CITY COUNCIL VOTES TO CREATE PHILADELPHIA PUBLIC FINANCIAL AUTHORITY
The ordinance paves the way for the establishment of the nation’s first municipal public bank here in Philadelphia.
PHILADELPHIA, March 3, 2022 – Today, the City Council voted 15 to 1 to pass legislation introduced late last year by Council Member Derek Green (At-Large), to establish the Philadelphia Public Financial Authority (“PPFA”) ), an entity that allows the city of Philadelphia to create the first municipal public bank in the country. The PPFA will provide much-needed financial support and resources to hard-to-lend businesses and organizations and local Business Development Financial Institutions (“CDFIs”).
As a former banker and small business lender, Board Member Green identified access to capital for entities that navigate the gaps in the current lending environment as a pressing issue that requires action from the city. Currently, only 6% of businesses with employees in Philadelphia are owned by African Americans, even though the city’s population is 44% African American. Only four percent of businesses with employees are owned by Latinx Philadelphians. About 40% of minority-owned businesses in Philadelphia have been forced to close due to the COVID-19 pandemic, further exacerbating existing wealth disparities and making access to credit even more elusive. PPFA’s goal is not to compete with current businesses or organizations, or duplicate existing services, but to offer credit enhancement products, such as letters of credit, that will provide greater opportunities for cooperatives, entrepreneurs of color and other business organizations. access additional credit to help create cash flow and create jobs.
“This bill is the culmination of years of collaboration with the Philadelphia Public Banking Coalition, the City Legal Department, the City Treasurer, our outside counsel, Holland and Knight LLP, and many conversations with the Department of Pennsylvania Banking and Securities, the Department of the Treasury, other interested parties and, most importantly, community stakeholders,” said Board Member Green. “The lack of access to credit, which has been reiterated by many small business owners of color, as their biggest challenge and greatest impediment to their ability to grow and prosper, has been the basis for the legislation that was passed today and why i have chosen to continue this public banking initiative. I am grateful for the support of my colleagues on the Board, and in particular the tireless efforts and dedication of all those who have contributed to making this l legislation a reality.
Black and brown businesses are fewer in number, employ fewer workers and find it harder to grow, which is directly related to their owners’ lack of access to credit and wealth. This inequitable access is why the PPFA is needed. More jobs, more wealth and more equity are the right way to alleviate the inextricably linked problems of the city’s 25% poverty rate, Philadelphia’s gun violence crisis and essential to building the city fairer than our residents deserve.
The ordinance, which can be viewed here, takes effect immediately.