How Measure Z Works

Measure Z creates a temporary parcel tax dedicated entirely to capitalizing a public bank for Berkeley — Public Bank East Bay. The revenue is placed in a dedicated fund and cannot be spent on anything else.

  • Residential rate: $0.06 per square foot of improvements (buildings), per year

  • Commercial/other property rate: $0.09 per square foot, per year

  • Estimated revenue: approximately $5.6 million per year

 

 

Why a Parcel Tax, and Why Now: The "Dollar Banked" Difference

When the city spends a dollar directly on a program, that dollar is used once, and it's gone. 

When that same dollar capitalizes a bank, it becomes the foundation the bank lends against — earning a return, and then getting lent again as it's redeposited by borrowers and vendors.

A public bank also does something direct spending can't: because it accepts deposits, it can lend out several times its own capital base, so a modest amount of public money supports far more local investment than the same amount spent outright. Over time, the bank's earnings flow back to the city, easing pressure on future budgets instead of adding to it.

From Tax to Bank: What Happens and When

  1. Capitalization — Parcel tax revenue is deposited into a dedicated fund, separate from Berkeley's general fund, used only to capitalize and support the bank.

  2. Chartering & Regulatory Approval — Public Bank East Bay applies for a bank charter, a rigorous, multi-year process required of every bank in the country, covering capital adequacy, liquidity, risk management, and regulatory compliance.

  3. Governance — A governing board that includes elected officials, community members, and financial professionals sets policy and lending priorities. Day-to-day operations are run by experienced, professional bankers, not city staff.

  4. Deadline & Safeguard — If the bank has not received regulatory authorization to operate by the ordinance's deadline, fund dollars must still be used to make loans supporting affordable housing, green infrastructure, and small businesses. They cannot revert to Berkeley's general fund for unrelated spending.

Why the Bank Lends Beyond Berkeley

Berkeley is providing startup capital and, in exchange, becomes an owner of the bank. A bank's core business is making loans, and the volume of loans it can safely make is proportional to its capital base. A larger, more diversified regional loan portfolio that spans Berkeley, Oakland, Richmond, and other East Bay communities is lower-risk and more profitable than a single-city lender, and Berkeley shares proportionally in that profitability as an owner.

The long-term goal remains a fully co-owned regional bank, with Oakland, Richmond, and Alameda County contributing their own capital alongside Berkeley's. This would also reduce the share of the cost Berkeley carries over time.

How the Bank Is Held Accountable

  • Open board meetings the public can attend

  • Public annual reports on lending activity and financial performance

  • The same regulatory and capital requirements as any FDIC-insured bank in the country

  • FDIC deposit insurance up to $250,000 per account — funded by premiums banks pay themselves, not by taxpayers

  • Built-in loan-loss reserves and internal risk controls to absorb losses if they occur, the same way every bank manages its lending risk

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