By Chronicle Editorial Board,Opinion StaffSep 10, 2026
Gift Article (SFChronicle.com)
The editorial board recommends voting no on San Francisco’s Proposition B, which would enable the first step in creating a city-run public bank.S.F. Chronicle illustration from Getty Images elements
San Francisco isn’t exactly a city known for the transparency or efficacy of its expenditures. The city has a $16.9 billion budget and no shortage of ways to get that money out the door — with decidedly mixed results.
And yet Proposition B, a City Charter amendment on the November ballot, would potentially launch an entirely new municipal entity to disperse taxpayer money.
The details are complex.
Prop B would allow for the creation of a Municipal Finance Corp. — the first step toward starting a city-run public bank. It would be a nonprofit, non-depository institution able to provide or arrange financing for affordable housing, home ownership, small businesses, climate infrastructure and environmental-justice projects. After at least three years of operation — and only after securing state and federal regulatory approvals — it could then transition into a full public bank.
Governance would be divided among professional boards and a public oversight commission. The Board of Supervisors would appoint four of the initial nine Municipal Finance Corp. commissioners, the mayor would appoint two, while the treasurer, controller and city attorney would each appoint one.
Prop B provides no funding. The Controller’s Office, citing a 2023 working group viability report, estimated that the city would have to come up with $310 million to $460 million to establish, capitalize and operate a public bank.
That’s quite an outlay at a time of federal funding shortfalls and perennial budget insecurity.
So, why now?
Some context is helpful. In 2019, California enacted Assembly Bill 857, the California Public Bank Act, which allows cities, counties and joint powers authorities to establish their own local public banks. The initial licensing window for the legislation will expire in 2029, so several cities and counties in the state are scrambling to launch their respective public banking efforts before the deadline.
Trinity Tran, the executive director of Public Bank LA, an organization that has been working to establish a public bank in Los Angeles since 2017, told the editorial board that the establishment of a municipal finance commission would prove that it could “responsibly use public dollars for public good and then after a few years, scale that up to a public bank.”
The idea of a public bank designed to support social and economic justice is a noble one. But good intentions do not automatically make a good institution.
Especially because San Francisco already has existing policy tools in service of these goals.
The Housing Trust Fund, for instance, provides direct support for building, purchasing and rehabilitating affordable housing, as well as down-payment assistance and programs intended to help people avoid losing their homes. Prop C on the November ballot would increase the city’s annual contribution to this fund, eventually, to $125 million and extend it through 2058.
Then there are housing bonds, which San Francisco funded to the tune of $300 million in 2024.
Meanwhile, the Office of Workforce and Economic Development and the Office of the Treasurer operate millions of dollars in small business loan and grant programs.
These redundancies are among the reasons Mayor Daniel Lurie told us he doesn’t support Prop B: “Creating a new institution, rather than investing those resources directly in housing, small businesses and other critical needs, is irresponsible.”
Prop B’s sponsors, including Supervisor Chyanne Chen, countered that unlike most existing funding mechanisms, a public bank would provide an ongoing source for needed projects. Its dollars would recirculate in the community as loans were paid off and then disbursed to the next recipient.
But would they?
Larry Marso, an attorney who worked as a mergers and acquisitions investment banker at Morgan Stanley, pointed to the Los Angeles Community Bank — established in 1995 with $430 million in federal funding — as a cautionary tale. Focused on rebuilding neighborhoods following the 1992 Los Angeles riots, the bank faced heavy criticism from federal and local housing officials for poor management, severe political meddling and rushing into non-compliant deals. The bank aggressively pushed to fund high-risk, ill-conceived projects, had an astronomical loan default rate and was forced to close by 2004.
Banks, Marso told the editorial board, “need to loan to a wide variety of people in a wide geography who are under widely different conditions. It’s called diversification. You have to diversify your loan portfolio.”
Prop B directs San Francisco to do the exact opposite.
Proponents note that North Dakota’s public bank has operated successfully for over 100 years. But that bank invests not just in feel-good green and socially just projects but fossil fuels. That’s not a model San Francisco should be holding up.
Moreover, Prop B’s authors arguably set the effort up to fail by being overly prescriptive. The 25-page measure cements into the City Charter a wide variety of dubious micromanaging — including a host of citizen oversight commissions and advisory committees of the ilk that voters said they wanted to move beyond when they passed Prop E for commission reform in 2024.
“This is the perfect example as to why we have these problems with our charter,” Sean Elsbernd, president and CEO of the local think tank SPUR, told the editorial board. “There is so much detail that doesn’t need to be in there.”
Elsbernd believes, as do we, that Prop B’s authors could have simply authorized a public bank in San Francisco and instructed the mayor and Board of Supervisors to pass legislation implementing it. This would have allowed for more flexibility.
San Francisco already has other ways to raise and deploy capital for social good. It can issue bonds. It can expand the Housing Trust Fund. It can partner with community-development financial institutions and nonprofit lenders. It can streamline approvals, reduce unnecessary fees and help affordable-housing developers control costs — all priorities of Mayor Lurie’s administration. These methods are more immediate and easier for voters to evaluate.
A bank, public or private, cannot make construction costs disappear or eliminate the risk that a borrower will default. If a project genuinely needs a subsidy, a loan is not a substitute for one. It merely changes who carries the risk.
About Opinion
The editorial positions of The Chronicle, including election recommendations, represent the consensus of the editorial board, consisting of the publisher, the editorial page editor and staff members of the opinion pages. Its judgments are made independent of the news operation, which covers the news without consideration of our editorial positions.
And with a public bank, that risk would ultimately belong to the public.
San Francisco doesn’t need to create complicated new mechanisms and hope they work. It needs to strengthen the institutions we already have. Vote no on Prop B.
Reach the Chronicle editorial board with a letter to the editor: www.sfchronicle.com/submit-your-opinion.
Sep 10, 2026
Opinion Staff
The editorial positions of The Chronicle, including election recommendations, represent the consensus of the editorial board, consisting of the publisher, the editorial page editor and staff members of the opinion pages. Its judgments are made independent of the news operation, which covers the news without consideration of our editorial positions.
