Berkeley Voters Weigh Measure Z Parcel Tax to Establish Municipal Public Bank

Voters in Berkeley are deciding this November on Measure Z, a local ballot proposal that would tax property owners for six years to capitalize a municipal public bank modeled in part on North Dakota's century-old state-run bank.

If approved by voters in the city of 122,000 residents, Measure Z would establish an annual parcel tax for six years starting at 6 cents per square foot for residential properties and 9 cents per square foot for commercial buildings.

Once the fund accumulates $40 million — a threshold projected to take more than four years — the city could apply for deposit insurance from the Federal Deposit Insurance Corp. (FDIC) and regulatory certification from the state of California.

Wholesale Lending Model Without Retail Branches or ATMs

Under Measure Z, the proposed Berkeley public bank would not operate as a consumer retail bank and would have no ATMs or local branches. Instead, it would partner with existing credit unions and community banks to originate low-interest loans.

The measure restricts the bank's lending to three categories:

• Affordable housing projects
• Green energy and local infrastructure
• Small businesses

Supporters say a locally controlled public bank would keep taxpayer capital invested in the community while avoiding investments in fossil fuels and weapons manufacturers.

"This is about setting up something that is publicly funded with community leadership that focuses on the things we want," said Will Toaspern, chair of the Coalition to Keep East Bay Money Local, which backs Measure Z.

A city-commissioned poll conducted in April found that 58% of likely Berkeley voters supported the public bank tax, though municipal tax expert Michael Coleman noted that California voters approved a smaller share of local tax and bond measures in the June primary amid rising cost-of-living concerns.

Critics Cite Regional Risk; Economists Question North Dakota Comparison

Opponents organized under the group Affordable Berkeley argue that the measure exposes Berkeley taxpayers to financial risk across a broader geographic footprint. Because the bank's capital would be raised from Berkeley property owners but made available for lending across the wider East Bay region, critics say the city would bear disproportionate liability.

"This is a bad deal for Berkeley," said Paul Mathew, a longtime Berkeley resident and member of Affordable Berkeley.

Supporters often point to the Bank of North Dakota, founded in 1919, which has extended infrastructure loans to cities at roughly 1 percentage point below market rates, according to the Northeast-Midwest Institute. However, University of North Dakota economics professor David Flynn cautioned that North Dakota's bank is tailored to an agricultural economy with less private lending competition, making it harder to replicate the same effect on housing costs in the Bay Area.

"You can't just pluck it out as if it's a Lego piece and drop it in Berkeley or San Francisco," Flynn said. Across the bay, San Francisco voters are considering a separate public bank ballot measure this November that would establish a governance structure without levying a tax.