Working Together to Build Something New – Funding Sustainable, Local Communities with Public Banks

Banking on New Mexico’s Five-Year Model Supports the City of Santa Fe’s Findings that a Public Bank Can Lower the City’s Debt.

Read or Download the BoNM Five-Year Public Bank Model

On January 21st, BoNM officially released its Five-Year Model Supporting a Public Bank for Santa Fe, which has been in development for the past several months. The five-year financial model, created by our Brass Tacks Team, working both with officials from the City and national Public Banking experts, proposes a Public Bank as a debt reduction, budget easing, income generating strategy for the City.

With the help of the City Finance Department, BoNM’s Brass Tacks Team identified loans and bonds available for refinancing during a five-year proposed start-up period. The BTT also included a small amount of hypothetical community partnership lending in their five-year model. The model restructured four existing loans and six bonds with two goals in mind: a) to lower the City’s Debt Service (principal, interest and fees associated with the loans and bonds) and b) to lower the City’s projected debt. The Brass Tacks Team’s model supports the exceptional and comprehensive work completed in the City’s Feasibility Study, continuing the community discussion initiated by that economic study.

The model indicates that should a Public Bank for Santa Fe “open for business” on July 1, 2017 with a loan portfolio of $45.5 million in loans to the City, plus a small amount of partnership lending, in its first year of operation the bank could help Santa Fe reduce its annual debt service costs by $1 million, while making a small profit of $.05 million. The model also projects that in five years the bank could reduce the City’s annual debt service costs by $1.3 million and reduce total City debt by $4.8 million.

Working Together to Build Something New – Funding Sustainable, Local Communities with Public Banks

New Mexico is facing huge challenges that national institutions, including global financial institutions, have failed to address: poverty, unemployment, low educational achievement, lack of funding for small business, to name a few. These are issues that we have too long waited for others to solve. It is now time to revive American self-reliance, develop pride in our own communities, and put capitalism and democracy to work together.

From the Tea Party on the right to progressives on the left, Americans are realizing that local government can, and must, solve problems that the largest governmental and financial institutions cannot, or will not, solve for them. “We are on our own,” one New Mexico mayor said recently. “If we are going to support local business or health centers, build bridges or support the arts, we are going to have to find the ways to raise the funds ourselves.”

Square WEB
Bob Lanphear, Lanphear Design

We in Banking on New Mexico have come to the same realization. It is time to generate funding and take initiative at the local level because no one else is putting our problems or the solutions to these problems at the top of their agendas. We can solve these problems on our own with the help of the formation of public banks.

More than 20 states are now considering the creation of public banks as a supplement to community banks and credit unions — increasing local control, reducing paper work, increasing lending to projects that benefit our local communities, and reversing the interest stream that now sends millions out of state. With public banks we can keep that interest at work here at home. This is community capitalism and a more democratic economy.

New Mexico has perhaps the richest history of any state in the country. Some say our diversity and conflict have blotted out our common humanity. We say, give us the tools to make communities work and watch us build a new story of pride and economic success. This can be the new story of New Mexico!

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Public Banking — Funding Local, Sustainable Economies