Press Release: MAYOR KENNEY SABOTAGES PUBLIC FINANCIAL AUTHORITY THAT WAS PASSED BY SUPERMAJORITY ON COUNCIL

DATE: July 6, 2022

CONTACT: Susan Windle | (susan@susanwindle.com) | 215-460-5973, Peter Winslow (pjwinslow@gmail.com) 914-227=3795

MAYOR KENNEY SABOTAGES PUBLIC FINANCIAL AUTHORITY THAT WAS PASSED BY SUPERMAJORITY ON COUNCIL

City Council voted nearly unanimously to establish the precursor to a public bank, and now the Mayor is openly refusing to fund it or appoint its board members

PHILADELPHIA—Today, the Philadelphia Public Banking Coalition responds to a letter from Mayor Kenney to City Council, in which the Mayor refuses to provide funding for the Philadelphia Public Financial Authority, which was passed nearly unanimously by City Council this Spring. In the event that City Council provided funding through the city budget or a transfer ordinance this Fall, the Mayor would prevent it from operating by refusing to appoint the authority’s board members, according to the letter. The coalition criticized the decision in an open letter to the Mayor, calling his actions an “affront to the democratic process.” A copy of the open letter is included at the bottom of this press release.

The Philadelphia Public Financing Authority (PPFA) was authorized by Council legislation that also called for the creation of a public bank in Philadelphia, which would enable the City to invest its own cash reserves in a manner to benefit the city rather than Wall Street banks. Until then, the authority would invest in projects, which are not typically funded by Wall Street, in communities that have historically been shut out of access to credit through racist banking practices like red lining. Projects could include low-income housing, worker and consumer co-ops, renewable energy, and small businesses owned by people of color, among others. If the PPFA, or another entity it created, later obtained a bank charter to establish a public bank, it would allow the bank’s projects to be financed at below-market interest rates. It would also give the city an alternative to borrowing from Wall Street, which currently charges the city over $170 million in interest each year.

Unlike other authorities, the PPFA would be operated by a board of community members appointed for their work to advance justice for underserved communities. Specifically, a majority of members must have at least five years of experience in at least one of the following areas: racial justice, low-income housing, public education, public health, co-operative development, neighborhood-based small business development, gender justice, environmental justice, or public transportation. Members must be endorsed by a community organization working on one of these issues in Philadelphia, and nominated by City Council and then appointed by the Mayor.

“Today we learned that the Mayor has decided to ignore the legally binding ordinance that calls for him to appoint the authority’s board,” said Stan Shapiro, co-founder of Philly Neighborhood Networks and a member of the Philadelphia Public Banking Coalition. “That ordinance was passed by a margin of 15-1 in City Council, and the Mayor – who could have vetoed it but declined – has simply chosen to pretend it doesn’t exist. This is outrageous as a matter of law, but even worse, as a matter of policy. When the PPFA spins off a Philadelphia Public Bank, as the Mayor knows is intended, it could help revitalize communities that have been the victims of racist banking policies for generations. But the Mayor is standing in the way.”

The Mayor’s office insisted that the bill include a clause that board members must ultimately be appointed by the Mayor, which the mayor is now using to sabotage the board by refusing to make appointments.

“Through the City’s Law Department, the Administration inserted a provision into the bill that required board members to ultimately be appointed by the Mayor,” said Susan Windle, a member of the Philadelphia Public Banking Coalition. “Now, the Mayor is using that provision to sabotage the entire project. He is subverting the democratic process by refusing to appoint board members to an authority that was approved by a supermajority of our elected representatives on City Council.”

Councilmember Derek Green, chief sponsor of the legislation, responds to the Mayor with this clarifying thought: “As a former banker and small business lender, for profit and non-profit lenders do not generally provide credit enhancements or loan guarantees. It’s just not their business model. Further, it would not be sound lending policy for entities like PIDC to provide loans and guarantees to disadvantaged businesses. Mayor Kenney’s idea creates more risk for PIDC. This is why we need the Philadelphia Public Financial Authority.”

The Philadelphia Public Banking Coalition’s open letter:

Mayor James F Kenney
215 City Hall
Philadelphia, PA 19107

July 6, 2022

July 6, 2022

Dear Mayor Kenney:

We are dismayed to learn that you have decided to ignore the legally binding ordinance that calls for you to appoint the Philadelphia Public Financial Authority’s Board of Directors. That ordinance was passed by a margin of 15-1 in City Council, but was returned by you with neither signature nor veto. Had you vetoed the bill, your action would have initiated a vigorous public debate about its merits, and we in the Coalition would have welcomed that debate. Your behavior is an affront to the democratic process.

The bill establishing the Philadelphia Public Financial Authority was drafted in close consultation over a six month period with the City’s Law Department as well as the prestigious banking law firm of Holland and Knight and members of the City’s Treasurer’s office. Through the Law Department, the Administration inserted a provision that required the board to ultimately be appointed by the Mayor, and you are now using that provision to sabotage the entire project.

Your behavior is an outrage as a matter of law and misguided as a matter of policy. As you know, the PPFA can lay the groundwork for a Philadelphia Public Bank, and with the fair lending policies and programs the legislation intends, help revitalize communities that have been the victims of racist banking policies for generations. We ask you to stop standing in the way of economic justice.

In your letter of June 22, you  claim that other agencies in the City already do the work of the PPFA. Despite their existence, however, massive disinvestment has continued to oppress Black and Brown communities all around the City. These communities were legally redlined for decades, and remain illegally redlined, by the private banking industry. The agencies you cite – Philadelphia Industrial Development Corporation, the Philadelphia Energy Authority, the Accelerator Fund – are either not addressing that problem, or are too small to make a difference.

As you know, the legislation creating the PPFA reserved a majority of its seats for individuals who have been advocates for policies that serve the community, not profit. On the other hand, the Philadelphia Industrial Development Corporation, the PPFA’s primary existing counterpart, is controlled by the Chamber of Commerce, which appoints a majority of its board. No wonder it has done little to erase the investment gap in our City. We can no longer tolerate the major economic development agency in the City being a tool of big business. Philadelphia needs a transparent and publicly accountable lending authority and, ultimately, a public bank that returns its earnings, not to shareholders, but to the communities it serves.

We call upon you to reverse your undemocratic decision, and to move forward with all measures needed to establish the Philadelphia Public Financial Authority as required by the law.

For the Philadelphia Public Banking Coalition:

Constance Billé
Deborah Figart, Ph.D.
Beth Finn
Pamela Haines
Ron Raju-Joseph
Kay Lasker
Nicole Levy
Vanessa Lowe
Stan Pokras
Theodora Rodine
Maurice Sampson
Susan Saxe
Stanley Shapiro
Ray Torres
Greg Windle
Susan Windle
Peter Winslow

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