Human Welfare and Community Action Commission ACTION CALENDAR June 12, 2012 (Continued from May 29, 2012)

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1 Human Welfare and Community Action Commission ACTION CALENDAR June 12, 2012 (Continued from May 29, 2012) To: Honorable Mayor and Members of the City Council From: Human Welfare and Community Action Commission Submitted by: Gloria Woodson, Vice-Chair, Human Welfare and Community Action Commission Subject: Banking Services Request for Proposal RECOMMENDATION Adopt a Resolution directing the Finance Department, as part of the Responsible Banking Policy, to collect a social impact report from all financial institutions that provide or wish to provide banking and/or investment management services to the City of Berkeley. FISCAL IMPACTS OF RECOMMENDATION The City will incur minimal costs in the personnel associated with collection of these reports and from the posting of the reports of public. CURRENT SITUATION AND ITS EFFECTS Due to the economic downturn many local businesses have found it increasingly difficult to obtain the capital they need while many homeowners have found it more difficult to refinance their homes or obtain loans for needed upgrades. Without an effective policy, financial institutions, especially those not locally owned may lack the incentive to invest locally sourced deposits from residents and the City government into the local economy and social programs. Local deposits may be used to fund more profitable investments in other areas and may not promote local needs such as business growth and home maintenance and ownership, which may have negative consequences on local quality of life, property values, and service availability. Our goal is not to dictate business policy to banks but only to collect the information needed for the City to make an informed decision as to whether or not its investment and deposit partners are creating local value from the funds they are holding and or managing. On March 21, 2012, the Human Welfare and Community Action Commission voted to recommend to City Council that they adopt an amendment to the Responsible Banking Policy asking the Finance department to collect a social impact report from all financial institutions that provide or wish to provide banking and/or investment management services to the city of Berkeley. (M/S/C: Sood/Cross. Ayes: Sood, Robinson, Reagan, Beck, Cross, Woodson, Dave. Noes: None. Abstain: None. Absent: Davila, Graham.) 2180 Milvia Street, Berkeley, CA Tel: (510) TDD: (510) Fax: (510) aking@cityofberkeley.info Website:

2 Banking Services Request for Proposal ACTION CALENDAR June 12, 2012 The social impact report is to be submitted biannually on February 1 and August 1 of each year and include the following elements: 1) Statement of their Community Reinvestment Act score; 2) Number of loan modifications by status: new requests, rejected, under review, accepted/in process; 3) List of loan modifications made in Berkeley with changes in APR and term; 4) List of all loans made to businesses headquartered in 5) List of loans made for the purchase or refinancing of homes in the City of 6) List of Berkeley residents employed by the institution; 7) List of charitable contributions made to non-profit organizations that serve the City of 8) List of loans made to non-profit organizations that serve the City of 9) List of equity investments made to businesses headquartered in the City of 10) Description of programs that serve the non-banked and under-banked in Berkeley, including product details and promotion of the product and statistics that show how many residents are utilizing these services; 11) Information on any other activities that may provide benefit to the citizens of including but not limited to financial literacy education, foreclosure prevention measures/programs All reports or the failure to submit reports are to be made available to the public within 10 days. BACKGROUND Human Welfare and Community Action Commission (HWCAC) is concerned with the social welfare of low income Berkeley residents. In the current economic climate it is even more important to leverage existing resources to support the local economic and social needs. With its large savings and investment portfolio the City can exert influence on financial partners to provide tangible investment into the Berkeley community. In order to accomplish this, information on what impact is being made is critical. We applaud the step taken by the Council in adopting the Responsible Banking Policy and look forward to seeing the results of this action. As stated in the policy statement, the HWCAC previously submitted a Council item in 2010 encouraging the City to adopt a responsible banking policy. In response Council requested the commission to look further into this issue and provide additional information. Since that time the commission has continued to review the policy internally and in addition has been in contact with the Finance department in order to get an understanding of what data if any it collects from these financial partners. After our initial recommendation the Finance department made a request for information from Wells Fargo but the responses did not provide specific answers to the recommended questions. In response, the HWCAC submitted a list of Page 2

3 Banking Services Request for Proposal ACTION CALENDAR June 12, 2012 the recommended questions to Mr. Hicks and have been informed that these have been submitted to Wells Fargo. RATIONALE FOR RECOMMENDATION We realize that the current economic environment makes it even more difficult for city governments to put additional resources towards social programs. We believe it is critical that we use existing resources to support our City goals. In addition, we believe that it would be in our City s best interests that our deposit and investment accounts go to institutions that make tangible investments in the economic and social growth of our City. We believe that there is a lack of information available to the public in regards to reinvestment activity. Secondly, we believe that by giving the banks and investment organizations concrete examples of metrics that are important to us will focus them on our expectations as a City. Lastly, we hope that these recommended questions will provide City leaders with access to information that can be used to help in their assessment our banking and investment relationships and with developing possible ways to leverage these relationships and incentive our partners to achieve social goals without additional funding. ALTERNATIVE ACTIONS CONSIDERED The HWCAC had considered the development of recommending a scorecard card program to have the Finance department formally rate each financial partner, because we felt that this would have a much larger impact on the Finance department we decided against this course of action. In addition we discussed the idea of creating a Banking Commission to serve as a citizen review board for the a banking policy but decided that this might be more appropriate at a future point due to the time and legal considerations of setting up a new commission. CITY MANAGER See companion report. CONTACT PERSON Gloria Woodson, Vice-Chair, HWCAC, Praveen Sood, Commissioner, HWCAC, Drew King, Commission Secretary, Attachments: 1: Resolution Exhibit A: Sample Report Page 3

4 RESOLUTION NO. ##,###-N.S. BANKING INFORMATION ACT: ESTABLISHING A SOCIAL IMPACT REPORT WHEREAS, the City of Berkeley believes that it is important to understand the social impact that institutions the City has deposit and investment accounts are making; and WHEREAS, information on these social impacts can help the City better assess which companies to partner with and help determine ways to improve the social impact of these firms. NOW THEREFORE, BE IT RESOLVED by the Council of the City of Berkeley that biannually, all companies that provide the City of Berkeley with deposit banking or investment account services will provide a social impact report (Exhibit A) to the City Finance department. 1. Statement of their Community Reinvestment Act score; 2. Number of Loan Modification By status: New requests, Rejected, Under Review, Accepted/In process; 3. List of loan modification made in Berkeley with changes in APR and term; 4. List of all loans made to businesses headquartered in 5. List of loans made for the purchase or refinancing of homes in the City of 6. List of Berkeley residents employed by the institution; 7. List of charitable contributions made to non-profit organizations that serve the City of 8. List of loans made to non-profit organizations that serve the city of 9. List of equity investments made to businesses Headquartered in the City of 10. Description of programs that serve the non-banked and under-banked in Berkeley, including product details and promotion of the product. Statistics that show how many residents are utilizing these services; 11. Information on any other activities that may provide benefit to the citizens of including but not limited to financial literacy education, foreclosure prevention measures/programs. BE IT FURTHER RESOLVED that reports should be provided to the Finance department biannually on Feb 1 and August 1 of each year. BE IT FURTHER RESOLVED that all reports should be made publicly available via the City s website within 10 days of receipt. All institutions that were requested to report but fail to submit reports by the due date should be noted on the site with the reason for their failure to comply with the request. Exhibits: A: Social Impact Report

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