenos Aires founded its city-owned bank in 1878, to serve low-income residents, and it has branches in shantytowns that no other financial entities serve. Germany, in turn, has various city-established but independently operated public law credit unions.

“The idea of a public bank is not a new concept,” Chen says, noting that public banks own an estimated quarter of the world’s deposits.

The idea has also been proposed in U.S. cities like Los Angeles, New York and Philadelphia, but voters will decide if San Francisco is the first to try it.