Mayor Steinberg urges City to invest with local banks to grow economy
Mayor Darrell Steinberg on Tuesday called for the City of Sacramento to increase the amount of money it deposits with community banks that in turn agree to put those municipal funds out to work in the community through loans to local enterprises.
Sacramento is already participating in the Responsible Investment for a Stronger Economy Initiative (RISE) through a $25 million investment with Five Star Bank. At Tuesday night’s Sacramento City Council meeting, Mayor Steinberg directed City Treasurer John Colville to pursue an expansion of the City’s participation in the program.
“I just want to go on record to reiterate my strong support for significantly expanding this great program and to do so as soon as we possibly can,” Mayor Steinberg said.
RISE was launched in October 2017 by Region Finance, a trade association of community banks affiliated with the Sacramento Region Business Association.
Josh Wood, CEO of Sacramento Region Business, said the group devised the first-in-the-nation program after it started looking at how much local governments in the Sacramento region were investing with overseas banks. “It was a sizable portion with no commitment that it ever get reinvested back here,” he said.
“Our goal is we want $1 billion invested with local banks so that the money will be recycled back into this economy,” Wood added.
Banks participating in the program agree to lend out at least 50 percent of the monies deposited by municipal clients to businesses and development projects within the jurisdiction.
Elk Grove was the first local government to join the RISE program. It said in November that it would place up to $15 million with River City Bank as a way to stimulate economic growth. Rancho Cordova followed suit by placing $5 million each into deposit accounts at Five Star Bank and American River Bank.
Sacramento made its $25 million deposit with Five Star Bank earlier this year. As of July 31, Five Star had approved loans totaling $25.8 million to city businesses in 2018 — more than the City investment.
“It has heightened our efforts to do deals in Sacramento,” said Five Star President and CEO James E. Beckwith, who also chairs the Region Finance group.